Income Taxes

12 Months Ended

Sep. 30, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income TaxesIncome (Loss) Before Income Taxes by Domestic and Foreign Subsidiaries

Income Before Income Taxes	2023		2022		2021
Domestic subsidiaries (including U.S. exports)	$	3,086	$	5,955	$	5,241
Foreign subsidiaries	1,683		(670)		(2,680)
Total income from continuing operations	4,769		5,285		2,561
Loss from discontinued operations	—		(62)		(38)
	$	4,769	$	5,223	$	2,523

Provision for Income Taxes: Current and Deferred

Income Tax Expense (Benefit)
Current	2023		2022		2021
Federal	$	1,475	$	436	$	594
State	402		282		129
Foreign(1)	867		846		554
	2,744		1,564		1,277
Deferred
Federal	(1,180)		407		(526)
State	4		26		(220)
Foreign	(189)		(265)		(506)
	(1,365)		168		(1,252)
Income tax expense on income from continuing operations	1,379		1,732		25
Income tax expense on loss from discontinued operations	—		(14)		(9)
	$	1,379	$	1,718	$	16

(1)Includes foreign withholding taxes.

Deferred Tax Assets and Liabilities

Components of Deferred Tax (Assets) and Liabilities	September 30, 2023		October 1, 2022
Deferred tax assets
Net operating losses and tax credit carryforwards(1)	$	(3,841)	$	(3,527)
Accrued liabilities	(1,335)		(1,570)
Lease liabilities	(852)		(748)
Licensing revenues	(115)		(124)
Other	(623)		(819)
Total deferred tax assets	(6,766)		(6,788)
Deferred tax liabilities
Depreciable, amortizable and other property	7,581		8,575
Investment in U.S. entities	1,271		1,798
Right-of-use lease assets	751		676
Investment in foreign entities	482		543
Other	81		64
Total deferred tax liabilities	10,166		11,656
Net deferred tax liability before valuation allowance	3,400		4,868
Valuation allowance	3,187		2,859
Net deferred tax liability	$	6,587	$	7,727

(1)Balances at September 30, 2023 and October 1, 2022 include approximately $1.6 billion and $1.5 billion, respectively, of International Theme Park net operating losses and approximately $1.0 billion at both September 30, 2023 and October 1, 2022 of foreign tax credits in the U.S. The International Theme Park net operating losses are primarily in France and, to a lesser extent, Hong Kong and China. Losses in France and Hong Kong have an indefinite carryforward period and losses in China have a five-year carryforward period. China theme park net operating losses of $0.2 billion, if not used, expire between fiscal 2024 and fiscal 2028. Foreign tax credits in the U.S. have a ten-year carryforward period. Foreign tax credits of $1.0 billion, if not used, expire beginning in fiscal 2028.

The following table details the change in valuation allowance for fiscal 2023, 2022 and 2021 (in billions):

	Balance at Beginning of Period		Charges to Tax Expense		Other Changes		Balance at End of Period
Year ended September 30, 2023	$	2.9	$	0.2	$	0.1	$	3.2
Year ended October 1, 2022	2.8		0.4		(0.3)		2.9
Year ended October 2, 2021	2.4		0.4		—		2.8

Reconciliation of the effective income tax rate for continuing operations to the federal rate

	2023		2022		2021
Federal income tax rate	21.0	%	21.0	%	21.0	%
State taxes, net of federal benefit(1)	5.8		3.1		1.9
Tax rate differential on foreign income	0.1		4.3		12.0
Foreign derived intangible income	(4.3)		(3.4)		(6.4)
Tax impact of equity awards	2.1		—		(5.3)
Legislative changes	—		1.7		(12.2)
Income tax audits and reserves	1.3		2.7		(4.8)
Goodwill impairment	3.5		—		—
Valuation allowance	(1.8)		4.5		2.6
Other	1.2		(1.1)		(7.8)
	28.9	%	32.8	%	1.0	%

(1)Fiscal 2023 includes an adjustment related to certain deferred state taxes

Unrecognized tax benefits

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits, excluding the related accrual for interest and penalties, is as follows:

	2023		2022		2021
Balance at the beginning of the year	$	2,449	$	2,641	$	2,740
Increases for current year tax positions	98		48		51
Increases for prior year tax positions	273		103		556
Decreases in prior year tax positions	(150)		(108)		(174)
Settlements with taxing authorities	(153)		(235)		(532)
Balance at the end of the year	$	2,517	$	2,449	$	2,641

Balances at September 30, 2023, October 1, 2022 and October 2, 2021 include $1.8 billion, $1.9 billion and $2.0 billion, respectively, that if recognized, would reduce our income tax expense and effective tax rate. These amounts are net of the offsetting benefits from other tax jurisdictions.

At September 30, 2023, October 1, 2022 and October 2, 2021 accrued interest and penalties related to unrecognized tax benefits were $1.0 billion in each period. During fiscal 2023, 2022 and 2021, the Company recorded additional interest and penalties of $210 million, $157 million and $191 million, respectively, and recorded reductions in accrued interest and penalties of $241 million, $119 million and $256 million, respectively. The Company’s policy is to report interest and penalties as a component of income tax expense.

The Company is generally no longer subject to U.S. federal examination for years prior to 2018. The Company is no longer subject to examination in any of its major state or foreign tax jurisdictions for years prior to 2008.

In the next twelve months, it is reasonably possible that our unrecognized tax benefits could change due to the resolution of open tax matters, which would reduce our unrecognized tax benefits by $0.3 billion.

Other

In fiscal 2023, the Company recognized income tax expense of $93 million for the shortfall between equity-based compensation deductions and amounts recorded based on the grant date fair value. In fiscal 2022 and 2021, the Company recognized income tax benefits of $2 million and $135 million, respectively, for the excess of equity-based compensation deductions over amounts recorded based on the grant date fair value.