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Taxes on Earnings
 12 Months Ended
Oct. 31, 2023
Income Tax Disclosure [Abstract]  
Taxes on Earnings Taxes on Earnings
Provision for Taxes
The domestic and foreign components of Net earnings from operations before taxes were as follows:
 For the fiscal years ended October 31,
 202320222021
 In millions
U.S.$(1,105)$(1,138)$(1,128)
Non-U.S.3,335 2,014 4,715 
$2,230 $876 $3,587 
Foreign earnings in fiscal 2021 were higher as compared to fiscal 2023 and 2022, primarily as a result of the income from the Itanium litigation judgment.
The Provision for taxes on Net earnings from operations were as follows:
 For the fiscal years ended October 31,
 202320222021
 In millions
U.S. federal taxes:   
Current$— $12 $26 
Deferred(88)(98)(79)
Non-U.S. taxes:
Current256 288 305 
Deferred23 (143)(116)
State taxes:
Current16 (43)(4)
Deferred(2)(8)28 
$205 $8 $160 
The differences between the U.S. federal statutory income tax rate and the Company's effective tax rate were as follows:
 For the fiscal years ended October 31,
 202320222021
U.S. federal statutory income tax rate21.0 %21.0 %21.0 %
State income taxes, net of federal tax benefit0.9 %2.8 %0.7 %
Lower rates in other jurisdictions, net(4.4)%(0.9)%(7.6)%
Valuation allowance(2.8)%(31.5)%(10.0)%
U.S. permanent differences(1.5)%6.0 %3.6 %
U.S. R&D credit(2.1)%(5.1)%(1.3)%
Uncertain tax positions(2.0)%(15.6)%(0.9)%
Goodwill impairment— %21.5 %— %
Tax law changes — %— %(1.1)%
Other, net0.1 %2.7 %0.1 %
9.2 %0.9 %4.5 %
The jurisdictions with favorable tax rates that had the most significant impact on the Company's effective tax rate in the periods presented include Puerto Rico and Singapore.
In fiscal 2023, the Company recorded $131 million of net income tax benefits related to various items discrete to the year. These amounts primarily included $104 million of income tax benefits related to transformation costs, and acquisition, disposition and other related charges and $19 million of net excess tax benefits related to stock-based compensation.
In fiscal 2022, the Company recorded $454 million of net income tax benefits related to various items discrete to the year. These amounts primarily included $150 million of income tax benefits related to releases of foreign valuation allowances, $99 million of income tax benefits related to transformation costs, and acquisition, disposition and other related charges, $43 million of income tax benefits related to the settlement of U.S. tax audit matters, $42 million of income tax benefits related to the release of U.S. passive foreign tax credit valuation allowances, $30 million of income tax benefits related to the change in pre-separation tax liabilities, primarily those for which the Company shared joint and several liability with HP Inc. and for which the Company was indemnified by HP Inc., $27 million of income tax benefits related to the utilization of capital losses which had a full valuation allowance, $12 million of income tax benefits as a result of the fiscal 2021 U.S. tax return filing primarily from the decrease in GILTI, and $11 million of net income tax benefits related to settlements and ongoing discussions in foreign tax audit matters.
In fiscal 2021, the Company recorded $294 million of net income tax benefits related to various items discrete to the year. These amounts primarily included $180 million of income tax benefits related to transformation costs, and acquisition, disposition and other related charges, $157 million of income tax benefits related to releases of foreign valuation allowances, $39 million of income tax benefits related to tax rate changes on deferred taxes, and $32 million of income tax benefits related to the change in pre-separation tax liabilities, primarily those for which the Company shared joint and several liability with HP Inc. and for which the Company was indemnified by HP Inc. These benefits were partially offset by $337 million of net income tax charges associated with income from the Itanium litigation judgment, against which $244 million of income tax attributes previously subject to a valuation allowance were utilized, resulting in a net tax expense of $93 million.
