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Income Taxes (Tables)

12 Months Ended

Sep. 26, 2020

The provision for income taxes for 2020, 2019 and 2018, consisted of the following (in millions):


	2020		2019		2018
Federal:
Current	$	6,306	$	6,384	$	41,425
Deferred	(3,619)		(2,939)		(33,819)
Total	2,687		3,445		7,606
State:
Current	455		475		551
Deferred	21		(67)		48
Total	476		408		599
Foreign:
Current	3,134		3,962		3,986
Deferred	3,383		2,666		1,181
Total	6,517		6,628		5,167
Provision for income taxes	$	9,680	$	10,481	$	13,372

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 (21% in 2020 and 2019; 24.5% in 2018) to income before provision for income taxes for 2020, 2019 and 2018, is as follows (dollars in millions):


	2020			2019			2018
Computed expected tax	$	14,089		$	13,805		$	17,890
State taxes, net of federal effect	423			423			271
Impacts of the Act	(582)			—			1,515
Earnings of foreign subsidiaries	(2,534)			(2,625)			(5,606)
Research and development credit, net	(728)			(548)			(560)
Excess tax benefits from equity awards	(930)			(639)			(675)
Other	(58)			65			537
Provision for income taxes	$	9,680		$	10,481		$	13,372
Effective tax rate	14.4		%	15.9		%	18.3		%

Significant Components of Deferred Tax Assets and Liabilities

As of September 26, 2020 and September 28, 2019, the significant components of the Company’s deferred tax assets and liabilities were (in millions):


	2020		2019
Deferred tax assets:
Amortization and depreciation	$	8,317	$	11,645
Accrued liabilities and other reserves	4,934		5,196
Lease liabilities	2,038		—
Deferred revenue	1,638		1,372
Other	2,409		2,174
Total deferred tax assets	19,336		20,387
Less: Valuation allowance	(1,041)		(747)
Total deferred tax assets, net	18,295		19,640
Deferred tax liabilities:
Minimum tax on foreign earnings	7,045		10,809
Right-of-use assets	1,862		—
Unrealized gains	526		186
Other	705		600
Total deferred tax liabilities	10,138		11,595
Net deferred tax assets	$	8,157	$	8,045

Aggregate Changes in Gross Unrecognized Tax Benefits

The aggregate change in the balance of gross unrecognized tax benefits, which excludes interest and penalties, for 2020, 2019 and 2018, is as follows (in millions):


	2020		2019		2018
Beginning balances	$	15,619	$	9,694	$	8,407
Increases related to tax positions taken during a prior year	454		5,845		2,431
Decreases related to tax positions taken during a prior year	(791)		(686)		(2,212)
Increases related to tax positions taken during the current year	1,347		1,697		1,824
Decreases related to settlements with taxing authorities	(85)		(852)		(756)
Decreases related to expiration of the statute of limitations	(69)		(79)		—
Ending balances	$	16,475	$	15,619	$	9,694