Income Taxes (Tables)

12 Months Ended

Sep. 26, 2021

Components of Income Tax Expense (Benefit)

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


	2021		2020		2019
Current provision (benefit):
Federal	$	942	$	210	$	1,563
State	8		1		2
Foreign	518		526		(407)
	1,468		737		1,158
Deferred (benefit) provision:
Federal	(251)		(192)		2,037
State	2		2		17
Foreign	12		(26)		(117)
	(237)		(216)		1,937
	$	1,231	$	521	$	3,095

Income before Income Tax, Domestic and Foreign

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


	2021		2020		2019
United States	$	8,781	$	5,004	$	7,042
Foreign	1,493		715		439
	$	10,274	$	5,719	$	7,481

Effective Income Tax Rate Reconciliation

The following is a reconciliation of the expected statutory federal income tax provision to our actual income tax provision (in millions, except percentages). Substantially all of our income is in the U.S., of which a significant portion qualifies for preferential treatment as FDII at a 13% effective tax rate.


	2021			2020			2019
Expected income tax provision at federal statutory tax rate	$	2,158		$	1,201		$	1,571
Benefit from FDII deduction	(550)			(381)			(419)
Excess tax benefit associated with share-based awards	(265)			(83)			(27)
Benefit related to research and development tax credits	(195)			(125)			(110)
Derecognition of deferred tax asset on distributed intellectual property	—			—			2,472
Benefit from establishing new U.S. net deferred tax assets	—			—			(570)




Other	83			(91)			178
	$	1,231		$	521		$	3,095
Effective tax rate	12		%	9		%	41		%

Deferred Tax Assets and Liabilities

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


	September 26, 2021		September 27, 2020
Unused tax credits	$	1,504	$	1,311
Customer incentives	762		537
Unused net operating losses	663		576
Accrued liabilities and reserves	483		275
Operating lease liabilities	188		107
Unearned revenues	181		262
Share-based compensation	175		151
Unrealized losses on other investments and marketable securities	106		235
Other	165		141
Total gross deferred tax assets	4,227		3,595
Valuation allowance	(1,926)		(1,728)
Total net deferred tax assets	2,301		1,867
Unrealized gains on other investments and marketable securities	(215)		(97)
Intangible assets	(198)		(181)
Operating lease assets	(174)		(100)
Property, plant and equipment	(111)		(162)
Other	(76)		(32)
Total deferred tax liabilities	(774)		(572)
Net deferred tax assets	$	1,527	$	1,295
Reported as:

Non-current deferred tax assets	$	1,591	$	1,351

Non-current deferred tax liabilities (1)	(64)		(56)
	$	1,527	$	1,295

(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 2021, 2020 and 2019 follows (in millions):


	2021		2020		2019
Beginning balance of unrecognized tax benefits	$	1,901	$	1,705	$	217
Additions based on prior year tax positions	56		20		1,238
Reductions for prior year tax positions and lapse in statute of limitations	(13)		(2)		(3)
Additions for current year tax positions	213		192		253
Settlements with taxing authorities	(21)		(14)		—
Ending balance of unrecognized tax benefits	$	2,136	$	1,901	$	1,705