INCOME TAXES (Tables)

12 Months Ended

Jun. 30, 2017

Provision for Income Taxes

The components of the provision for income taxes were as follows:

(In millions)
Year Ended June 30,	2017			2016		2015
Current Taxes
U.S. federal	$	2,739		$	545	$	3,661
U.S. state and local		30			136		364
Foreign		2,472			1,940		2,065
Current taxes		5,241			2,621		6,090
Deferred Taxes
Deferred taxes		(3,296	)		332		224
Provision for income taxes	$	1,945		$	2,953	$	6,314

Income (Loss) Before Income Taxes

U.S. and foreign components of income (loss) before income taxes were as follows:

(In millions)
Year Ended June 30,	2017		2016			2015
U.S.	$	453	$	(325	)	$	7,363
Foreign		22,696		20,076			11,144
Income before income taxes	$	23,149	$	19,751		$	18,507

Difference Between Income Taxes Computed at Federal Statutory Rate and Provision for Income Taxes

The items accounting for the difference between income taxes computed at the U.S. federal statutory rate and our effective rate were as follows:

Year Ended June 30,	2017		2016		2015
Federal statutory rate		35.0%		35.0%		35.0%
Effect of:
Foreign earnings taxed at lower rates		(15.7)%		(19.4)%		(20.9)%
Phone business losses		(7.3)%		1.3%		19.1%
Excess tax benefits relating to stock-based compensation		(2.7)%		(2.0)%		0%
Domestic production activities deduction		(1.4)%		(0.6)%		(2.4)%
Interest, net		1.8%		1.2%		1.5%
Other reconciling items, net		(1.3)%		(0.5)%		1.8%
Effective rate		8.4%		15.0%		34.1%

Deferred Income Tax Assets and Liabilities

The components of the deferred income tax assets and liabilities were as follows:

(In millions)
June 30,	2017			2016
Deferred Income Tax Assets
Stock-based compensation expense	$	777		$	809
Other expense items		1,550			1,609
Restructuring charges		66			284
Unearned revenue		1,889			494
Impaired investments		59			226
Loss carryforwards		4,809			4,252
Depreciation and amortization		53			115
Other revenue items		130			89
Deferred income tax assets		9,333			7,878
Less valuation allowance		(3,310	)		(4,729	)
Deferred income tax assets, net of valuation allowance	$	6,023		$	3,149
Deferred Income Tax Liabilities
Foreign earnings	$	(1,107	)	$	(1,242	)
Unrealized gain on investments and debt		(1,384	)		(2,102	)
Depreciation and amortization		(1,630	)		(1,008	)
Other		(21	)		(54	)
Deferred income tax liabilities		(4,142	)		(4,406	)
Net deferred income tax assets (liabilities)	$	1,881		$	(1,257	)
Reported As
Other long-term assets	$	2,412		$	219
Long-term deferred income tax liabilities		(531	)		(1,476	)
Net deferred income tax assets (liabilities)	$	1,881		$	(1,257	)

Changes in Unrecognized Tax Benefits

The aggregate changes in the balance of unrecognized tax benefits were as follows:

(In millions)
Year Ended June 30,	2017			2016			2015
Balance, beginning of year	$	10,164		$	9,599		$	8,714
Decreases related to settlements		(4	)		(201	)		(50	)
Increases for tax positions related to the current year		1,277			1,086			1,091
Increases for tax positions related to prior years		397			115			94
Decreases for tax positions related to prior years		(49	)		(317	)		(144	)
Decreases due to lapsed statutes of limitations		(48	)		(118	)		(106	)
Balance, end of year	$	11,737		$	10,164		$	9,599