

	Fiscal
(in thousands)	2019		2018			2017
Current:
Federal	$	6,580	$	83,159		$	(3,975	)
State	214		58			64
Foreign	6,384		16,980			13,290
Deferred:
Federal	2,959		23,346			(15,374		)
State	—		(2		)	40
Foreign	6,773		(2,797		)	(1,439		)
Provision for (benefit from) income taxes	$	22,910	$	120,744		$	(7,394	)

The following table reconciles the provision for (benefit from) income taxes with the expected income tax provision computed based on the applicable U.S. federal statutory tax rate for fiscal 2019, 2018, and 2017:



	Fiscal
(dollar amounts in thousands)	2019			2018			2017
Expected income provision based on the U.S. federal statutory tax rate	$	7,284		$	43,568		$	41,358
Effect of earnings of foreign subsidiaries subject to different tax rates	(4,335		)	(12,947		)	(22,832		)
Benefit from tax incentives	(5,084		)	(20,429		)	(23,294		)
Benefit from research and development tax credits	(3,041		)	(2,785		)	(1,859		)
Benefit from foreign tax credits	(22,744		)	(3,939		)	(26,119		)
U.S. one-time transition tax	9,369			101,854			—
Remeasurement of deferred taxes	5,480			2,760			—
Non-deductible goodwill impairment	—			—			8,805
Valuation allowance	25,289			7,366			6,458
Foreign operations (withholding taxes, taxes on unrepatriated foreign earnings, and deemed dividends)	8,578			5,746			6,039
Unrecognized tax benefit	156			530			2,936
Non-deductible items	2,248			(758		)	778
Other, net	(290		)	(222		)	336
Provision for (benefit from) income taxes	$	22,910		$	120,744		$	(7,394	)
Effective tax rate	66.0		%	68.0		%	(6.2		)%

On December 22, 2017, the TCJA was signed into law. Among the many U.S. tax law changes, the TCJA reduced the U.S. federal statutory tax rate from 35% to 21%, imposed a one-time transition tax on deemed repatriation of previously untaxed accumulated earnings and profits of certain foreign subsidiaries, and created a new foreign minimum tax. In accordance with Staff Accounting Bulletin No. 118 ("SAB 118"), the accounting for the tax effects of the TCJA was completed in the first quarter of fiscal 2019.

In fiscal 2019, the Company recorded an additional tax expense of $9.4 million due to newly issued TCJA regulations and guidance on the computation of the U.S. one-time transition tax. The Company recognized an aggregate tax expense for fiscal 2018 and 2019 of $114.0 million, comprised primarily of $2.8 million from the re-measurement of U.S. deferred tax assets and liabilities to reflect the decrease in the U.S. federal statutory tax rate in fiscal 2018, and $111.2 million related to the U.S. one-time transition tax on deemed repatriation of previously untaxed accumulated earnings and profits of certain foreign subsidiaries, net of related foreign tax credits and unrecognized tax benefit in fiscal 2018 and 2019. The Company also recorded $5.5 million in fiscal 2019 to revalue certain foreign deferred assets and liabilities to reflect enacted foreign statutory tax rates in Singapore and the Netherlands.

During fiscal 2019, the Company completed its evaluation of the future cash needs of its U.S. and foreign operations, the alignment of cash balances with the Company’s long-term capital allocation strategy, and the impact of the TCJA which generally allows U.S. corporations to make distributions without incurring additional U.S. income tax. As a result of this reassessment, a portion of the Company’s undistributed foreign earnings are no longer deemed to be indefinitely reinvested outside the U.S. as of September 28, 2019. The Company recorded $0.7 million of tax expense in the second quarter of fiscal 2019 as part of the initial change in assertion and $1.8 million of tax expense cumulatively by the end of fiscal 2019 primarily due to subsequent changes in foreign exchange rates from the date of the initial change.

Further, we operate in a number of foreign jurisdictions, including Singapore, where we have a tax incentive that allows for a reduced tax rate on certain classes of income, provided the Company meets certain employment and investment conditions through the expiration date in fiscal 2020. This tax incentive arrangement may be renewed subject to the agreement of the Singapore government on additional requirements that must be satisfied. In fiscal 2019, 2018, and 2017, the tax incentive arrangement helped to reduce the Company’s provision for income taxes by $5.0 million or $0.08 per share, $20.4 million or $0.29 per share and $23.3 million or $0.33 per share, respectively.



	Fiscal
(in thousands)	2019			2018
Accruals and reserves	$	5,514		$	6,652
Tax credit carryforwards	23,448			4,532
Net operating loss carryforwards	36,050			39,856
Gross deferred tax assets	$	65,012		$	51,040

Valuation allowance	$	(58,411	)	$	(37,249	)
Deferred tax assets, net of valuation allowance	$	6,601		$	13,791

Taxes on undistributed foreign earnings	$	(24,542	)	$	(21,988	)
Fixed and intangible assets	(7,704		)	(8,377		)
Deferred tax liabilities	$	(32,246	)	$	(30,365	)
Net deferred tax liabilities	$	(25,645	)	$	(16,574	)

Reported as
Deferred tax assets	$	6,409		$	9,017
Deferred tax liabilities	(32,054		)	(25,591		)
Net deferred tax liabilities	$	(25,645	)	$	(16,574	)

As of September 28, 2019, the Company has foreign net operating loss carryforwards of $110.6 million, state net operating loss carryforwards of $146.5 million, and U.S. federal and state tax credit carryforwards of $7.8 million that can be used to offset future income tax obligations. These net operating loss and tax credit carryforwards can be utilized prior to their expiration dates in fiscal years 2020 through 2035, with the exception of certain credits and foreign net operating losses that can be carried forward indefinitely. The Company has recorded valuation allowances against certain foreign and state net operating loss carryforwards and state tax credits which are expected to expire unutilized.

The Company continues to evaluate the realizability of its net deferred tax assets at each reporting date and records a benefit for deferred tax assets to the extent it has projected future taxable income or deferred tax liabilities that provide a source of future income to benefit such deferred tax assets. As a result of this analysis, the Company continues to maintain a valuation allowance against certain state and foreign deferred tax assets as the realization of these assets is not more likely than not given uncertainty of future apportioned earnings in these jurisdictions.



	Fiscal
(in thousands)	2019			2018			2017
Unrecognized tax benefit, beginning of year	$	13,038		$	12,062		$	7,453
Additions for tax positions, current year	410			1,482			3,657
Additions for tax positions, prior year	—			—			1,834
Reductions for tax positions, prior year	(523		)	(506		)	(882		)
Unrecognized tax benefit, end of year	$	12,925		$	13,038		$	12,062

The Company recognizes interest and penalties related to potential income tax liabilities as a component of unrecognized tax benefit and in provision for income taxes. For the fiscal year ended September 28, 2019, the Company recognized $1.4 million of accrued interest and penalties related to unrecognized tax benefit. The amount of interest and penalties related to unrecognized tax benefit recorded in the provision for income taxes was not material for any period presented.

It is reasonably possible that the amount of the unrecognized tax benefit with respect to certain unrecognized tax positions will increase or decrease during the next 12 months due to the expected lapse of statutes of limitation and/or settlements of tax

examinations. Given the number of years and numerous matters that remain subject to examination in various tax jurisdictions, we cannot practicably estimate the financial outcomes of these examinations.