Income Taxes (Tables)

12 Months Ended

Sep. 30, 2017

Income Tax Disclosure [Abstract]

Provision for Income Taxes

The provision for income taxes for 2017, 2016 and 2015, consisted of the following (in millions):

	2017			2016			2015
Federal:
Current	$	7,842		$	7,652		$	11,730
Deferred	5,980			5,043			3,408
Total (1)	13,822			12,695			15,138
State:
Current	259			990			1,265
Deferred	2			(138		)	(220		)
Total	261			852			1,045
Foreign:
Current	1,671			2,105			4,744
Deferred	(16		)	33			(1,806		)
Total	1,655			2,138			2,938
Provision for income taxes	$	15,738		$	15,685		$	19,121

(1) Includes taxes of $7.9 billion, $6.7 billion and $7.3 billion provided on foreign pre-tax earnings in 2017, 2016 and 2015, respectively.

Reconciliation of Provision for Income Taxes

A reconciliation of the provision for income taxes, with the amount computed by applying the statutory federal income tax rate (35% in 2017, 2016 and 2015) to income before provision for income taxes for 2017, 2016 and 2015, is as follows (dollars in millions):

	2017			2016			2015
Computed expected tax	$	22,431		$	21,480		$	25,380
State taxes, net of federal effect	185			553			680
Indefinitely invested earnings of foreign subsidiaries	(6,135		)	(5,582		)	(6,470		)
Domestic production activities deduction	(209		)	(382		)	(426		)
Research and development credit, net	(678		)	(371		)	(171		)
Other	144			(13		)	128
Provision for income taxes	$	15,738		$	15,685		$	19,121
Effective tax rate	24.6		%	25.6		%	26.4		%

Significant Components of Deferred Tax Assets and Liabilities

As of September 30, 2017 and September 24, 2016, the significant components of the Company’s deferred tax assets and liabilities were (in millions):

	2017			2016
Deferred tax assets:
Accrued liabilities and other reserves	$	4,019		$	4,135
Basis of capital assets	1,230			2,107
Deferred revenue	1,521			1,717
Deferred cost sharing	667			667
Share-based compensation	703			601
Other	834			788
Total deferred tax assets, net of valuation allowance of $0	8,974			10,015
Deferred tax liabilities:
Unremitted earnings of foreign subsidiaries	36,355			31,436
Other	207			485
Total deferred tax liabilities	36,562			31,921
Net deferred tax liabilities	$	(27,588	)	$	(21,906	)

Aggregate Changes in Gross Unrecognized Tax Benefits, Excluding Interest and Penalties

The aggregate changes in the balance of gross unrecognized tax benefits, which excludes interest and penalties, for 2017, 2016 and 2015, is as follows (in millions):

	2017			2016			2015
Beginning balances	$	7,724		$	6,900		$	4,033
Increases related to tax positions taken during a prior year	333			1,121			2,056
Decreases related to tax positions taken during a prior year	(952		)	(257		)	(345		)
Increases related to tax positions taken during the current year	1,880			1,578			1,278
Decreases related to settlements with taxing authorities	(539		)	(1,618		)	(109		)
Decreases related to expiration of statute of limitations	(39		)	—			(13		)
Ending balances	$	8,407		$	7,724		$	6,900