Income Taxes (Tables)

12 Months Ended

Sep. 24, 2023

Components of Income Tax Expense (Benefit)

The components of the income tax provision from continuing operations were as follows (in millions):


	2023		2022		2021
Current provision:
Federal	$	1,229	$	1,114	$	942
State	10		1		8
Foreign (1)	491		906		518
	1,730		2,021		1,468
Deferred (benefit) provision:
Federal	(1,475)		(34)		(251)
State	(8)		15		2
Foreign (1)	(143)		10		12
	(1,626)		(9)		(237)
	$	104	$	2,012	$	1,231

Income before Income Tax, Domestic and Foreign

The components of income from continuing operations before income taxes by U.S. and foreign jurisdictions were as follows (in millions):


	2023		2022		2021
United States	$	6,400	$	12,537	$	8,781
Foreign	1,043		2,461		1,493
	$	7,443	$	14,998	$	10,274

Effective Income Tax Rate Reconciliation

The following is a reconciliation of the expected statutory federal income tax provision to our actual income tax provision from continuing operations (in millions, except percentages). A significant portion of our U.S. income qualifies for preferential treatment as FDII (foreign-derived intangible income) at a 13% effective tax rate.


	2023			2022			2021
Expected income tax provision at federal statutory tax rate	$	1,563		$	3,150		$	2,158
Benefit from FDII deduction related to capitalizing research and development expenditures	(598)			—			—
Benefit from FDII deduction, excluding the impact of capitalizing research and development expenditures	(447)			(753)			(550)
Benefit related to research and development tax credits	(235)			(224)			(195)
Benefit from fiscal 2021 and 2022 FDII deductions related to a change in sourcing of research and development expenditures	(126)			—			—
Benefit from releasing valuation allowance on unutilized foreign loss carryforwards	(114)			—			—
Foreign currency (gains) losses related to Korean withholding tax receivable	(66)			243			12
Shortfall (excess) tax benefit associated with share-based awards	3			(257)			(265)




Nontaxable reversal of 2018 EC fine	—			(224)			—
Other	124			77			71
	$	104		$	2,012		$	1,231
Effective tax rate	1		%	13		%	12		%

Deferred Tax Assets and Liabilities

We had deferred tax assets and deferred tax liabilities as follows (in millions):


	September 24, 2023		September 25, 2022
Unused tax credits	$	1,819	$	1,624
Capitalized research and development expenditures	1,490		—
Customer incentives	659		807
Accrued liabilities and reserves	401		264
Unused net operating losses	364		887
Share-based compensation	285		225
Operating lease liabilities	216		202
Unrealized losses on other investments and marketable securities	159		197
Other	409		435
Total gross deferred tax assets	5,802		4,641
Valuation allowance	(1,803)		(2,223)
Total net deferred tax assets	3,999		2,418
Intangible assets	(335)		(315)
Operating lease assets	(194)		(184)
Unrealized gains on other investments and marketable securities	(101)		(84)
Property, plant and equipment	(52)		(101)
Other	(118)		(98)
Total deferred tax liabilities	(800)		(782)
Net deferred tax assets	$	3,199	$	1,636
Reported as:

Non-current deferred tax assets	$	3,310	$	1,803

Non-current deferred tax liabilities (1)	(111)		(167)
	$	3,199	$	1,636

(1) Non-current deferred tax liabilities were included in other liabilities in the consolidated balance sheets.

Unrecognized Tax Benefits Roll Forward

A summary of the changes in the amount of unrecognized tax benefits for fiscal 2023, 2022 and 2021 follows (in millions):


	2023		2022		2021
Beginning balance of unrecognized tax benefits	$	2,191	$	2,136	$	1,901
Additions based on prior year tax positions	10		58		56
Reductions for prior year tax positions and lapse in statute of limitations	(63)		(136)		(13)
Additions for current year tax positions	158		184		213
Settlements with taxing authorities	—		(51)		(21)
Ending balance of unrecognized tax benefits	$	2,296	$	2,191	$	2,136