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Income Taxes
 12 Months Ended
Jun. 25, 2023
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The components of income before income taxes were as follows:
Year Ended
June 25,
2023		June 26,
2022		June 27,
2021
 (in thousands)
United States$151,759 $87,933 $120,161 
Foreign4,957,451 5,105,181 4,250,643 
$5,109,210 $5,193,114 $4,370,804 

Significant components of the provision (benefit) for income taxes attributable to income before income taxes were as follows:
Year Ended
June 25,
2023		June 26,
2022		June 27,
2021
 (in thousands)
Federal:
Current$541,416 $620,344 $437,525 
Deferred(136,178)(226,895)(139,531)
405,238 393,449 297,994 
State:
Current32,082 20,759 13,560 
Deferred(2,813)(19,096)(8,324)
29,269 1,663 5,236 
Foreign:
Current196,842 204,163 162,738 
Deferred(33,070)(11,447)(3,622)
163,772 192,716 159,116 
Total provision for income taxes$598,279 $587,828 $462,346 
Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, as well as the tax effect of carryforwards. Significant components of the Company’s net deferred tax assets and liabilities were as follows:
June 25,
2023		June 26,
2022
 (in thousands)
Deferred tax assets:
Tax carryforwards$359,505 $315,396 
Allowances and reserves192,374 194,410 
Equity-based compensation9,600 8,845 
Inventory valuation differences57,675 52,323 
Outside basis differences of foreign subsidiaries527,139 421,056 
R&D capitalization36,618 — 
Operating lease liabilities50,867 50,294 
Finance lease assets32,905 35,754 
Intangible assets4,108 889 
Other31,773 23,955 
Gross deferred tax assets1,302,564 1,102,922 
Valuation allowance(352,377)(308,724)
Net deferred tax assets950,187 794,198 
Deferred tax liabilities:
Capital assets(121,948)(114,644)
Amortization of goodwill(12,515)(13,789)
Right-of-use assets(50,867)(50,294)
Finance lease liabilities(50,534)(52,379)
Other(1,974)(2,395)
Gross deferred tax liabilities(237,838)(233,501)
Net deferred tax assets$712,349 $560,697 

The change in gross deferred tax assets, gross deferred tax liabilities, and valuation allowance between fiscal year 2023 and 2022 is primarily due to increases in gross deferred tax assets for outside basis differences of foreign subsidiaries, tax credits, and capitalized research and experimental expenditures.
The Company has an accounting policy election to record deferred taxes related to Global Intangible Low-Taxed Income (“GILTI”).
Realization of the Company’s net deferred tax assets is based upon the weighting of available evidence, including such factors as the recent earnings history and expected future taxable income. The Company believes it is more likely than not that such deferred tax assets will be realized with the exception of $352.4 million primarily related to California deferred tax assets. At June 25, 2023, the Company continued to record a valuation allowance to offset the entire California deferred tax asset balance due to the single sales factor apportionment resulting in lower taxable income in California.
At June 25, 2023, the Company had federal net operating loss carryforwards of $12.9 million. If not utilized, these losses will begin to expire in fiscal year 2024, and are subject to limitation on their utilization.
At June 25, 2023, the Company had state net operating loss carryforwards of $171.4 million. If not utilized, these losses will begin to expire in fiscal year 2024, and are subject to limitation on their utilization.
At June 25, 2023, the Company had foreign net operating loss carryforwards of $19.6 million. All of these losses can be carried forward indefinitely, and are subject to limitation on their utilization.
At June 25, 2023, the Company had state tax credit carryforwards of $530.3 million. Substantially all of these credits can be carried forward indefinitely.
A reconciliation of income tax expense provided at the federal statutory rate (21% in fiscal years 2023, 2022, and 2021) to actual income tax expense is as follows: 
Year Ended
June 25,
2023		June 26,
2022		June 27,
2021
 (in thousands)
Income tax expense computed at federal statutory rate$1,072,934 $1,096,692 $917,869 
State income taxes, net of federal tax benefit(23,252)(35,584)(33,478)
Foreign income taxed at different rates(430,314)(407,989)(365,886)
Settlements and reductions in uncertain tax positions(28,968)(51,227)(13,613)
Tax credits(103,019)(96,440)(86,709)
State valuation allowance, net of federal tax benefit49,073 43,502 39,477 
Equity-based compensation15,816 (13,168)(45,764)
Other permanent differences and miscellaneous items46,009 52,042 50,450 
$598,279 $587,828 $462,346 
Effective from fiscal year 2022, the Company has a 15-year tax incentive ruling in Malaysia for one of its foreign subsidiaries. The statutory tax rate in Malaysia is 24%. The tax incentive provides exemptions on foreign income earned and is contingent upon meeting certain conditions. The Company expects to apply for renewals upon expiration. The impact of the tax incentive decreased worldwide taxes by approximately $576.0 million for fiscal year 2023. The benefit of the tax incentive on diluted earnings per share was approximately $4.24 in fiscal year 2023.
