On December 22, 2017, the U.S. government enacted comprehensive tax legislation, commonly known as the Tax Cuts and Jobs Act of 2017, or the Act, which significantly revised the Internal Revenue Code of 1986, as amended. The Act contains broad and complex changes to corporate taxation, including, in part, reduction of the U.S. federal corporate tax rate from 35% to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously considered permanently reinvested, and creates new taxes on certain foreign sourced earnings. As our accounting and tax year is the fiscal period ending on the last Saturday in June, U.S. federal tax law requires that taxpayers with a fiscal year that spans the effective date of a rate change to calculate a blended tax rate based on the pro rata number of days in the fiscal year before and after the effective date. As a result, our U.S. federal tax rate for fiscal 2018 was a days-weighted blended tax rate of 28.17%. For fiscal 2019 and subsequent tax years, our U.S. federal tax rate is 21%.

Staff Accounting Bulletin 118 allows companies to record provisional amounts and recognize the effect of the tax law during a measurement period. The measurement period ended in the second quarter of our fiscal 2019. As of June 30, 2019, we have finalized our accounting for the tax impact of the Act. However, further technical guidance related to the Act, including final regulations on a broad range of topics, is expected to be issued and, as such, if our interpretation and final accounting are inconsistent with future regulations and guidance, we will recognize the impact as a discrete item in the period such guidance is issued.

The Global Intangible Low-Tax Income, or GILTI, which is a provision under the Act, imposes a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. GILTI requires an accounting policy election of either (1) treating taxes due on future U.S. inclusions in taxable income related to GILTI as a current period expense when incurred, or (2) factoring such amounts into the measurement of deferred taxes. We elected to treat GILTI as a period cost and recognize the impact in the period when it is incurred.

Income/(loss) before provision for income taxes for fiscal 2019, 2018, and 2017 consisted of the following (in millions):

	2019			2018			2017
United States	$	(40.6	)	$	(51.1	)	$	(10.1	)
Foreign		19.8			(30.7	)		71.4
Income/(loss) before provision for income taxes	$	(20.8	)	$	(81.8	)	$	61.3

The provision for income taxes for fiscal 2019, 2018, and 2017 consisted of the following (in millions):

	2019			2018			2017
Current tax expense/(benefit)
Federal	$	(4.9	)	$	21.5		$	9.6
Foreign		20.4			14.1			25.5
		15.5			35.6			35.1
Deferred tax expense/(benefit)
Federal		(8.5	)		14.4			(10.6	)
Foreign		(6.7	)		(9.5	)		(12.3	)
		(15.2	)		4.9			(22.9	)
Provision for income taxes	$	0.3		$	40.5		$	12.2

The provision for income taxes differs from the federal statutory rate for fiscal 2019, 2018, and 2017 as follows (in millions):

	2019			2018			2017
Provision at U.S. federal statutory tax rate	$	(4.4	)	$	(22.9	)	$	21.5
Qualified stock options		4.0			4.9			5.5
Shortfall related to share-based compensation		3.3			4.1			—
Non-deductible officer compensation		1.1			—			—
Business credits		(6.1	)		(4.9	)		(3.6	)
Foreign tax differential		1.0			16.5			(13.2	)
Non-deductible portion of contingent consideration		—			—			0.9
Change in valuation allowance		—			—			(0.8	)
Nondeductible amortization		0.7			1.2			1.6
Taxes associated with one-time transition tax		—			44.1			—
Impact of corporate tax rate change on deferred taxes		—			(2.7	)		—
Other differences		0.7			0.2			0.3
Provision for income taxes	$	0.3		$	40.5		$	12.2

Net deferred tax assets of $31.1 million and $15.9 million were non-current as of the end of fiscal 2019 and 2018, respectively, and were included in other assets in the accompanying consolidated balance sheets.

Significant components of our deferred tax assets (liabilities) as of the end of fiscal 2019 and 2018 consisted of the following (in millions):

	2019			2018
Deferred tax assets:
Investment writedowns	$	—		$	1.1
Inventory writedowns		12.1			11.6
Property and equipment		1.5			1.9
Accrued compensation		0.8			0.1
Deferred compensation		0.5			0.6
Share-based compensation		9.5			11.1
Business credit carryforward		37.3			25.3
Acquisition intangibles		7.0			0.6
Other accruals		3.3			1.6
		72.0			53.9
Valuation allowance		(30.4	)		(23.3	)
		41.6			30.6
Deferred tax liabilities:
Interest		(10.5	)		(14.7	)
		(10.5	)		(14.7	)
Net deferred tax assets	$	31.1		$	15.9

