Income Taxes

6 Months Ended

Oct. 02, 2020

The following table summarizes our effective tax rate for the periods presented:


	Three Months Ended						Six Months Ended
(In millions, except percentages)	October 2, 2020			October 4, 2019			October 2, 2020			October 4, 2019
Income from continuing operations before income taxes	$	231		$	60		$	330		$	152
Income tax expense	$	65		$	22		$	15		$	76
Effective tax rate	28		%	37		%	5		%	50		%

Our effective tax rate for income from continuing operations for the three and six months ended October 2, 2020 differs from the federal statutory income tax rate primarily due to various permanent differences, foreign return to provision adjustments, and state taxes, partially offset by the benefits of lower-tax international earnings and the research and development tax credit. In addition, for the six months ended October 2, 2020, we recorded a tax benefit related to a favorable tax ruling in Japan.

Our effective tax rate for income from continuing operations for the three and six months ended October 4, 2019 differs from the federal statutory income tax rate primarily due to tax expense related to the Ninth Circuit's holding in Altera Corp. v. Commissioner (which the Supreme Court declined to review in June 2020), various permanent differences, and state taxes, partially offset by the benefits of lower-tax international earnings and the research and development tax credit.

The aggregate changes in the balance of gross unrecognized tax benefits for the six months ended October 2, 2020 were as follows:


(In millions)
Balance as of April 3, 2020	$	724
Settlements with tax authorities	(17)
Lapse of statute of limitations	(14)
Increase related to prior period tax positions	12
Decrease related to prior period tax positions	(52)
Increase related to current year tax positions	12
Balance as of October 2, 2020	$	665

The timing of the resolution of income tax examinations is highly uncertain, and the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ materially from the amounts accrued for each year. Given the potential resolution of uncertain tax positions involves multiple tax periods and jurisdictions, we are unable to accurately estimate when these unrecognized tax benefits will be realized or released. However, it is reasonably possible that there could be significant changes to our unrecognized tax benefits in the next 12 months.

We continue to monitor the progress of ongoing income tax controversies and the impact, if any, of the expected expiration of the statute of limitations in various taxing jurisdictions.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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