Earnings of the Company’s foreign subsidiaries included in consolidated retained earnings that are indefinitely reinvested in foreign operations aggregated to approximately $1.1 billion at June 25, 2023. If these earnings were remitted to the United States, they would be subject to foreign withholding taxes of approximately $171.1 million at the current statutory rates. The potential tax expense associated with these foreign withholding taxes would be offset by $136.9 million of foreign tax credits that would be generated in the United States upon remittance.
On August 16, 2022, the IRA was signed into law. In general, the provisions of the IRA will be effective beginning with the Company’s fiscal year 2024, with certain exceptions. The IRA includes a new 15% corporate minimum tax. The impact on income taxes due to changes in legislation is required under the authoritative guidance of ASC 740, Income Taxes, to be recognized in the period in which the law is enacted. The Company has evaluated the potential impacts of the IRA and does not expect it to have a material impact on the effective tax rate. However, the Company expects future guidance from the Treasury Department and will further analyze when the guidance is issued.
The Company’s gross uncertain tax positions were $640.2 million, $617.4 million, and $566.8 million as of June 25, 2023, June 26, 2022, and June 27, 2021, respectively. During fiscal year 2023, gross uncertain tax positions increased by $22.8 million. The amount of uncertain tax positions that, if recognized, would impact the effective tax rate was $550.1 million, $539.6 million, and $504.4 million, as of June 25, 2023, June 26, 2022, and June 27, 2021, respectively.
The aggregate changes in the balance of gross uncertain tax positions were as follows: 
(in thousands)
Balance as of June 28, 2020$476,695 
Settlements and effective settlements with tax authorities(1,443)
Lapse of statute of limitations(8,456)
Increases in balances related to tax positions taken during prior periods15,986 
Decreases in balances related to tax positions taken during prior periods(2,746)
Increases in balances related to tax positions taken during current period86,735 
Balance as of June 27, 2021566,771 
Settlements and effective settlements with tax authorities(14,440)
Lapse of statute of limitations(8,021)
Increases in balances related to tax positions taken during prior periods6,468 
Decreases in balances related to tax positions taken during prior periods(28,376)
Increases in balances related to tax positions taken during current period94,971 
Balance as of June 26, 2022617,373 
Settlements and effective settlements with tax authorities(50,238)
Lapse of statute of limitations(22,103)
Increases in balances related to tax positions taken during prior periods5,841 
Decreases in balances related to tax positions taken during prior periods(4,316)
Increases in balances related to tax positions taken during current period93,615 
Balance as of June 25, 2023$640,172 
The Company recognizes interest expense and penalties related to the above uncertain tax positions within income tax expense. The Company had accrued $74.4 million, $61.2 million, and $54.6 million cumulatively for gross interest and penalties as of June 25, 2023, June 26, 2022, and June 27, 2021, respectively.
The Company is subject to audits by state and foreign tax authorities. The Company is unable to make a reasonable estimate as to when cash settlements, if any, with the relevant taxing authorities will occur.
The Company files U.S. federal, U.S. state, and foreign income tax returns. As of June 25, 2023, tax years 2005-2023 remain subject to examination in the jurisdictions where the Company operates. The Internal Revenue Service (“IRS”) has examined the Company’s U.S. federal income tax return for the fiscal year ended June 24, 2018. As of September 25, 2022, the IRS has proposed adjustments resulting in a tax liability increase of approximately $50.0 million, which was previously reserved. The Company has agreed to pay the amount and has made a partial cash settlement in the September quarter with the remaining settlement expected to be paid based on the IRS requirements.
The IRS is examining the Company’s U.S. federal income tax returns for the fiscal years ended June 30, 2019, and June 28, 2020. To date, no significant adjustments have been proposed by the IRS. The Company is unable to make a reasonable estimate as to when cash settlements, if any, with the IRS will occur.
The Company is in various stages of examinations in connection with all of its tax audits worldwide, and it is difficult to determine when these examinations will be settled. It is reasonably possible that over the next 12-month period the Company may experience an increase or decrease in its uncertain tax positions as a result of tax examinations or lapses of statutes of limitation. The change in uncertain tax positions as a result of lapses of statutes of limitation may range up to $9.2 million.