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Income Taxes | 9 Months Ended
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Mar. 31, 2016
Income Tax Disclosure [Abstract] |
Income Taxes | 12. Income Taxes We account for income taxes under the asset and liability method. We consider the operating earnings of our foreign subsidiaries to be indefinitely invested outside the United States. Therefore, no provision has been made for the federal, state, or foreign taxes that may result from future remittances of undistributed earnings of our foreign subsidiaries. The provision for income taxes recorded in interim periods is recorded by applying the estimated annual effective tax rate to year-to-date income before provision for income taxes, excluding the effects of significant unusual or infrequently occurring discrete items. The tax effects of discrete items are recorded in the same period that the related discrete items are reported and results in a difference between the actual effective tax rate and the estimated annual effective tax rate. The provision for income taxes of $1.4 million and $19.4 million for the three months ended March 31, 2016 and 2015, respectively, represented estimated federal, state, and foreign income taxes. The effective tax rate for the three months ended March 31, 2016 diverged from the combined U.S. federal and state statutory tax rate primarily because of foreign income taxed at lower tax rates and research credits, which included the retroactive reinstatement of the federal research credit, partially offset by foreign withholding taxes, nondeductible amortization, and the impact of accounting for qualified stock options. Additional federal research and development credits of $1.4 million related to fiscal 2015 were treated as a discrete tax benefit in the three months ended March 31, 2016. The effective tax rate for the three months ended March 31, 2015, diverged from the combined U.S. federal and state statutory tax rate, primarily because of foreign withholding taxes, nondeductible amortization, and net unrecognized tax benefits associated with qualified stock options, partially offset by foreign income taxed at lower tax rates, and research and development credits. The provision for income taxes for the three months ended March 31, 2015, excluding the impact of accounting for contingent consideration as a discrete item, would have been $18.9 million. The provision for income taxes of $20.1 million and $38.0 million for the nine months ended March 31, 2016 and 2015, respectively, represented estimated federal, state, and foreign income taxes. The effective tax rate for the nine months ended March 31, 2016 diverged from the combined U.S. federal and state statutory tax rate primarily because of foreign income taxed at lower tax rates and research credits, partially offset by foreign withholding taxes, nondeductible amortization, contingent consideration, and net unrecognized tax benefits associated with qualified stock options. Additional federal research and development credits of $4.5 million related to fiscal 2015 were treated as a discrete tax benefit in the nine months ended March 31, 2016. The effective tax rate for the nine months ended March 31, 2015 diverged from the combined U.S. federal and state statutory tax rate primarily because of foreign income taxed at lower tax rates and research credits, partially offset by foreign withholding taxes, nondeductible amortization, and net unrecognized tax benefits associated with qualified stock options. The provision for income taxes for the nine months ended March 31, 2015, excluding the impact of accounting for contingent consideration as a discrete item, would have been $39.9 million. On March 31, 2016, Japan’s parliament approved legislation to reduce corporate combined income tax rates by 3.2 percentage points to 33.06%. As this tax rate change was enacted after the third quarter of our fiscal 2016, we will account for the impact in the fourth quarter of our fiscal 2016. The Protecting Americans from Tax Hikes Act of 2015, or the PATH Act which made the federal research tax credit permanent, was passed on December 17, 2015. The PATH Act retroactively extended federal research credit from January 1, 2015. As such, we recognized six months of tax benefit totaling $4.5 million from the federal research tax credit related to fiscal 2015. The total liability for gross unrecognized tax benefits related to uncertain tax positions increased $2.9 million during the nine months ended March 31, 2016 to $14.5 million from $11.6 million at June 30, 2015, and was included in other long-term liabilities on our condensed consolidated balance sheets. If recognized, the total gross unrecognized tax benefits would reduce the effective tax rate on income from continuing operations. Accrued interest and penalties related to unrecognized tax benefits as of March 31, 2016 was $1.5 million; this balance increased $0.4 million from June 30, 2015. We classify interest and penalties as components of income tax expense. It is reasonably possible that the amount of the liability for unrecognized tax benefits may change within the next twelve months and an estimate of the range of possible changes may include an increase in our liability of up to $1.0 million. In July 2015, the U.S. Tax Court issued an opinion in Altera Corp. v. Commissioner related to a treasury regulation addressing the treatment of stock-based compensation in a cost-sharing arrangement with a related party. At this time, a final decision has not been issued by the U.S. Tax Court. Further, the U.S. Department of the Treasury has not withdrawn the requirement in its regulations related to the treatment of stock-based compensation. The Commissioner has the right to appeal the U.S. Tax Court decision. While we determined no adjustment to our financial statements is required due to the uncertainties with respect to the ultimate resolution, we will continue to monitor developments in this case. In September 2015, we were notified by the National Tax Agency of Japan that our open tax years would be subject to audit. In April 2016, this audit was concluded with adjustments that are not material to our consolidated financial statements. We expect to record the impact of this audit in the fourth quarter of our fiscal 2016. Our major tax jurisdictions are the United States, Hong Kong SAR, and Japan. From fiscal 2009 onward, we remain subject to examination by one or more of these jurisdictions.

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