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Income Taxes
9 Months Ended
Jan. 24, 2020
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The Company's effective tax rate for the three and nine months ended January 24, 2020 was (21.5) percent and (8.2) percent, respectively, as compared to 7.2 percent and 11.2 percent for the three and nine months ended January 25, 2019, respectively. The decrease in the effective tax rate for the three and nine months ended January 24, 2020, as compared to the corresponding periods in the prior fiscal year, was primarily due to the impact of certain tax adjustments described below.
Certain Tax Adjustments
During the three months ended January 24, 2020, the benefit from certain tax adjustments of $558 million, recognized in income tax provision in the consolidated statements of income, included the following:
A benefit of $558 million related to the release of a valuation allowance previously recorded against certain net operating losses. Luxembourg enacted tax legislation during the quarter which required the Company to reassess the realizability of certain net operating losses. The Company evaluated both the positive and negative evidence and released valuation allowance equal to the expected benefit from the utilization of certain net operating losses in connection with a planned intercompany sale of intellectual property.
During the nine months ended January 24, 2020, the net benefit from certain tax adjustments of $839 million, recognized in income tax provision in the consolidated statements of income, included the following:
A net benefit of $30 million related to U.S. Treasury’s issuance of certain Final Regulations associated with U.S. Tax Reform. The primary impact of these regulations resulted in the Company re-establishing its permanently reinvested assertion on certain foreign earnings and reversing the previously accrued tax liability. This benefit was partially offset by additional tax associated with a previously executed internal reorganization of certain foreign subsidiaries.

A benefit of $251 million related to tax legislative changes in Switzerland which abolished certain preferential tax regimes the Company benefited from and replaced them with a new set of internationally accepted measures. The legislation provided for higher effective tax rates but allowed for a transitional period whereby an amortizable asset was created for Swiss federal income tax purposes which will be amortized and deducted over a 10-year period.
A benefit of $558 million related to the release of a valuation allowance previously recorded against certain net operating losses. Luxembourg enacted tax legislation during the quarter which required the Company to reassess the realizability of certain net operating losses. The Company evaluated both the positive and negative evidence and released valuation allowance equal to the expected benefit from the utilization of certain net operating losses in connection with a planned intercompany sale of intellectual property.
During the three months ended January 25, 2019, the net benefit from certain tax adjustments of $64 million, recognized in income tax provision in the consolidated statements of income, included the following:
A net benefit of $12 million associated with the transition tax liability and the impacts of U.S. Tax Reform on deferred tax assets, liabilities, and valuation allowances.

A benefit of $32 million related to intercompany legal entity restructuring.

A net benefit of $20 million associated with the finalization of certain income tax aspects of the divestiture of the Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency businesses.
During the nine months ended January 25, 2019, the net benefit from certain tax adjustments of $35 million, recognized in income tax provision in the consolidated statements of income, included the following:
A net benefit of $25 million associated with the transition tax liability and the impacts of U.S. Tax Reform on deferred tax assets, liabilities, and valuation allowances

A benefit of $32 million related to intercompany legal entity restructuring.

A net benefit of $20 million associated with the finalization of certain income tax aspects of the divestiture of the Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency businesses.
A charge of $42 million related to the recognition of a prepaid tax expense resulting from the reduction in the U.S. statutory tax rate due to U.S. Tax Reform and the sale of U.S. manufactured inventory held as of April 27, 2018.
At January 24, 2020 and April 26, 2019, the Company's gross unrecognized tax benefits were $1.8 billion. In addition, the Company had accrued gross interest and penalties of $207 million at January 24, 2020. If all of the Company’s unrecognized tax benefits were recognized, approximately $1.8 billion would impact the Company’s effective tax rate. At both January 24, 2020 and April 26, 2019, the total balance of the Company's gross unrecognized tax benefits was recorded as a noncurrent liability within accrued income taxes on the consolidated balance sheets. The Company recognizes interest and penalties related to income tax matters within income tax provision in the consolidated statements of income and records the liability within either current or noncurrent accrued income taxes on the consolidated balance sheets.
Refer to Note 17 to the consolidated financial statements for additional information regarding the status of current tax audits and proceedings.