Income Taxes (Tables)

12 Months Ended

Sep. 30, 2018

U.S. and non-U.S. income before income tax

The Company’s income before taxes by fiscal year consisted of the following:



	2018		2017		2016
	(in millions)
U.S.	$	8,088	$	8,440	$	5,839
Non-U.S.	4,718		3,254		2,173
Total income before taxes	$	12,806	$	11,694	$	8,012

Comprehensive Income Tax (Expense) Benefit Components Table

Income tax provision by fiscal year consisted of the following:



	2018			2017		2016
	(in millions)
Current:
U.S. federal	$	2,819		$	2,377	$	2,250
State and local	219			291		181
Non-U.S.	754			629		368
Total current taxes	3,792			3,297		2,799
Deferred:
U.S. federal	(1,214		)	1,607		(508		)
State and local	(96		)	66		(63		)
Non-U.S.	23			25		(207		)
Total deferred taxes	(1,287		)	1,698		(778		)
Total income tax provision	$	2,505		$	4,995	$	2,021

Components of Deferred Tax Assets and Liabilities

The tax effect of temporary differences that give rise to significant portions of deferred tax assets and liabilities at September 30, 2018 and 2017, are presented below:



	2018			2017
	(in millions)
Deferred Tax Assets:
Accrued compensation and benefits	$	135		$	194
Accrued litigation obligation	329			373
Client incentives	213			272
Net operating loss carryforwards	34			45
Comprehensive loss	17			29
Federal benefit of state taxes	120			236
Other	127			193
Valuation allowance	(34		)	(35		)
Deferred tax assets	941			1,307
Deferred Tax Liabilities:
Property, equipment and technology, net	(286		)	(391		)
Intangible assets	(5,153		)	(6,756		)
Foreign taxes	(106		)	(59		)
Deferred tax liabilities	(5,545		)	(7,206		)
Net deferred tax liabilities	$	(4,604	)	$	(5,899	)

Reconciliation of the US Statutory Federal Tax Rate

The income tax provision differs from the amount of income tax determined by applying the applicable U.S. federal statutory rate of 24.5% to pretax income, as a result of the following:



	For the Years Ended September 30,
	2018					2017					2016
	Dollars			Percent		Dollars			Percent		Dollars			Percent
	(in millions, except percentages)
U.S. federal income tax at statutory rate	$	3,141		25	%	$	4,093		35	%	$	2,804		35	%
State income taxes, net of federal benefit	201			2	%	200			2	%	135			2	%
Non-U.S. tax effect, net of federal benefit	(465		)	(4	)%	(641		)	(5	)%	(553		)	(7	)%
Transition tax on foreign earnings	1,147			9	%	—			—	%	—			—	%
Remeasurement of deferred tax balances	(1,133		)	(9	)%	—			—	%	(88		)	(1	)%
Revaluation of Visa Europe put option	—			—	%	—			—	%	(89		)	(1	)%
Reorganization of Visa Europe and other legal entities	—			—	%	1,515			13	%	—			—	%
Other, net	(386		)	(3	)%	(172		)	(2	)%	(188		)	(3	)%
Income tax provision	$	2,505		20	%	$	4,995		43	%	$	2,021		25	%

Unrecognized Tax Benefits Reconciliation, Table

A reconciliation of beginning and ending unrecognized tax benefits by fiscal year is as follows:



	2018			2017
	(in millions)
Balance at beginning of period	$	1,353		$	1,160
Increases of unrecognized tax benefits related to prior years	367			56
Decreases of unrecognized tax benefits related to prior years	(233		)	(59		)
Increases of unrecognized tax benefits related to current year	172			197
Reductions related to lapsing statute of limitations	(1		)	(1		)
Balance at end of period	$	1,658		$	1,353