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Income Taxes
 12 Months Ended
Jun. 30, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Certain amounts below have been adjusted to reflect the retrospective application of our change in inventory accounting method as described in Notes 1 and 7.
Income before income taxes was derived from the following sources:
202120202019
United States$1,273,037 $828,160 $1,140,983 
Foreign973,920 678,694 808,492 
$2,246,957 $1,506,854 $1,949,475 

Income taxes include the following:
202120202019
Federal
  Current$247,094 $105,796 $160,858 
  Deferred(52,960)24,905 18,133 
Foreign
  Current269,607 167,680 206,167 
  Deferred8,851 (14,247)3,202 
State and local
  Current34,895 18,756 20,932 
  Deferred(7,391)1,632 15,100 
$500,096 $304,522 $424,392 

A reconciliation of the effective income tax rate to the statutory federal rate follows:
202120202019
Statutory federal income tax rate21.0 %21.0 %21.0 %
State and local income taxes1.0 1.4 1.7 
Tax related to international activities3.6 1.8 2.9 
Transition tax related to the TCJ Act— (0.7)0.8 
Remeasurement of deferred tax assets and liabilities related to the TCJ Act— — (0.9)
Cash surrender value of life insurance(0.6)(0.3)(0.1)
Federal manufacturing deduction— — 0.1 
Foreign derived intangible income deduction(1.0)(1.5)(1.0)
Research tax credit(0.4)(0.6)(0.5)
Share-based compensation(1.6)(1.5)(1.7)
Other0.3 0.6 (0.5)
Effective income tax rate22.3 %20.2 %21.8 %
We made the accounting policy election to treat taxes related to Global Intangible Low-Taxed Income ("GILTI") as a current period expense when incurred. The tax rate impact of GILTI is included with tax related to international activities in the table above.

On March 27, 2020, the President of the United States signed into law the Coronavirus Aid, Relief, and Economic Security ("CARES") Act, a significant tax-and-spending package intended to provide economic stimulus to address the impact of the COVID-19 pandemic. The CARES Act did not result in a material impact on our effective tax rate.

On December 27, 2020, the Consolidated Appropriations Act, 2021, was signed into law. In addition to providing funding for the government, this law provides further COVID-19 economic relief, and extends certain expiring tax provisions. This act did not result in a material impact on our effective tax rate.
Deferred income taxes are provided for the temporary differences between the financial reporting basis and the tax basis of assets and liabilities. The differences comprising the net deferred taxes shown on the Consolidated Balance Sheet at June 30 were as follows:
20212020
Retirement benefits$322,931 $504,747 
Other liabilities and reserves136,710 139,872 
Long-term contracts5,562 7,392 
Stock-based compensation30,165 35,483 
Loss carryforwards861,013 754,655 
Unrealized currency exchange gains and losses18,841 39,256 
Inventory(11,753)(31,081)
Tax credit carryforwards19,709 33,176 
Undistributed foreign earnings(21,722)(15,196)
Depreciation and amortization(945,422)(988,886)
Valuation allowance(865,764)(771,430)
Net deferred tax (liability)$(449,730)$(292,012)
Change in net deferred tax (liability):
Provision for deferred tax$51,500 $(12,290)
Items of other comprehensive (loss) income(209,509)102,297 
Acquisitions and other291 (301,690)
Total change in net deferred tax$(157,718)$(211,683)

As of June 30, 2021, we recorded deferred tax assets of $861,013 resulting from $3,473 million in loss carryforwards. A valuation allowance of $841,789 related to the loss carryforwards has been established due to the uncertainty of their realization. Of this valuation allowance, $816,388 relates to non-operating entities whose loss carryforward utilization is considered to be remote. Some of the loss carryforwards can be carried forward indefinitely; others can be carried forward from three years to 20 years. In addition, a valuation allowance of $23,975 related to other future deductible items has been established due to the uncertainty of their realization.

Although future distributions of foreign earnings to the United States should not be subject to U.S. federal income taxes, other U.S. or foreign taxes may be imposed on such earnings. We have analyzed existing factors and determined we will no longer permanently reinvest certain foreign earnings. On these undistributed foreign earnings of approximately $712 million that are no longer permanently reinvested outside of the United States, we have recorded a deferred tax liability of $16 million. The remaining undistributed foreign earnings of approximately $1,609 million remain permanently reinvested outside the United States at June 30, 2021. Of these undistributed earnings, we have recorded a deferred tax liability of $6 million where certain foreign holding companies are not permanently reinvested in their subsidiaries. It is not practicable to estimate the additional taxes, including applicable foreign withholding taxes, that might be payable on the potential distribution of such permanently reinvested foreign earnings.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
202120202019
Balance July 1$86,277 $140,662 $153,091 
Additions for tax positions related to current year10,145 4,955 2,272 
Additions for tax positions of prior years10,320 798 45 
Additions for acquisitions2,376 43,532 — 
Reductions for tax positions of prior years(1,996)(41,726)(927)
Reductions for settlements(7,165)(53,520)(832)
Reductions for expiration of statute of limitations(2,252)(3,820)(9,388)
Effect of foreign currency translation3,054 (4,604)(3,599)
Balance June 30$100,759 $86,277 $140,662 

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $100,759, $86,277 and $140,662 as of June 30, 2021, 2020 and 2019, respectively. The accrued interest related to the gross unrecognized tax benefits, excluded from the amounts above, was $17,862, $14,247 and $25,214 as of June 30, 2021, 2020 and 2019, respectively.

It is reasonably possible that, within the next 12 months, the amount of gross unrecognized tax benefits could be reduced by up to approximately $40,000 as a result of the revaluation of existing uncertain tax positions arising from developments in the examination process or the closure of tax statutes. Any increase in the amount of unrecognized tax benefits within the next 12 months is expected to be insignificant.
We file income tax returns in the United States and in various foreign jurisdictions. In the normal course of business, we are subject to examination by taxing authorities throughout the world. We are open to assessment of our U.S. federal income tax returns by the Internal Revenue Service for years after 2013, and our state and local income tax returns for years after 2013. We are open to assessment for significant foreign jurisdictions for years after 2011.