XML 42 R24.htm IDEA: XBRL DOCUMENT v3.24.3
Income Taxes
 12 Months Ended
Sep. 30, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Provision for Income Taxes
The provision (benefit) for income taxes for the years ended September 30 consisted of:
(Millions of dollars)202420232022
Current:
Federal$132 $364 $17 
State and local, including Puerto Rico17 87 32 
Foreign362 303 228 
$511 $754 $277 
Deferred:
Domestic$(169)$(644)$(96)
Foreign(42)22 (33)
(211)(622)(129)
Income tax provision$300 $132 $148 
The components of Income from Continuing Operations Before Income Taxes for the years ended September 30 consisted of:
(Millions of dollars)202420232022
Domestic, including Puerto Rico$336 $358 $496 
Foreign1,669 1,304 1,287 
Income from Continuing Operations Before Income Taxes$2,005 $1,662 $1,783 
Unrecognized Tax Benefits
The table below summarizes the gross amounts of unrecognized tax benefits without regard to reduction in tax liabilities or additions to deferred tax assets and liabilities if such unrecognized tax benefits were settled. The Company believes it is reasonably possible that the amount of unrecognized benefits will change during the next twelve months due to one or more of the following events: expiring statutes, audit activity, tax payments, other activity, or final decisions in matters that are the subject of controversy in various taxing jurisdictions in which we operate. However, the Company does not expect changes to have a significant effect on its results of operations, financial condition, or cash flows.
(Millions of dollars)202420232022
Balance at October 1$269 $267 $354 
Increase due to acquisitions— — 2 
Increase due to current year tax positions22 22 40 
Increase due to prior year tax positions— 33 60 
Decreases due to prior year tax positions— (29)— 
Decrease due to settlements with tax authorities (64)(6)(77)
Decrease due to lapse of statute of limitations(6)(18)(112)
Balance at September 30$221 $269 $267 
Unrecognized tax benefits that would affect the effective tax rate if recognized$257 $366 $348 
The following were included for the years ended September 30 as a component of Income tax provision on the consolidated statements of income.
(Millions of dollars)202420232022
Interest and penalties associated with unrecognized tax benefits
$42 $20 $(6)
The Company conducts business and files tax returns in numerous countries and currently has tax audits in progress in a number of tax jurisdictions. The IRS has completed its audit for the BD legacy fiscal year 2014 and BD combined company fiscal years 2015 and 2017. With regard to legacy CareFusion, which the Company acquired in 2015, and legacy Bard, all pre-acquisition examinations have been completed. The IRS is reviewing BD’s fiscal years 2018 through 2022. For the other major tax jurisdictions where the Company conducts business, tax years are generally open after 2016.
Deferred Income Taxes
Deferred income taxes at September 30 consisted of:
 20242023
(Millions of dollars)AssetsLiabilitiesAssetsLiabilities
Compensation and benefits$405 $— $426 $— 
Property and equipment— 391 — 405 
Intangibles— 1,612 — 1,858 
Loss and credit carryforwards2,946 — 2,352 — 
Product recall and liability reserves261 — 362 — 
Capitalized research and development expenses (a)364 — 243 — 
Other512 64 431 88 
4,489 2,067 3,814 2,351 
Valuation allowance(2,990)— (2,272)— 
Net (b)$1,498 $2,067 $1,542 $2,351 
(a)As required by the 2017 Tax Cuts and Jobs Act, the Company’s research and development expenditures were capitalized and amortized in fiscal year 2024 for income tax purposes. This resulted in an increase in cash tax paid in fiscal year 2024 with a corresponding deferred tax benefit.
(b)Net deferred tax assets are included in Other Assets and net deferred tax liabilities are included in Deferred Income Taxes and Other Liabilities on the consolidated balance sheets.
Deferred tax assets and liabilities are netted on the balance sheet by separate tax jurisdictions. The Company asserts indefinite reinvestment for all historical unremitted foreign earnings as of September 30, 2024. Deferred taxes have not been provided on undistributed earnings of foreign subsidiaries as of September 30, 2024 since the determination of the total amount of unrecognized deferred tax liability is not practicable.
Generally, deferred tax assets have been established as a result of net operating losses and credit carryforwards with expiration dates from 2025 to an unlimited expiration date. Valuation allowances have been established as a result of an evaluation of the uncertainty associated with the realization of certain deferred tax assets on these losses and credit carryforwards. The valuation allowance at September 30, 2024 is primarily the result of foreign losses due to the Company’s global re-organization of its foreign entities and these generally have no expiration date. Valuation allowances are also maintained with respect to deferred tax assets for certain state carryforwards that may not be realized. The net change during the year in the total valuation allowance is attributable to foreign losses and credits.
Tax Rate Reconciliation
A reconciliation of the federal statutory tax rate to the Company’s effective income tax rate for continuing operations was as follows:
202420232022
Federal statutory tax rate21.0 %21.0 %21.0 %
State and local income taxes, net of federal tax benefit(0.7)(1.0)(1.1)
Foreign income tax at rates other than 21%(9.1)(8.2)(7.3)
Effect of foreign operations4.3 (3.9)5.6 
Effect of Research Credits, FDII and Other Credits (a)(22.1)(3.2)(2.2)
Effect of share-based compensation(0.3)(0.4)(1.7)
Effect of gain on divestitures— 3.2 — 
Effect of valuation allowance19.3 — (5.5)
Effect of nondeductible costs (b)2.2 — — 
Other, net0.4 0.4 (0.5)
Effective income tax rate15.0 %7.9 %8.3 %
(a)    During fiscal year 2024, the Company was granted non-U.S. tax credits, for which a full valuation allowance was established.
(b)    Primarily related to the estimated liability recorded as a result of the SEC investigation, as further discussed in Note 6.
Tax Holidays and Payments
The approximate tax impacts related to tax holidays in various countries in which the Company does business are provided below. The tax holidays expire at various dates through 2039. The Company’s income tax payments, net of refunds are also provided below.
(Millions of dollars, except per share amounts)202420232022
Tax impact related to tax holidays$414 $363 $284 
Impact of tax holiday on diluted earnings per share1.42 1.26 0.99 
Income tax payments, net of refunds653 629 532