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INCOME TAXES | 9 Months Ended
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Feb. 27, 2022
Income Tax Disclosure [Abstract] |
INCOME TAXES | 10. INCOME TAXES In the third quarter of fiscal 2022 and 2021, we recognized income tax expense of $109.9 million and $101.6 million, respectively. In the first three quarters of fiscal 2022 and 2021, we recognized income tax expense of $263.8 million and $269.0 million, respectively. The effective tax rate (calculated as the ratio of income tax expense to pre-tax income, inclusive of equity method investment earnings) was 33.4% and 26.5% for the third quarter of fiscal 2022 and 2021, respectively. The effective tax rate for the first three quarters of fiscal 2022 and 2021 was 26.5% and 21.3%, respectively. The effective tax rate in the third quarter of fiscal 2022 reflected additional tax expense of $25.0 million related to tax elections made in connection with filing our fiscal 2021 federal tax return. These elections are still under review with the Internal Revenue Service. These elections may result in increases to the tax basis in those assets and if successful would result in tax benefits being realized in future periods. The effective tax rate also reflected additional tax expense associated with non-deductible goodwill related to assets held for sale for which an impairment charge was recognized. The effective tax rate in the first three quarters of fiscal 2022 reflected the above-cited items, as well as a tax benefit resulting from state law changes, a benefit from statute lapses on state tax issues that were previously reserved, and a benefit from the settlement of tax issues that were previously reserved. The effective tax rate for the third quarter of fiscal 2021 reflected additional tax expense associated with non-deductible goodwill related to the divestiture of the Peter Pan® peanut butter business. The effective tax rate for the first three quarters of fiscal 2021 reflected the above-cited item, as well as release of valuation allowance associated with the capital gains from the divestiture of the Peter Pan® peanut butter business, a benefit from statute lapses on state tax issues that were previously reserved, and a benefit resulting from the regulations issued by the U.S. Treasury and Internal Revenue Service on certain provisions of the 2017 Tax Cuts and Jobs Act. The amount of gross unrecognized tax benefits for uncertain tax positions was $54.8 million as of February 27, 2022 and $33.0 million as of May 30, 2021. Included in these amounts were $0.2 million and $0.8 million, respectively, for tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. The amount as of February 27, 2022 includes the issue noted above that is still under review with the IRS. The gross unrecognized tax benefits excluded related liabilities for gross interest and penalties of $7.6 million and $8.8 million as of February 27, 2022 and May 30, 2021, respectively. The net amount of unrecognized tax benefits at February 27, 2022 and May 30, 2021 that, if recognized, would favorably impact the Company's effective tax rate was $49.9 million and $28.2 million, respectively. We estimate that it is reasonably possible that the amount of gross unrecognized tax benefits will decrease by up to $4.4 million over the next twelve months due to various state audit settlements and the expiration of statutes of limitations. In the third quarter of fiscal 2022, it was determined that the current earnings of certain foreign subsidiaries were not indefinitely reinvested or that we could not remit to the U.S. parent in a tax-neutral transaction. Accordingly, we recorded a deferred tax liability of $1.2 million on approximately $23.6 million of earnings at February 27, 2022. The deferred tax liability relates to local withholding taxes that will be owed when this cash is distributed. The undistributed historic earnings in our foreign subsidiaries through May 30, 2021 are considered to be indefinitely reinvested or can be remitted in a tax-neutral transaction. Accordingly, we have not recorded a deferred tax liability related to these undistributed historic earnings.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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