Income taxes (Tables)

12 Months Ended

Aug. 31, 2020

Income Tax Disclosure [Abstract]

Schedule of income before income tax, domestic and foreign

The components of earnings before income tax provision were (in millions):

	2020		2019		2018
U.S.	$	759	$	1,898	$	3,292
Non–U.S.	(16)		2,629		2,683
Total	$	743	$	4,527	$	5,975

Provisions for income taxes

The provision for income taxes consists of the following (in millions):

	2020		2019		2018
Current provision
Federal	$	150	$	201	$	866
State	49		46		103
Non–U.S.	204		241		353
	403		488		1,322
Deferred provision
Federal – tax law change	—		—		(648)
Federal – excluding tax law change	(83)		151		304
State	2		4		78
Non–U.S. – tax law change	139		—		—
Non–U.S. – excluding tax law change	(101)		(55)		(58)
	(43)		100		(324)
Income tax provision	$	360	$	588	$	998

Difference between the statutory federal income tax rate and the effective tax rate

The difference between the statutory federal income tax rate and the effective tax rate is as follows:

	2020		2019		2018
Federal statutory rate	21.0	%	21.0	%	25.7	%
State income taxes, net of federal benefit	5.3		0.9		2.3
Foreign income taxed at non-U.S. rates	(12.0)		(2.1)		(12.2)
Non-taxable income	(28.5)		(3.5)		(5.2)
Non-deductible expenses	5.9		0.5		2.1
Transition tax	—		—		12.4
Tax law changes	18.8		(0.4)		(10.9)
Change in valuation allowance1	1.2		1.9		8.7
Goodwill impairment	43.5		—		—
Tax credits	(9.8)		(4.8)		(6.9)
Other	3.1		(0.5)		0.7
Effective income tax rate	48.5	%	13.0	%	16.7	%

¹Net of changes in related tax attributes.

Deferred tax assets and liabilities included in the consolidated balance sheet

The deferred tax assets and liabilities included in the Consolidated Balance Sheets consist of the following (in millions):

	2020		2019
Deferred tax assets:
Compensation and benefits	$	177	$	133
Postretirement benefits	105		—
Insurance	98		90
Accrued rent & lease obligations	5,187		219
Allowance for doubtful accounts	12		13
Tax attributes	6,909		6,687
Stock compensation	47		45
Deferred income	18		115
Other	80		78
	12,633		7,380
Less: valuation allowance	6,608		6,638
Total deferred tax assets	6,025		742
Deferred tax liabilities:
Accelerated depreciation	722		475
Inventory	344		394
Intangible assets	1,274		1,116
Equity method investment	548		481
Lease right-of-use asset	4,589		—
	7,477		2,466
Net deferred tax liabilities	$	1,452	$	1,724

Reconciliation of the total amounts of unrecognized tax benefits

The following table provides a reconciliation of the total amounts of unrecognized tax benefits (in millions):

	2020		2019		2018
Balance at beginning of year	$	455	$	456	$	409
Gross increases related to tax positions in a prior period	60		33		123
Gross decreases related to tax positions in a prior period	(23)		(53)		(15)
Gross increases related to tax positions in the current period	9		26		29
Settlements with taxing authorities	(4)		(2)		(87)
Lapse of statute of limitations	(3)		(5)		(3)
Balance at end of year	$	494	$	455	$	456