Income Taxes |
9 Months Ended |
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Feb. 28, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes |
(6) Income Taxes Our effective tax rate was 15.0% for the third quarter and 17.2% for the nine months of 2021, compared to 25.0% for the third quarter and 18.5% for the nine months of 2020. The tax rate for the third quarter of 2021 includes benefits of $108 million from a tax rate increase in the Netherlands applied to our deferred tax balances and associated with voluntary contributions to our tax-qualified U.S. domestic pension plans (“U.S. Pension Plans”). The tax rate for the nine months of 2021 also includes a benefit of $191 million from an increase in our 2020 tax loss primarily attributable to an Application for Change in Accounting Method discussed below and other accelerated deductions claimed on the 2020 tax return. The tax rate for the nine months of 2020 included a $133 million benefit from a valuation allowance reduction. We filed an application with the Internal Revenue Service (“IRS”) in 2020 requesting approval to change our accounting method for depreciation to allow retroactive application of tax regulations issued during 2020 on certain assets placed in service during 2018 and 2019. During the second quarter of 2021, the IRS issued guidance granting automatic approval to change the method of accounting for these assets resulting in an income tax benefit of $130 million for the second quarter. During the second quarter of 2021, we filed suit in U.S. District Court for the Western District of Tennessee challenging the validity of a tax regulation related to the one-time transition tax on unrepatriated foreign earnings, which was enacted as part of the Tax Cuts and Jobs Act (“TCJA”). Our lawsuit seeks to have the court declare this regulation invalid and order the refund of overpayments of U.S. federal income taxes for 2018 and 2019 attributable to the denial of foreign tax credits under the regulation. We have recorded a cumulative benefit of $233 million through 2019 attributable to our interpretation of the TCJA and the Internal Revenue Code. We continue to pursue this lawsuit; however, if we are ultimately unsuccessful in defending our position, we may be required to reverse the benefit previously recorded. |