Income taxes

3 Months Ended

Nov. 30, 2022

Income Tax Disclosure [Abstract]

Income taxes

Income taxes

The effective tax rate for the three months ended November 30, 2022 was a benefit of 27.5%, primarily due to a reduction in the valuation allowance and impact of the opioid-related claims and litigation. The Company recognized a tax benefit due to the reduction of a valuation allowance previously recorded against deferred tax assets related to capital loss carryforwards. The reduction is primarily due to capital loss carryforwards utilized in the current period against capital gains recognized on the sale of shares in AmerisourceBergen and based on forecasted capital gains. See Note 5. Equity method investments for further information. This benefit was partially offset by the impact of certain nondeductible opioid-related claims recorded in the three months ended November 30, 2022. See Note 10. Commitments and contingencies for further information.

The effective tax rate for the three months ended November 30, 2021 was an expense of 7.2%, primarily due to lower tax expense on gains from consolidation of the Company’s investment in VillageMD and Shields, as a portion of these gains were not subject to tax. See Note 2. Acquisitions and other investments for further information.

Income taxes paid for the three months ended November 30, 2022 and 2021 were $5 million and $34 million, respectively.