Taxes on Earnings (Tables)

12 Months Ended

Oct. 31, 2017

The domestic and foreign components of earnings from continuing operations before taxes were as follows:



	For the fiscal years ended October 31
	2017			2016		2015
	In millions
U.S.	$	(14	)	$	468	$	216
Non-U.S.	3,290			3,293		3,316
	$	3,276		$	3,761	$	3,532

The provision for (benefit from) taxes on earnings from continuing operations was as follows:



	For the fiscal years ended October 31
	2017		2016			2015
	In millions
U.S. federal taxes:
Current	$	189	$	439		$	(2,206	)
Deferred	197		470			1,069
Non-U.S. taxes:
Current	302		288			431
Deferred	4		(123		)	76
State taxes:
Current	20		(35		)	362
Deferred	38		56			82
	$	750	$	1,095		$	(186	)

The differences between the U.S. federal statutory income tax rate and HP’s effective tax rate were as follows:



	For the fiscal years ended October 31
	2017		2016		2015
U.S. federal statutory income tax rate from continuing operations	35.0	%	35.0	%	35.0	%
State income taxes from continuing operations, net of federal tax benefit	1.4	%	1.1	%	(6.1	)%
Lower rates in other jurisdictions, net	(13.2	)%	(9.3	)%	(1.2	)%
Research and development (“R&D”) credit	(0.5	)%	(2.4	)%	(0.2	)%
Valuation allowances	(1.9	)%	(1.2	)%	(48.0	)%
Uncertain tax positions	0.4	%	11.7	%	11.1	%
Indemnification related items	(0.3	)%	(4.1	)%	—	%
Other, net	2.0	%	(1.7	)%	4.1	%
	22.9	%	29.1	%	(5.3	)%

A reconciliation of unrecognized tax benefits is as follows:



	As of October 31
	2017			2016			2015
	In millions
Balance at beginning of year	$	10,858		$	6,546		$	1,545
Increases:
For current year’s tax positions	52			468			2,102
For prior years’ tax positions	85			4,004			5,208
Decreases:
For prior years’ tax positions	(181		)	(62		)	(2,063		)
Statute of limitations expirations	(1		)	—			(46		)
Settlements with taxing authorities	(5		)	(98		)	(200		)
Balance at end of year	$	10,808		$	10,858		$	6,546

The significant components of deferred tax assets and deferred tax liabilities were as follows:



	As of October 31
	2017						2016
	Deferred Tax Assets			Deferred Tax Liabilities			Deferred Tax Assets			Deferred Tax Liabilities
	In millions
Loss and credit carryforwards	$	9,914		$	—		$	8,725		$	—
Unremitted earnings of foreign subsidiaries	—			(5,554		)	—			(5,179		)
Inventory valuation	7			(34		)	—			(12		)
Intercompany transactions—excluding inventory	1,901			—			2,560			—
Fixed assets	256			(8		)	274			—
Warranty	219			—			248			—
Employee and retiree benefits	519			(3		)	592			—
Accounts receivable allowance	103			—			117			—
Intangible assets	16			(209		)	23			(213		)
Restructuring and other	13			—			17			—
Deferred revenue	231			—			206			—
Other	372			(4		)	399			(99		)
Gross deferred tax assets and liabilities	13,551			(5,812		)	13,161			(5,503		)
Valuation allowances	(8,807		)	—			(8,520		)	—
Net deferred tax assets and liabilities	$	4,744		$	(5,812	)	$	4,641		$	(5,503	)

Long-term deferred tax assets and liabilities included in the Consolidated Balance Sheets as follows:



	As of October 31
	2017			2016
	In millions
Long-term deferred tax assets	$	342		$	254
Long-term deferred tax liabilities	(1,410		)	(1,116		)
Total	$	(1,068	)	$	(862	)

As of October 31, 2017, HP had recorded deferred tax assets for various tax credit carryforwards as follows:



	Carryforward		Valuation Allowance			Initial Year of Expiration
	In millions
U.S. foreign tax credits	$	1,050	$	—		2022
U.S. R&D and other credits	920		—			2018
Tax credits in state and foreign jurisdictions	288		(115		)	2021
Balance at end of year	$	2,258	$	(115	)

The deferred tax asset valuation allowance and changes were as follows:



	As of October 31
	2017			2016			2015
	In millions
Balance at beginning of year	$	8,520		$	7,114		$	8,231
Income tax expense (benefit)	297			1,421			(2,183		)
Other comprehensive income, currency translation and charges to other accounts	(10		)	(15		)	1,066
Balance at end of year	$	8,807		$	8,520		$	7,114