Income Taxes

3 Months Ended

Sep. 27, 2019

Note S — Income Taxes

Effective Tax Rate

Our effective tax rate (income taxes as a percentage of income from continuing operations before income taxes) was 1.1 percent in the quarter ended September 27, 2019 compared with 16.0 percent in the quarter ended September 28, 2018. In the quarter ended September 27, 2019, our effective tax rate benefited from the favorable impact of excess tax benefits related to equity-based compensation, from the ability to utilize capital loss carryforwards with a full valuation allowance against capital gains generated from the Harris Night Vision business divestiture, and from the release of uncertain tax positions due to statute of limitations expirations. In the quarter ended September 28, 2018, our effective tax rate benefited from the tax rate reduction under the Tax Cuts and Jobs Act (the “Tax Act”), from the favorable impact of excess tax benefits related to equity-based compensation, and from several differences in GAAP and tax accounting related to investments.

Tax Uncertainties

A reconciliation of the beginning and ending amounts of unrecognized tax benefits for the quarter ended September 27, 2019 is as follows:



	September 27, 2019
	(In millions)
Balance at beginning of period	$	204
Additions based on tax positions taken during the period	12
Additions based on tax positions taken during prior periods	11
Additions for tax positions related to acquired entities	169
Decreases based on tax positions taken during prior periods	—
Decreases from lapse in statutes of limitations	(12		)
Balance at end of period	$	384

As of September 27, 2019, we had $384 million of unrecognized tax benefits, of which $324 million would favorably impact our future tax rates in the event that the tax benefits are eventually recognized.

We recognize accrued interest and penalties related to unrecognized tax benefits as part of our income tax expense. We had accrued $29 million for the potential payment of interest and penalties as of September 27, 2019 (and this amount was not included in the $384 million of unrecognized tax benefits balance at September 27, 2019 shown above) and $29 million of this total could favorably impact future tax rates.