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Income Taxes
 12 Months Ended
Jun. 30, 2022
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Income before income taxes was derived from the following sources:
202220212020
United States$646,364 $1,273,037 $828,160 
Foreign967,862 973,920 678,694 
$1,614,226 $2,246,957 $1,506,854 

Income taxes include the following:
202220212020
Federal
  Current$297,672 $247,094 $105,796 
  Deferred(253,123)(52,960)24,905 
Foreign
  Current303,089 269,607 167,680 
  Deferred(45,977)8,851 (14,247)
State and local
  Current48,479 34,895 18,756 
  Deferred(52,100)(7,391)1,632 
$298,040 $500,096 $304,522 

A reconciliation of the effective income tax rate to the statutory federal rate follows:
202220212020
Statutory federal income tax rate21.0 %21.0 %21.0 %
State and local income taxes(0.2)1.0 1.4 
Tax related to international activities2.7 3.6 1.8 
Transition tax related to the TCJ Act— — (0.7)
Cash surrender value of life insurance0.5 (0.6)(0.3)
Foreign derived intangible income deduction(3.7)(1.0)(1.5)
Research tax credit(0.8)(0.4)(0.6)
Share-based compensation(1.3)(1.6)(1.5)
Other0.3 0.3 0.6 
Effective income tax rate18.5 %22.3 %20.2 %




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:
20222021
Retirement benefits$207,147 $322,931 
Other liabilities and reserves180,624 136,710 
Long-term contracts8,739 5,562 
Stock-based compensation31,490 30,165 
Loss carryforwards888,552 861,013 
Unrealized currency exchange gains and losses254,334 18,841 
Inventory14,649 (11,753)
Tax credit carryforwards17,326 19,709 
Undistributed foreign earnings(21,822)(21,722)
Depreciation and amortization(875,623)(945,422)
Valuation allowance(901,875)(865,764)
Net deferred tax (liability)$(196,459)$(449,730)
Change in net deferred tax (liability):
Provision for deferred tax$351,201 $51,500 
Items of other comprehensive (loss) income(98,810)(209,509)
Acquisitions and other880 291 
Total change in net deferred tax$253,271 $(157,718)

As of June 30, 2022, we recorded deferred tax assets of $889 million resulting from $3,566 million in loss carryforwards. A valuation allowance of $876 million related to the loss carryforwards has been established due to the uncertainty of their realization. Of this valuation allowance, $853 million 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 to 20 years. In addition, a valuation allowance of $26 million 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 $678 million that are no longer permanently reinvested outside of the United States, we have recorded a deferred tax liability of $13 million. The remaining undistributed foreign earnings of approximately $1,630 million remain permanently reinvested outside the United States at June 30, 2022. Of these undistributed earnings, we have recorded a deferred tax liability of $8 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:
202220212020
Balance July 1$100,759 $86,277 $140,662 
Additions for tax positions related to current year7,039 10,145 4,955 
Additions for tax positions of prior years1,415 10,320 798 
Additions for acquisitions— 2,376 43,532 
Reductions for tax positions of prior years(140)(1,996)(41,726)
Reductions for settlements(3,127)(7,165)(53,520)
Reductions for expiration of statute of limitations(6,647)(2,252)(3,820)
Effect of foreign currency translation(8,630)3,054 (4,604)
Balance June 30$90,669 $100,759 $86,277 

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $91 million, $101 million and $86 million as of June 30, 2022, 2021 and 2020, respectively. The accrued interest related to the gross unrecognized tax benefits, excluded from the amounts above, was $18 million, $18 million and $14 million as of June 30, 2022, 2021 and 2020, 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 $30 million 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 2016. We are open to assessment for significant foreign jurisdictions for years after 2011.