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Income Taxes (Notes)
9 Months Ended
Dec. 30, 2017
Income Tax Disclosure [Abstract]  
Income Tax Disclosure [Text Block]
18. Income Taxes
The Tax Cuts and Jobs Act (the “Tax Act”) was enacted into law in the U.S. on December 22, 2017. The Tax Act includes various changes to the tax law, including a permanent reduction in the corporate income tax rate. The Company recognized the estimated effects of the changes in the tax rate and laws resulting from the Tax Act during the quarter ended December 31, 2017.
The Tax Act reduces the federal corporate income tax rate from 35% to 21% effective January 1, 2018. The Company’s federal statutory rate for the fiscal year ending March 31, 2018 is a blended rate based on the weighting of pre- and post-Tax Act rates and will be 21% for future fiscal years.
Deferred tax assets and liabilities are remeasured at the new rates; however, given a full valuation allowance against net deferred tax assets, the expense arising from the re-measurement of deferred tax assets and liabilities is fully offset by an equivalent adjustment to our existing valuation allowance, resulting in no net impact to tax expense.
The Tax Act imposes a one-time transition tax on the deemed repatriation of post-1986 undistributed foreign subsidiaries’ earnings. Based on the information available as of December 31, 2017, the Company estimated undistributed foreign earnings of approximately $43 million. The taxable income arising from this deemed repatriation is expected to be fully offset by the utilization of net operating loss carryforwards and other tax credits, offset by changes in the valuation allowance, resulting in no net impact to tax expense.
The Tax Act also includes a base erosion and anti-abuse tax (BEAT), applicable to corporations with annual gross receipts of at least $500M for the prior 3-years, which requires U.S. multinationals making “excessive” deductible payments to their foreign affiliates to pay a 10 percent tax on their income without those deductions, after a one-year, 5 percent transition rate. Further the Tax Act imposes a tax on global intangible low-taxed income (GILTI) on controlled foreign corporations’ aggregate net income over a 10% benchmark return on qualified business asset investment less interest expense. We have not evaluated the impacts of these provisions at this time nor have we elected whether to treat the impacts of GILTI as a period expense or as a deferred tax item.
We continue to evaluate the impact the new legislation will have on our financial position, results of operations, and cash flows. We expect additional technical guidance from the Department of Treasury, possibly up through the date of the Company’s tax return filings. Additionally, the FASB has proposed new accounting guidance regarding the treatment of the impact of the Tax Act on items recorded within accumulated other comprehensive income (loss), but this guidance has not been finalized. The Securities and Exchange Commission Staff Accounting Bulletin No. 118 allows the use of provisional amounts if accounting for the income tax effects of the Act has not been completed when the Company’s financial statements are issued. This measurement period may extend no longer than one year.
While we believe the net impact on the 2018 effective tax rate and tax expense is not material due to our existing net operating loss carryforwards and other tax credits, rule-making and the Company’s assessment remains ongoing. Therefore, the final impact of the Tax Reform may differ due to changes in interpretations, assumptions and that we are not able to fully quantify the impact on our financial position, results of operations, and cash flows at this time. Provisional amounts will be adjusted during the measurement period as accounting for the income tax effects of the Act is completed and the rules and technical guidance are finalized.