Income Taxes (Tables)

12 Months Ended

Sep. 29, 2018

The provision for income taxes for 2018, 2017 and 2016, consisted of the following (in millions):



	2018			2017			2016
Federal:
Current	$	41,425		$	7,842		$	7,652
Deferred	(33,819		)	5,980			5,043
Total	7,606			13,822			12,695
State:
Current	551			259			990
Deferred	48			2			(138		)
Total	599			261			852
Foreign:
Current	3,986			1,671			2,105
Deferred	1,181			(16		)	33
Total	5,167			1,655			2,138
Provision for income taxes	$	13,372		$	15,738		$	15,685

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 (24.5% in 2018; 35% in 2017 and 2016) to income before provision for income taxes for 2018, 2017 and 2016, is as follows (dollars in millions):



	2018			2017			2016
Computed expected tax	$	17,890		$	22,431		$	21,480
State taxes, net of federal effect	271			185			553
Impacts of the Act	1,515			—			—
Earnings of foreign subsidiaries	(5,606		)	(6,135		)	(5,582		)
Domestic production activities deduction	(195		)	(209		)	(382		)
Research and development credit, net	(560		)	(678		)	(371		)
Other	57			144			(13		)
Provision for income taxes	$	13,372		$	15,738		$	15,685
Effective tax rate	18.3		%	24.6		%	25.6		%

Significant Components of Deferred Tax Assets and Liabilities

As of September 29, 2018 and September 30, 2017, the significant components of the Company’s deferred tax assets and liabilities were (in millions):



	2018		2017
Deferred tax assets:
Accrued liabilities and other reserves	$	3,151	$	4,019
Basis of capital assets	137		1,230
Deferred revenue	1,141		1,521
Deferred cost sharing	—		667
Share-based compensation	513		703
Unrealized losses	871		—
Other	797		834
Total deferred tax assets	6,610		8,974
Deferred tax liabilities:
Earnings of foreign subsidiaries	275		36,355
Other	501		207
Total deferred tax liabilities	776		36,562
Net deferred tax assets/(liabilities)	$	5,834	$	(27,588	)

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 2018, 2017 and 2016, is as follows (in millions):



	2018			2017			2016
Beginning balances	$	8,407		$	7,724		$	6,900
Increases related to tax positions taken during a prior year	2,431			333			1,121
Decreases related to tax positions taken during a prior year	(2,212		)	(952		)	(257		)
Increases related to tax positions taken during the current year	1,824			1,880			1,578
Decreases related to settlements with taxing authorities	(756		)	(539		)	(1,618		)
Decreases related to expiration of statute of limitations	—			(39		)	—
Ending balances	$	9,694		$	8,407		$	7,724