Income Taxes

9 Months Ended

Sep. 26, 2020

Income taxes

The consolidated effective tax rate for the quarter ended September 26, 2020 and September 28, 2019 was 16% and 27%, respectively. The effective tax rate for the quarter was favorably impacted by the reversal of a liability for uncertain tax positions of $32 million, resulting from the finalization of a tax examination. The reserves were related to the Company's estimate of the transition tax liability in conjunction with the finalization of accounting under Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act.

The consolidated effective tax rate for the year-to-date periods ended September 26, 2020 and September 28, 2019 was 20% and 22%, respectively. The effective tax rate for the year-to-date period was favorably impacted by the reversal of the liability noted above.

As of September 26, 2020, the Company classified $16 million of unrecognized tax benefits as a net current tax liability. Management's estimate of reasonably possible changes in unrecognized tax benefits during the next twelve months consists of the current liability expected to be settled within one year, offset by approximately $3 million of projected additions related primarily to ongoing intercompany transfer pricing activity. Management is currently unaware of any issues under review that could result in significant additional payments, accruals or other material deviation in this estimate.

The Company’s total gross unrecognized tax benefits as of September 26, 2020 was $62 million. Of this balance, $53 million represents the amount that, if recognized, would affect the Company’s effective income tax rate in future periods.



December 28, 2019	$	90
Tax positions related to current year:
Additions	3
Reductions	—
Tax positions related to prior years:
Additions	5
Reductions	(34)
Settlements	(2)
Lapse in statute of limitations	—
September 26, 2020	$	62

The accrual balance for tax-related interest was approximately $13 million at September 26, 2020.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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