Income Taxes

6 Months Ended

Jun. 28, 2025

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company determines its income taxes for interim reporting periods by applying the Company’s estimated annual effective tax rate to the year-to-date results, adjusted for tax items discrete to each period.

Continuing Operations

For the three and six months ended June 28, 2025, the Company recorded an income tax benefit of $834 million and $711 million representing an effective tax rate of 1,263.6% and (92.8)%, respectively. The tax benefit for the three and six months ended June 28, 2025 reflected a discrete tax benefit of $792 million and $781 million, respectively, primarily due to a tax benefit of $853 million related to the release of uncertain tax positions pertaining to the reasonable cause relief for dual consolidated losses approved by the Internal Revenue Services (IRS) in April 2025, partially offset by other items, including $45 million of deferred tax expense associated with the expected gain on the transfer of appreciated assets related to the acquisition of ZT Systems.

For the three and six months ended June 29, 2024, the Company recorded an income tax provision of $41 million and an income tax benefit of $11 million representing an effective tax rate of 13.4% and (2.9)%, respectively. The tax provision for the three months ended June 29, 2024 reflected a discrete tax expense of $21 million, primarily related to interest and penalties accrued for uncertain tax positions partially offset by the tax effects of stock-based compensation. The tax benefit for the six months ended June 29, 2024 reflected a discrete tax benefit of $40 million, primarily related to stock-based compensation.

As of June 28, 2025 and December 28, 2024, the Company had long-term income tax liabilities related to unrecognized tax benefits of $738 million and $1.4 billion, respectively, recorded under Other long-term liabilities in the Company’s consolidated balance sheets. The reduction in long-term income tax liabilities was primarily due to the release of $853 million of uncertain tax positions pertaining to reasonable cause relief for dual consolidated losses approved by the IRS in April 2025.

Discontinued Operations

For the three and six months ended June 28, 2025, the Company recorded an income tax benefit of $24 million primarily related to a discrete tax benefit of $49 million related to the expected disposition of the ZT Manufacturing Business partially offset by income tax expense from operations included in income from discontinued operations.