Income Taxes

9 Months Ended

Jan. 01, 2021

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


	Three Months Ended						Nine Months Ended
(In millions, except percentages)	January 1, 2021			January 3, 2020			January 1, 2021			January 3, 2020
Income from continuing operations before income taxes	$	253		$	410		$	583		$	562
Income tax expense	$	80		$	57		$	95		$	133
Effective tax rate	32		%	14		%	16		%	24		%

Our effective tax rate for income from continuing operations for the three months ended January 1, 2021 differs from the federal statutory income tax rate primarily due to taxes in foreign jurisdictions in excess of the federal statutory rate, and state taxes, partially offset by the benefits of lower-tax international earnings and stock-based compensation. Our effective tax rate for income from continuing operations for the nine months ended January 1, 2021 differs from the federal statutory income tax rate primarily due to the gain on selling a building, taxes in foreign jurisdictions in excess of the federal statutory rate, and state taxes, partially offset by the benefits of lower-tax international earnings, a favorable withholding tax ruling in Japan, and stock-based compensation.

Our effective tax rate for income from continuing operations for the three and nine months ended January 3, 2020 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), a discrete tax charge recorded to account for the sale of the equity investment in DigiCert Parent Inc. (DigiCert), 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 nine months ended January 1, 2021 were as follows:


(In millions)
Balance as of April 3, 2020	$	724
Settlements with tax authorities	(38)
Lapse of statute of limitations	(16)
Increase related to prior period tax positions	25
Decrease related to prior period tax positions	(62)
Increase related to current year tax positions	10
Balance as of January 1, 2021	$	643

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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