Income Taxes (Tables)

12 Months Ended

Jun. 30, 2016

Schedule of Income Before Income Tax, Domestic and Foreign

The following table summarizes earnings from continuing operations before income taxes:



(in millions)	2016		2015		2014
U.S. Operations	$	2,050	$	1,733	$	1,665
Non-U.S. Operations	226		234		133
Earnings from continuing operations before income taxes	$	2,276	$	1,967	$	1,798

Schedule of Components of Income Tax Expense (Benefit), Current and Deferred

The following table summarizes the components of provision for income taxes from continuing operations:



(in millions)	2016			2015			2014
Current:
Federal	$	611		$	424		$	521
State and local	74			83			51
Non-U.S.	73			29			37
Total current	$	758		$	536		$	609

Deferred:
Federal	$	96		$	196		$	24
State and local	12			24			3
Non-U.S.	(21		)	(1		)	(1		)
Total deferred	87			219			26
Provision for income taxes	$	845		$	755		$	635

Schedule of Effective Income Tax Rate Reconciliation

The following table presents a reconciliation of the provision based on the federal statutory income tax rate to our effective income tax rate from continuing operations:



	2016		2015		2014
Provision at Federal statutory rate	35.0	%	35.0	%	35.0	%
State and local income taxes, net of federal benefit	1.5		4.1		2.2
Foreign tax rate differential	(0.6	)	(2.4	)	(1.2	)
Nondeductible/nontaxable items	1.0		0.7		(0.2	)
Other	0.2		1.0		(0.5	)
Effective income tax rate	37.1	%	38.4	%	35.3	%

Schedule of Deferred Tax Assets and Liabilities

The following table presents the components of the deferred income tax assets and liabilities at June 30:



(in millions)	2016			2015
Deferred income tax assets:
Receivable basis difference	$	44		$	47
Accrued liabilities	133			138
Share-based compensation	56			53
Loss and tax credit carryforwards	193			197
Deferred tax assets related to uncertain tax positions	95			100
Other	46			50
Total deferred income tax assets	567			585
Valuation allowance for deferred income tax assets	(93		)	(87		)
Net deferred income tax assets	$	474		$	498

Deferred income tax liabilities:
Inventory basis differences	$	(1,351	)	$	(1,344	)
Property-related	(172		)	(155		)
Goodwill and other intangibles	(607		)	(352		)
Other	—			(2		)
Total deferred income tax liabilities	$	(2,130	)	$	(1,853	)
Net deferred income tax liability	$	(1,656	)	$	(1,355	)

Schedule of Deferred Tax Assets and Liabilities after Netting by Tax Jurisdiction

Deferred income tax assets and liabilities in the preceding table, after netting by taxing jurisdiction, are in the following captions in the consolidated balance sheets at June 30:



(in millions)	2016 (5)			2015
Current deferred income tax asset (1)	$	—		$	22
Noncurrent deferred income tax asset (2)	42			17
Current deferred income tax liability (3)	—			(1,066		)
Noncurrent deferred income tax liability (4)	(1,698		)	(328		)
Net deferred income tax liability	$	(1,656	)	$	(1,355	)


(1)	Included in prepaid expenses and other in the consolidated balance sheets.


(2)	Included in other assets in the consolidated balance sheets.


(3)	Included in other accrued liabilities in the consolidated balance sheets.


(4)	Included in deferred income taxes and other liabilities in the consolidated balance sheets.


(5)	In the second quarter of fiscal 2016, we adopted amended accounting guidance that deferred tax assets and liabilities should be classified as noncurrent on the consolidated balance sheet. See Note 1 for further discussion.

Schedule of Unrecognized Tax Benefits Roll Forward

The following table presents a reconciliation of the beginning and ending amounts of unrecognized tax benefits:



(in millions)	2016			2015			2014
Balance at beginning of fiscal year	$	542		$	510		$	650
Additions for tax positions of the current year	22			15			16
Additions for tax positions of prior years	42			69			94
Reductions for tax positions of prior years	(48		)	(42		)	(40		)
Settlements with tax authorities	(30		)	(10		)	(210		)
Expiration of the statute of limitations	(1		)	—			—
Balance at end of fiscal year	$	527		$	542		$	510