The U.S. and non-U.S. components of income from continuing operations before income taxes were as follows:

The reconciliation between U.S. federal income taxes at the statutory rate and income tax expense was as follows:

(1)

The U.S. federal statutory rate was 21% for fiscal 2022, 2021, and 2020.

(2)

Excludes items which are separately presented.

The income tax expense for fiscal 2022 included a $124 million income tax benefit related to the tax impacts of certain intercompany transactions, a $64 million income tax benefit related primarily to a lapse of a statute of limitation, and a $51 million income tax benefit related to the release of a valuation allowance associated primarily with improved current and expected future operating profit and taxable income. In addition, the income tax expense for fiscal 2022 included $27 million of income tax expense related to the write-down of certain deferred tax assets to the lower corporate tax rate enacted in the canton of Schaffhausen and $12 million of income tax expense related to an income tax audit of an acquired entity. As we are entitled to indemnification of pre-acquisition period tax obligations under the terms of the purchase agreement, we recorded an associated indemnification receivable and other income of $11 million during fiscal 2022.

The income tax expense for fiscal 2021 included a $353 million income tax benefit related to changes in valuation allowances, of which $327 million related to the net reduction in valuation allowances associated primarily with certain tax planning actions as well as improved current and expected future operating profit and taxable income. In addition, the income tax expense for fiscal 2021 included a $29 million income tax benefit related to an Internal Revenue Service approved change in the tax method of depreciating or amortizing certain assets and $23 million of income tax expense associated with the tax impacts of an intercompany transaction.

The income tax expense for fiscal 2020 included $355 million of income tax expense related to the tax impacts of certain measures of the Switzerland Federal Act on Tax Reform and AHV Financing (“Swiss Tax Reform”) and an income tax benefit of $31 million related to pre-separation tax matters and the termination of the Tax Sharing Agreement. See “Swiss Tax Reform” and “Tax Sharing Agreement” below for additional information. In addition, the income tax expense for fiscal 2020 included $226 million of income tax expense related to increases to the valuation allowance for certain deferred tax assets, related primarily to the COVID-19 pandemic. As a result of the pandemic and its negative impact on our current and expected operating profit and taxable income, we believed it was more likely than not that a portion of our deferred tax assets would not be realized. The pre-tax goodwill impairment charge of $900 million recorded during fiscal 2020 resulted in a tax benefit of $4 million as the associated goodwill was primarily not deductible for income tax purposes. See Note 7 for additional information regarding the impairment of goodwill.

Deferred Tax Assets and Liabilities

Deferred income taxes result from temporary differences between the amount of assets and liabilities recognized for financial reporting and tax purposes. The components of the net deferred income tax asset were as follows:


	Fiscal Year End
	2022		2021

	(in millions)
Deferred tax assets:
Accrued liabilities and reserves	$	317	$	313
Tax loss and credit carryforwards		8,288		3,836
Inventories		62		46
Intangible assets		563		535
Pension and postretirement benefits		71		177
Deferred revenue		1		7
Interest		406		310
Unrecognized income tax benefits		1		4
Lease liabilities		81		94
Other		1		9
Gross deferred tax assets		9,791		5,331
Valuation allowance		(7,112)		(2,729)
Deferred tax assets, net of valuation allowance		2,679		2,602

Deferred tax liabilities:
Property, plant, and equipment		(101)		(97)
Write-down of investments in subsidiaries		(125)		(2)
Lease ROU assets		(79)		(92)
Other		(120)		(93)
Total deferred tax liabilities		(425)		(284)

Net deferred tax assets	$	2,254	$	2,318

Our tax loss and credit carryforwards (tax effected) at fiscal year end 2022 were as follows:


	Expiration Period
			Fiscal 2028
	Through		Through		No
	Fiscal 2027		Fiscal 2042		Expiration		Total

	(in millions)
U.S. Federal:
Net operating loss carryforwards	$	30	$	426	$	55	$	511
Tax credit carryforwards		53		110		—		163
U.S. State:
Net operating loss carryforwards		52		19		4		75
Tax credit carryforwards		11		—		6		17
Non-U.S.:
Net operating loss carryforwards		107		5,934		1,443		7,484
Tax credit carryforwards		—		—		1		1
Capital loss carryforwards		3		—		34		37
Total tax loss and credit carryforwards	$	256	$	6,489	$	1,543	$	8,288

The valuation allowance for deferred tax assets of $7,112 million and $2,729 million at fiscal year end 2022 and 2021, respectively, related principally to the uncertainty of the utilization of certain deferred tax assets, primarily tax loss and credit carryforwards in various jurisdictions. During fiscal 2022, the valuation allowance increased primarily as a result of

$4,464 million (tax effected) net write-downs of investments in subsidiaries in certain jurisdictions, with a corresponding increase to tax loss and credit carryforwards. We believe that we will generate sufficient future taxable income to realize the income tax benefits related to the remaining net deferred tax assets on the Consolidated Balance Sheet.

