INCOME TAXES

9 Months Ended

Mar. 31, 2022

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 7: INCOME TAXES

We file a consolidated federal income tax return in the U.S. with the Internal Revenue Service (IRS) and file tax returns in various state, local, and foreign jurisdictions. Tax returns are typically examined and either settled upon completion of the examination or through the appeals process. On July 14, 2021 we filed a U.S. federal income tax form 1139 carryback claim to utilize net operating losses against income earned in tax years 2015 and 2016. Filing this carryback claim has opened our 2015 and 2016 tax years to examination. Consequently, our U.S. federal

income tax returns for 2015, 2016, 2018 and later years remain open for examination. Our U.S. federal income tax returns for 2017, 2014 and all years prior to 2014 are closed. With respect to state and local jurisdictions and countries outside of the U.S., we are typically subject to examination for three to six years after the income tax returns have been filed. Although the outcome of tax audits is always uncertain, we believe that adequate amounts of tax, interest, and penalties have been provided for in the accompanying consolidated financial statements for any adjustments that might be incurred due to federal, state, local or foreign audits.

We had gross unrecognized tax benefits of $225.9 million as of March 31, 2022 and $264.3 million as of June 30, 2021. The gross unrecognized tax benefits decreased $38.4 million during the nine months ended March 31, 2022. The decrease is related to federal and state statute of limitation periods expiring in the current year. We believe it is reasonably possible that the balance of unrecognized tax benefits could decrease by approximately $33.3 million within the next twelve months. The anticipated decrease is due to the expiration of statutes of limitations and anticipated closure of various state matters currently under examination. For such matters where a change in the balance of unrecognized tax benefits is not yet deemed reasonably possible, no estimate has been included.

Our effective tax rate for continuing operations, including the effects of discrete tax items, was 8.1% and 10.3% for the nine months ended March 31, 2022 and 2021, respectively. Discrete items decreased the effective tax rate by 14.4% and 2.3% for the nine months ended March 31, 2022 and 2021, respectively. A discrete income tax benefit of $52.6 million and $11.4 million were recorded in the nine months ended March 31, 2022 and 2021, respectively. The discrete tax benefit recorded in the current period primarily resulted from federal and state statute of limitations expirations. The discrete tax benefit recorded in the prior period primarily resulted from settlements with taxing authorities and statute of limitations expirations.