Realization of deferred tax assets depends on our generating sufficient U.S. and certain foreign taxable income in future years to obtain a benefit from the utilization of those deferred tax assets on our tax returns. Accordingly, the amount of deferred tax assets considered realizable may increase or decrease when we reevaluate the underlying basis for our estimates of future U.S. and foreign taxable income. As of the end of fiscal 2019, a valuation allowance of $30.4 million is maintained to reduce deferred tax assets to levels we believe are more likely than not to be realized through future taxable income. The net change in the valuation allowance during fiscal 2019 was an increase of $7.1 million.

Undistributed earnings of our foreign subsidiaries were approximately $859.3 million as of the end of fiscal 2019 and are considered to be indefinitely reinvested overseas.

As of the end of fiscal 2019, we had federal and California net operating loss carryforwards of approximately zero and $33.2 million, respectively. The California net operating loss will begin to expire in fiscal 2020, if not utilized. Under current tax law, net operating loss and tax credit carryforwards available to offset future income or income taxes may be limited by statute or upon the occurrence of certain events, including significant changes in ownership.

We had $11.0 million and $37.8 million of federal and state research tax credit carryforwards, respectively, as of the end of fiscal 2019. The federal research tax credit carryforward will begin to expire in 2026 and the state research tax credit can be carried forward indefinitely. We also had $0.8 million of federal alternative minimum tax credit carryforward available to offset future federal tax liabilities with no expiration or potentially refundable under current tax laws.

The total liability for gross unrecognized tax benefits related to uncertain tax positions, included in other liabilities in our consolidated balance sheets, decreased by $5.9 million from $24.8 million in fiscal 2018 to $18.9 million in fiscal 2019. Of this amount, $13.1 million will reduce the effective tax rate on income from continuing operations, if recognized. A reconciliation of the beginning and ending balance of gross unrecognized tax benefits for fiscal 2019, 2018, and 2017 consisted of the following (in millions):

	2019			2018			2017
Beginning balance	$	24.8		$	15.2		$	13.4
Increase in unrecognized tax benefits related to current year tax positions		4.2			10.5			2.5
Increase in unrecognized tax benefits related to prior year tax positions		—			—			0.1
Decrease due to effective settlement with tax authorities		(6.2	)		—			—
Remeasurement of unrecognized tax benefits		(2.0	)		—			—
Decrease due to statute expiration		(1.9	)		(0.9	)		(0.8	)
Ending Balance	$	18.9		$	24.8		$	15.2

Accrued interest and penalties remained flat, increased by $0.7 million, and decreased by $0.2 million representing income tax expense or benefit, in fiscal 2019, 2018, and 2017, respectively. Accrued interest and penalties were $1.9 million as of June 30, 2019 and 2018. Our policy is to classify interest and penalties, if any, as components of income tax expense.

It is reasonably possible that the amount of liability for unrecognized tax benefits may change within the next 12 months; an estimate of the range of possible changes could result in a decrease of $1.8 million to an increase of $3.0 million.

In July 2018, the U.S. Ninth Circuit Court of Appeals reversed a 2015 decision of the U.S. Tax Court in Altera Corp. v. Commissioner that found that the Treasury regulations addressing the treatment of stock-based compensation in a cost-sharing arrangement with a related party were invalid. In August 2018, the U.S. Ninth Circuit Court of Appeals withdrew its July 2018 opinion to allow time for the reconstituted panel to confer on this appeal. In June 2019, the reconstituted panel of the U.S. Ninth Circuit Court of appeals reversed the 2015 Tax Court decision. As our tax filing position is consistent with the treasury regulations, no adjustment to our financial statements is required. However, due to the uncertainties with respect to the ultimate resolution, we will continue to monitor developments in this case.

Our major tax jurisdictions are the United States, Hong Kong SAR, and Japan. From fiscal 2013 onward, we remain subject to examination by one or more of these jurisdictions. In August 2018, we received the revenue agent’s report resolving the fiscal 2014 and 2015 examination by the Internal Revenue Service with no material impact on our consolidated financial statements. Our case is pending review by the Joint Committee on Taxation, which we anticipate will conclude in our fiscal 2020. Any prospective adjustments to our unrecognized tax benefits will be recorded as an increase or decrease to income tax expense and cause a corresponding change to our effective tax rate. Accordingly, our effective tax rate could fluctuate materially from period to period.