INCOME TAXES (Tables)

12 Months Ended

Jun. 30, 2020

Income Tax Disclosure [Abstract]

Provision for income taxes

The provision for income taxes is comprised of the following:

	Year Ended June 30
(In millions)	2020		2019		2018
Current:
Federal	$	128	$	180	$	334
Foreign	368		383		357
State and local	(3)		16		(3)
	493		579		688
Deferred:
Federal	(93)		(95)		135
Foreign	(49)		27		35
State and local	(1)		2		5
	(143)		(66)		175
	$	350	$	513	$	863

Reconciliation of the U.S. federal statutory income tax rate and actual effective tax rate on earnings before income taxes

A reconciliation of the U.S. federal statutory income tax rate to the Company’s actual effective tax rate on earnings before income taxes is as follows:

	Year Ended June 30
	2020		2019		2018
Provision for income taxes at statutory rate	21.0	%	21.0	%	28.1	%
Increase (decrease) due to:
State and local income taxes, net of federal tax benefit	(0.1)		0.6		0.5
TCJA net income tax impact(1)	—		0.2		22.8
Stock-based compensation arrangements – excess tax benefits	(7.5)		(2.7)		(2.5)
Taxation of foreign operations	11.0		1.9		(4.7)
Income tax reserve adjustments	0.4		0.5		(0.5)
Nondeductible goodwill impairment charges	8.0		0.6		—
Other, net	0.7		0.1		(0.1)
Effective tax rate(2)	33.5	%	22.2	%	43.6	%

⁽¹⁾Includes the mandatory deemed repatriation tax on undistributed earnings of foreign subsidiaries (the “Transition Tax”), the remeasurement of U.S. net deferred tax assets resulting from the statutory tax rate reduction, including the enactment date remeasurement, and the net deferred tax liability related to foreign withholding taxes on certain foreign earnings resulting from the TCJA.

⁽²⁾The reconciling items between the Company's U.S. federal statutory income tax rate and the Company's actual effective tax rate were materially impacted by the decrease in earnings before income taxes from fiscal 2019 to fiscal 2020.

Significant components of deferred income tax assets and liabilities

Significant components of the Company’s deferred income tax assets and liabilities were as follows:

	June 30
(In millions)	2020		2019
Deferred tax assets:
Compensation-related expenses	$	142	$	179
Inventory obsolescence and other inventory related reserves	75		64
Retirement benefit obligations	71		71
Various accruals not currently deductible	212		206
Net operating loss, credit and other carryforwards	98		41
Unrecognized state tax benefits and accrued interest	12		12
Lease liabilities	585		—
Other differences between tax and financial statement values	217		125
	1,412		698
Valuation allowance for deferred tax assets	(107)		(48)
Total deferred tax assets	1,305		650
Deferred tax liabilities:
Depreciation and amortization(1)	(563)		(286)
ROU assets	(504)		—
Other differences between tax and financial statement values(2)	(194)		(69)
Total deferred tax liabilities	(1,261)		(355)
Total net deferred tax assets	$	44	$	295

⁽¹⁾Includes deferred tax liabilities associated with book-to-tax basis differences related to the Company's non-taxable acquisitions.

⁽²⁾Includes the deferred tax liability of $117 million associated with the gain on a previously held equity method investment.

Reconciliation of the beginning and ending amount of gross unrecognized tax benefits

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows:

	June 30
(In millions)	2020		2019
Beginning of the year balance of gross unrecognized tax benefits	$	67	$	60
Gross amounts of increases as a result of tax positions taken during a prior period	11		12
Gross amounts of decreases as a result of tax positions taken during a prior period	(9)		(6)
Gross amounts of increases as a result of tax positions taken during the current period	7		9
Amounts of decreases in unrecognized tax benefits relating to settlements with taxing authorities	(4)		(7)
Reductions to unrecognized tax benefits as a result of a lapse of the applicable statutes of limitations	(2)		(1)
End of year balance of gross unrecognized tax benefits	$	70	$	67

Tax years that remain subject to examination vary by the major tax jurisdictions

The tax years subject to examination vary depending on the tax jurisdiction. As of June 30, 2020, the following tax years remain subject to examination by the major tax jurisdictions indicated:

Major Jurisdiction	Open Fiscal Years
Belgium	2018 – 2020
Canada	2015 – 2020
China	2016 – 2020
France	2016 – 2020
Germany	2013 – 2020
Hong Kong	2014 – 2020
Italy	2016 – 2020
Japan	2020
Korea	2019 - 2020
Russia	2017 – 2020
Spain	2016 – 2020
Switzerland	2018 – 2020
United Kingdom	2019 – 2020
United States	2019 – 2020
State of California	2013 – 2020
State and City of New York	2015 – 2020