As a result of certain employment actions and capital investments the Company has undertaken, income from manufacturing and services in certain countries is subject to reduced tax rates through 2039. The gross foreign income tax benefits attributable to these actions and investments were $857 million ($0.65 diluted net EPS) in fiscal 2023, $832 million ($0.63 diluted net EPS) in fiscal 2022, and $889 million ($0.67 diluted net EPS) in fiscal 2021. Refer to Note 16, “Net Earnings Per Share” for details on shares used to compute diluted net EPS.
Uncertain Tax Positions
A reconciliation of unrecognized tax benefits is as follows:
 As of October 31,
 202320222021
 In millions
Balance at beginning of year$674 $2,131 $2,159 
Increases:
For current year's tax positions67 81 24 
For prior years' tax positions20 41 64 
Decreases:
For prior years' tax positions(2)(48)(31)
Statute of limitations expiration(4)(12)(44)
Settlements with taxing authorities(83)(1,491)(15)
Settlements related to joint and several positions indemnified by HP Inc.— (28)(26)
Balance at end of year$672 $674 $2,131 
Up to $354 million, $386 million and $688 million of the Company's unrecognized tax benefits at October 31, 2023, 2022 and 2021, respectively, would affect its effective tax rate if realized in their respective periods. During the first quarter of fiscal 2022, the Company effectively settled with the U.S. Internal Revenue Service (“IRS”) for fiscal 2016, primarily contributing to the reduction in the Company's unrecognized tax benefits of $1.5 billion, which was predominantly related to the timing of intercompany royalty revenue recognition which does not affect the Company’s effective tax rate.
The Company recognizes interest income from favorable settlements and interest expense and penalties accrued on unrecognized tax benefits in Provision for taxes in the Consolidated Statements of Earnings. The Company recognized $25 million and $55 million of interest income and $17 million of interest expense in fiscal 2023, 2022, and 2021, respectively. As of October 31, 2023 and 2022, the Company had accrued $56 million and $81 million, respectively, for interest and penalties in the Consolidated Balance Sheets.
The Company is subject to income tax in the U.S. and approximately 85 other countries and is subject to routine corporate income tax audits in many of these jurisdictions.
The Company engages in continuous discussion and negotiation with taxing authorities regarding tax matters in various jurisdictions. The Company is no longer subject to U.S. federal tax audits for years prior to 2017. The IRS is conducting audits of the Company's fiscal 2017 through 2022 U.S. federal income tax returns. During the fourth quarter of fiscal 2023, the IRS issued notices of proposed adjustments (“NOPAs”) for fiscal 2017, 2018, and 2019 relating to HPE’s intercompany transfer pricing. After the close of fiscal 2023, the IRS issued a Revenue Agent Report (“RAR”) finalizing their position on the NOPAs for the same issues and same fiscal years. The IRS is seeking to increase taxable income across the three fiscal years by $904 million. As of the balance sheet date, HPE has sufficient tax credit carryforwards to offset any incremental tax liability from the adjustments in the RAR. However, HPE disagrees with the IRS’ adjustments and believes the positions taken on its tax returns are more likely than not to prevail on technical merits, and the Company will defend these positions through the IRS administrative processes, as necessary. Accordingly, no changes have been made to the Company’s reserves for uncertain tax positions in fiscal 2023 relating to the IRS’ adjustments. With respect to major state and foreign tax jurisdictions, the Company is no longer subject to tax authority examinations for years prior to 2005. However, it is reasonably possible that certain foreign and state tax issues may be concluded in the next 12 months, including issues involving resolution of certain intercompany transactions and other matters. The Company believes it is reasonably possible that its existing unrecognized tax benefits may be reduced by an amount up to $16 million within the next 12 months.
The Company believes it has provided adequate reserves for all tax deficiencies or reductions in tax benefits that could result from federal, state and foreign tax audits. The Company regularly assesses the likely outcomes of these audits in order to determine the appropriateness of the Company's tax provision. The Company adjusts its uncertain tax positions to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular audit. However, income tax audits are inherently unpredictable and there can be no assurance that the Company will accurately predict the outcome of these audits. The amounts ultimately paid on resolution of an audit could be materially different from the
amounts previously included in the Provision for taxes and therefore the resolution of one or more of these uncertainties in any particular period could have a material impact on net earnings or cash flows.
