Income Taxes (Tables)

12 Months Ended

Sep. 30, 2017



Income Before Income Taxes	2017		2016		2015
Income Before Income Taxes
Domestic (including U.S. exports)	$	12,611	$	14,018	$	12,825
Foreign subsidiaries	1,177		850		1,043
	$	13,788	$	14,868	$	13,868

Income Tax Expense / (Benefit)



Income Tax Expense/(Benefit)	2017			2016			2015
Income Tax Expense/(Benefit)
Current
Federal	$	3,229		$	3,146		$	4,182
State	360			154			333
Foreign ⁽¹⁾	489			533			525
	4,078			3,833			5,040
Deferred
Federal	370			1,172			82
State	5			100			(52		)
Foreign	(31		)	(27		)	(54		)
	344			1,245			(24		)
	$	4,422		$	5,078		$	5,016

⁽¹⁾ Includes foreign withholding taxes

Deferred Tax Assets and Liabilities



Components of Deferred Tax Assets and Liabilities	September 30, 2017			October 1, 2016

Deferred tax assets
Accrued liabilities	$	(2,422	)	$	(2,736	)
Net operating losses and tax credit carryforwards	(1,705		)	(1,567		)
Other	(386		)	(566		)
Total deferred tax assets	(4,513		)	(4,869		)
Deferred tax liabilities
Depreciable, amortizable and other property	5,692			5,682
Foreign subsidiaries	518			348
Licensing revenues	476			480
Other	422			295
Total deferred tax liabilities	7,108			6,805
Net deferred tax liability before valuation allowance	2,595			1,936
Valuation allowance	1,716			1,602
Net deferred tax liability	$	4,311		$	3,538

Reconciliation of Effective Income Tax Rate to Federal Rate

A reconciliation of the effective income tax rate to the federal rate is as follows:



	2017		2016		2015
Federal income tax rate	35.0	%	35.0	%	35.0	%
State taxes, net of federal benefit	1.7		1.8		1.9
Domestic production activity deduction	(2.1	)	(1.6	)	(1.9	)
Earnings in jurisdictions taxed at rates different from the statutory U.S. federal rate	(1.6	)	(1.1	)	(1.5	)
Disneyland Paris recapitalization ⁽¹⁾	—		—		2.9
Other, including tax reserves and related interest ⁽²⁾	(0.9	)	0.1		(0.2	)
	32.1	%	34.2	%	36.2	%

⁽¹⁾

At the beginning of fiscal 2015, the Company had a $399 million deferred income tax asset on the difference between the Company’s tax basis in its investment in Disneyland Paris and the Company’s financial statement carrying value of Disneyland Paris. As a result of the Disneyland Paris recapitalization and the increase in the Company’s ownership interest (see Note 6 for further discussion of this transaction), the deferred tax asset was written off to income tax expense in fiscal 2015.


⁽²⁾	In fiscal 2017, the Company adopted new accounting guidance, which resulted in $125 million of tax benefits related to employee share-based awards being credited to “Income taxes” in the Consolidated Statement of Income (see Note 18).

Reconciliation of Beginning and Ending Amount of Gross Unrecognized Tax Benefits, Excluding Related Accrual for Interest

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits, excluding the related accrual for interest, is as follows:



	2017			2016			2015
Balance at the beginning of the year	$	844		$	912		$	803
Increases for current year tax positions	61			71			98
Increases for prior year tax positions	13			142			280
Decreases in prior year tax positions	(55		)	(158		)	(193		)
Settlements with taxing authorities	(31		)	(123		)	(76		)
Balance at the end of the year	$	832		$	844		$	912