Income Taxes

6 Months Ended

Jan. 26, 2013

Income Tax Disclosure [Abstract]

Income Taxes

15. Income Taxes

The following table provides details of income taxes (in millions, except percentages):

	Three Months Ended						Six Months Ended
	January 26, 2013			January 28, 2012			January 26, 2013			January 28, 2012
Income before provision for (benefit from) income taxes	$	2,780		$	2,749		$	5,411		$	4,994
Provision for (benefit from) income taxes	$	(363	)	$	567		$	176		$	1,035
Effective tax rate	(13.1		)%	20.6		%	3.3		%	20.7		%

As discussed further below, the effective tax rate for the three and six months ended January 26, 2013 reflected the Company's recognition of total tax benefits of approximately $926 million related to a tax settlement with the Internal Revenue Service (“IRS”) and the reinstatement of the U.S. federal research and development (“R&D”) tax credit on January 2, 2013.

In the second quarter of fiscal 2013, the IRS and the Company settled all outstanding items related to the audit of the Company's federal income tax returns for the fiscal years ended July 27, 2002 through July 28, 2007. As a result of the settlement, the Company increased its income tax receivable by $733 million and recognized a net benefit to the provision for income taxes of $794 million, which included a reduction in interest expense of $157 million. The Company is no longer subject to U.S. federal income tax audit through fiscal 2007.

As a result of the IRS tax settlement, the amount of gross unrecognized tax benefits was reduced by approximately $1.0 billion, of which $154 million, which was previously paid by the Company, became certain as a result of completing the audit. The total amount of gross unrecognized tax benefits was $1.9 billion as of January 26, 2013, of which $1.6 billion would affect the effective tax rate if realized. Although timing of the resolution of audits is highly uncertain, the Company does not believe it is reasonably possible that the total amount of unrecognized tax benefits as of January 26, 2013 will materially change in the next 12 months.

In the second quarter of fiscal 2013, the American Taxpayer Relief Act of 2012 reinstated the U.S. federal R&D tax credit, retroactive to January 1, 2012. As a result, during the three months ended January 26, 2013, the Company recognized total tax benefits of $132 million, of which $72 million related to fiscal 2012 R&D expenses.