XML 49 R13.htm IDEA: XBRL DOCUMENT v3.20.4
Taxes on Earnings
3 Months Ended
Jan. 31, 2021
Income Tax Disclosure [Abstract]  
Taxes on Earnings Taxes on Earnings
Provision for Taxes
HP’s effective tax rate was 17.5% and 22.8% for the three months ended January 31, 2021 and 2020, respectively. The difference between the U.S. federal statutory tax rate of 21% and HP’s effective tax rate for the three months ended January 31, 2021 is primarily due to favorable tax rates associated with certain earnings from HP’s operations in lower-tax jurisdictions throughout the world. For the three months ended January 31, 2020, HP’s effective tax rate generally differs from the U.S. federal statutory rate of 21% primarily due to the accrual of uncertain tax positions in various jurisdictions, partially offset by favorable tax rates associated with certain earnings from HP’s operations in lower-tax jurisdictions throughout the world.
During the three months ended January 31, 2021, discrete items in the provision for taxes and excess tax benefits associated with stock options, restricted stock units and performance-adjusted restricted stock units were immaterial.
During the three months ended January 31, 2020, HP recorded $7 million of net income tax benefits related to discrete
 items in the provision for taxes. This amount included tax benefits of $48 million and $7 million related to restructuring
 and other net tax benefits, respectively. These benefits were partially offset by uncertain tax position charges of $48 million.
 For the period ended January 31, 2020, excess tax benefits associated with stock options, restricted stock units and performance-adjusted restricted stock units were immaterial.
Uncertain Tax Positions
As of January 31, 2021, the amount of gross unrecognized tax benefits was $799 million, of which up to $638 million would affect HP’s effective tax rate if realized. Total gross unrecognized tax benefits decreased by $21 million for the three months ended January 31, 2021, primarily related to the resolution of various audits. HP recognizes interest income from favorable settlements and interest expense and penalties accrued on unrecognized tax benefits in the provision for taxes in the Consolidated Condensed Statements of Earnings. As of January 31, 2021 and 2020, HP had accrued $64 million and $61 million, respectively, for interest and penalties.
HP engages in continuous discussions and negotiations with taxing authorities regarding tax matters in various jurisdictions. HP expects to complete resolution of certain tax years with various tax authorities within the next 12 months. HP believes it is reasonably possible that its existing gross unrecognized tax benefits may be reduced by up to $103 million within the next 12 months, affecting HP’s effective tax rate if realized.
HP is subject to income tax in the United States and approximately 60 other countries and is subject to routine corporate income tax audits in many of these jurisdictions. In addition, HP is subject to numerous ongoing audits by federal, state and foreign tax authorities. The Internal Revenue Service (“IRS”) is conducting an audit of HP’s 2018 and 2019 income tax returns.