Income Taxes

9 Months Ended

Apr. 25, 2020

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



	Three Months Ended						Nine Months Ended
	April 25, 2020			April 27, 2019			April 25, 2020			April 27, 2019
Income before provision for income taxes	$	3,444		$	3,615		$	10,664		$	10,867
Provision for income taxes	$	670		$	571		$	2,086		$	1,452
Effective tax rate	19.4		%	15.8		%	19.6		%	13.4		%

The effective tax rate for the first nine months of fiscal 2019 includes a $152 million tax benefit relating to indirect effects from adoption of ASC 606 at the beginning of fiscal 2019.

In the first quarter of fiscal 2020, the Internal Revenue Service (IRS) and Cisco settled all outstanding items related to the audit of our federal income tax returns for the fiscal year ended July 30, 2011 through July 27, 2013. As a result of the settlement, we recognized a net benefit to the provision for income taxes of $102 million, which included a reduction in interest expense of $4 million. We are no longer subject to U.S. federal tax audit through fiscal 2013.

As of April 25, 2020, we had $2.1 billion of unrecognized tax benefits, of which $1.8 billion, if recognized, would favorably impact the effective tax rate. We regularly engage in discussions and negotiations with tax authorities regarding tax matters in various jurisdictions. We believe it is reasonably possible that certain federal, foreign and state tax matters may be concluded in the next 12 months. Specific positions that may be resolved include issues involving transfer pricing and various other matters. We estimate that the unrecognized tax benefits at April 25, 2020 could be reduced by approximately $150 million in the next 12 months.