Income Taxes

6 Months Ended

Mar. 03, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Our income tax (provision) benefit consisted of the following:

	Quarter ended						Six months ended
	March 3, 2022			March 4, 2021			March 3, 2022			March 4, 2021
Income before taxes	$	2,509		$	635		$	5,030		$	1,476
Income tax (provision) benefit	(255)			(48)			(474)			(99)
Effective tax rate	10.2		%	7.6		%	9.4		%	6.7		%

We operate in a number of jurisdictions outside the United States, including Singapore, where we have tax incentive arrangements. These incentives expire, in whole or in part, at various dates through 2034 and are conditional, in part, upon meeting certain business operations and employment thresholds. The effect of tax incentive arrangements reduced our tax provision by $304 million (benefiting our diluted earnings per share by $0.27) and $594 million ($0.53 per diluted share) for the second quarter and first six months of 2022, respectively, and by $45 million ($0.04 per diluted share) and $101 million ($0.09 per diluted share) for the second quarter and first six months of 2021, respectively.

As of March 3, 2022, gross unrecognized tax benefits were $700 million, substantially all of which would affect our effective tax rate in the future, if recognized. Amounts accrued for interest and penalties related to uncertain tax positions were not significant for any period presented. We are currently under audit by the U.S. Internal Revenue Service for our 2018 and 2019 tax years. We believe that adequate amounts of taxes and related interest and penalties have been provided.

On March 16, 2022, the Idaho governor signed a new law that is expected to reduce our Idaho taxable income and as a result, we do not expect to utilize our tax credits in Idaho for the foreseeable future. We are in the process of assessing the impact of the new law but currently estimate it to result in a valuation allowance against Idaho’s net deferred tax assets and an increase to tax expense of approximately $200 million in the third quarter of 2022.