The Company has not provided for U.S. federal and state income and foreign withholding taxes on $9.4 billion of undistributed earnings and basis differences from non-U.S. operations as of October 31, 2023 because the Company intends to reinvest such earnings indefinitely outside of the U.S. Determination of the amount of unrecognized deferred tax liability related to these earnings and basis differences is not practicable. The Company will remit non-indefinitely reinvested earnings of its non-U.S. subsidiaries for which deferred U.S. state income and foreign withholding taxes have been provided where excess cash has accumulated and the Company determines that it is advantageous for business operations, tax or cash management reasons.
Deferred Income Taxes
Deferred income taxes result from temporary differences between the amount of assets and liabilities recognized for financial reporting and tax purposes.
The significant components of deferred tax assets and deferred tax liabilities were as follows:
 As of October 31,
 20232022
 In millions
Deferred tax assets:
Loss and credit carryforwards$5,802 $7,222 
Inventory valuation90 87 
Intercompany prepayments325 321 
Warranty49 61 
Employee and retiree benefits184 247 
Restructuring52 55 
Deferred revenue658 601 
Intangible assets107 113 
Capitalized R&D44 — 
Lease liabilities209 185 
Other196 269 
Total deferred tax assets7,716 9,161 
Valuation allowance(5,294)(6,817)
Total deferred tax assets net of valuation allowance2,422 2,344 
Deferred tax liabilities:
Unremitted earnings of foreign subsidiaries(190)(170)
ROU assets(192)(167)
Fixed assets(102)(200)
Total deferred tax liabilities(484)(537)
Net deferred tax assets and liabilities$1,938 $1,807 
Deferred tax assets and liabilities included in the Consolidated Balance Sheets are as follows:
 As of October 31,
 20232022
In millions
Deferred tax assets$2,264 $2,127 
Deferred tax liabilities(326)(320)
Deferred tax assets net of deferred tax liabilities$1,938 $1,807 
As of October 31, 2023, the Company had $386 million, $3.1 billion and $20.2 billion of federal, state and foreign net operating loss carryforwards, respectively. Amounts included in state and foreign net operating loss carryforwards will begin to expire in 2024; federal net operating losses can carry forward indefinitely. The Company has provided a valuation allowance of $147 million and $3.9 billion for deferred tax assets related to state and foreign net operating losses carryforwards, respectively. As of October 31, 2023, the Company also had $13 million, $5.6 billion, and $85 million of federal, state, and foreign capital loss carryforwards, respectively. Amounts included in federal and state capital loss carryforwards will begin to expire in 2028; foreign capital losses can carry forward indefinitely. The Company has provided a valuation allowance of $7 million and $25 million for deferred tax assets related to state and foreign capital loss carryforwards, respectively.
As of October 31, 2023, the Company had recorded deferred tax assets for various tax credit carryforwards as follows:
 CarryforwardValuation AllowanceInitial Year of Expiration
 In millions
U.S. foreign tax credits$904 $(875)2026
U.S. research and development and other credits215 — 2029
Tax credits in state and foreign jurisdictions164 (114)2024
Balance at end of year$1,283 $(989) 
Total valuation allowances decreased by $1.5 billion in fiscal 2023, primarily from the expiration of U.S. federal capital loss carryforwards.
Tax Matters Agreement and Other Income Tax Matters
In connection with the completed separations and mergers of the former Enterprise Services business with DXC Technology Company (“DXC”) (the “Everett Transaction” or “Everett”) and the Software Segment with Micro Focus International plc (“Micro Focus”) (the “Seattle Transaction” or “Seattle”), the Company entered into a DXC Tax Matters Agreement with DXC and a Micro Focus Tax Matters Agreement with Micro Focus, respectively. See Note 18, “Guarantees, Indemnifications and Warranties,” for a description of the DXC Tax Matters Agreement and Micro Focus Tax Matters Agreement.