Note 12—Income Taxes

The effective income tax rates were 26% and 31% for the three months ended December 31, 2015 and 2014, respectively. The effective tax rate for the three months ended December 31, 2015 differs from the effective tax rate in the same period in the prior fiscal year primarily due to:


•	the non-taxable revaluation of the Visa Europe put option recorded in the quarter ended December 31, 2015;


•	foreign tax credit benefits related to prior fiscal years recognized during the quarter ended December 31, 2015; and


•	the absence of the reversal of previously established state tax reserves in the quarter ended December 31, 2014.

During the three months ended December 31, 2015, the Company's gross unrecognized tax benefits increased by $20 million, which would favorably impact the effective tax rate if recognized. The increase in gross unrecognized tax benefits is primarily related to various tax positions across several jurisdictions. During the three months ended December 31, 2015 and 2014, respectively, there were no significant changes in interest and penalties related to uncertain tax positions.

The Company’s tax filings are subject to examination by the U.S. federal, state and foreign taxing authorities. The timing and outcome of the final resolutions of the various ongoing income tax examinations are highly uncertain. It is not reasonably possible to estimate the increase or decrease in unrecognized tax benefits within the next twelve months.

In November 2015, the FASB issued Accounting Standards Update 2015-17, which simplifies the presentation of deferred income taxes by requiring that deferred tax assets and liabilities be presented as non-current. The standard impacts presentation only. The Company elected to early adopt the standard on a retrospective basis effective October 1, 2015 and all deferred tax assets and liabilities are classified as non-current on the Company's consolidated balance sheets. All prior period amounts have been reclassified to conform with the current period presentation.