We have provided income taxes for earnings that are currently distributed as well as the taxes associated with several subsidiaries’ earnings that are expected to be distributed in the future. No additional provision has been made for Swiss or non-Swiss income taxes on the undistributed earnings of subsidiaries or for unrecognized deferred tax liabilities for temporary differences related to basis differences in investments in subsidiaries, as such earnings are expected to be permanently reinvested, the investments are essentially permanent in duration, or we have concluded that no additional tax liability will arise as a result of the distribution of such earnings. As of fiscal year end 2022, certain subsidiaries had approximately $33.6 billion of cumulative undistributed earnings that have been retained indefinitely and reinvested in our global manufacturing operations, including working capital; property, plant, and equipment; intangible assets; and research and development activities. A liability could arise if our intention to permanently reinvest such earnings were to change and amounts are distributed by such subsidiaries or if such subsidiaries are ultimately disposed. It is not practicable to estimate the additional income taxes related to permanently reinvested earnings or the basis differences related to investments in subsidiaries. As of fiscal year end 2022, we had approximately $7.0 billion of cash, cash equivalents, and intercompany deposits, principally in our subsidiaries, that we have the ability to distribute to TEGSA, our Luxembourg subsidiary, which is the obligor of substantially all of our debt, and to TE Connectivity Ltd., our Swiss parent company, but we consider to be permanently reinvested. We estimate that an immaterial amount of tax expense would be recognized on the Consolidated Financial Statements if our intention to permanently reinvest these amounts were to change. Our current plans do not demonstrate a need to repatriate cash, cash equivalents, and intercompany deposits that are designated as permanently reinvested in order to fund our operations, including investing and financing activities.

Uncertain Tax Positions

The following table summarizes the activity related to unrecognized income tax benefits:


	Fiscal
	2022		2021		2020

	(in millions)
Balance at beginning of fiscal year	$	359	$	414	$	542
Additions for tax positions related to prior years		10		14		29
Reductions for tax positions related to prior years		(17)		(77)		(87)
Additions for tax positions related to the current year		37		50		39
Current year acquisitions		—		4		—
Settlements		(2)		(9)		(12)
Reductions due to lapse of applicable statutes of limitations		(100)		(37)		(97)
Balance at end of fiscal year	$	287	$	359	$	414

The total amount of unrecognized tax benefits that, if recognized, would reduce income tax expense and the effective tax rate were $272 million, $378 million, and $393 million at fiscal year end 2022, 2021, and 2020, respectively.

We record accrued interest and penalties related to uncertain tax positions as part of income tax expense (benefit). As of fiscal year end 2022 and 2021, we had $54 million and $53 million, respectively, of accrued interest and penalties related to uncertain tax positions on the Consolidated Balance Sheets, recorded primarily in income taxes. During fiscal 2022, 2021, and 2020, we recognized income tax expense of $3 million, expense of $12 million, and benefits of $1 million, respectively, related to interest and penalties on the Consolidated Statements of Operations.

We file income tax returns on a unitary, consolidated, or stand-alone basis in multiple state and local jurisdictions, which generally have statutes of limitations ranging from 3 to 4 years. Various state and local income tax returns are currently in the process of examination or administrative appeal.

Our non-U.S. subsidiaries file income tax returns in the countries in which they have operations. Generally, these countries have statutes of limitations ranging from 3 to 10 years. Various non-U.S. subsidiary income tax returns are currently in the process of examination by taxing authorities.

As of fiscal year end 2022, under applicable statutes, the following tax years remained subject to examination in the major tax jurisdictions indicated:


Jurisdiction		Open Years
Brazil		2017 through 2022
China		2012 through 2022
Czech Republic		2017 through 2022
France		2019 through 2022
Germany		2012 through 2022
Hong Kong		2016 through 2022
India		2012 through 2022
Ireland		2017 through 2022
Italy		2017 through 2022
Japan		2016 through 2022
Luxembourg		2017 through 2022
Mexico		2017 through 2022
Singapore		2017 through 2022
South Korea		2017 through 2022
Spain		2018 through 2022
Switzerland		2017 through 2022
Thailand		2020 through 2022
United Kingdom		2020 through 2022
U.S.—federal		2019 through 2022

In most jurisdictions, taxing authorities retain the ability to review prior tax years and to adjust any net operating loss and tax credit carryforwards from these years that are utilized in a subsequent period.

Although it is difficult to predict the timing or results of our worldwide examinations, we estimate that approximately $20 million of unrecognized income tax benefits, excluding the impact relating to accrued interest and penalties, could be resolved within the next twelve months.

We are not aware of any other matters that would result in significant changes to the amount of unrecognized income tax benefits reflected on the Consolidated Balance Sheet as of fiscal year end 2022.

Other Income Tax Matters

Swiss Tax Reform

In September 2018, Swiss Parliament approved the Federal Act on Tax Reform and AHV Financing, which was approved by public vote in May 2019. Swiss Tax Reform eliminated certain preferential tax items and implemented new tax rates at both the federal and cantonal levels.

The federal provisions of Swiss Tax Reform were enacted into law in fiscal 2019 and became effective in January 2020. Additionally, in fiscal 2019, the federal tax authority issued guidance abolishing certain interest deductions which became effective in January 2020.

In October 2019, the canton of Schaffhausen enacted Swiss Tax Reform into law, including reductions in tax rates. Consequently, during fiscal 2020, we recognized $355 million of income tax expense related primarily to cantonal implementation and the resulting write-down of certain deferred tax assets to the lower tax rates.

Tax Sharing Agreement

Upon our separation from Tyco International plc in fiscal 2007, we entered into a Tax Sharing Agreement with Tyco International plc (now part of Johnson Controls International plc) and Covidien plc (now part of Medtronic plc) under which we shared certain income tax liabilities for periods prior to and including June 29, 2007. Pursuant to the Tax Sharing Agreement, we entered into certain guarantee commitments and indemnifications.

In fiscal 2020, we, Johnson Controls International plc, and Medtronic plc entered into an agreement to terminate the Tax Sharing Agreement. We believe that substantially all income tax matters that may be subject to the Tax Sharing Agreement have been settled with tax authorities and we do not expect any remaining tax matters to have a material effect on our results of operations, financial position, or cash flows. Accordingly, during fiscal 2020, we recognized an income tax benefit of $31 million and net other income of $8 million representing settlement of the remaining shared pre-separation income tax matters and indemnification balances.