XML 36 R16.htm IDEA: XBRL DOCUMENT v3.24.2.u1
Income Taxes
 12 Months Ended
Jun. 30, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The components of income before income taxes were as follows:
Year Ended
June 30,
2024		June 25,
2023		June 26,
2022
 (in thousands)
United States$282,736 $151,759 $87,933 
Foreign4,077,486 4,957,451 5,105,181 
$4,360,222 $5,109,210 $5,193,114 
Significant components of the provision (benefit) for income taxes attributable to income before income taxes were as follows:
Year Ended
June 30,
2024		June 25,
2023		June 26,
2022
 (in thousands)
Federal:
Current$566,106 $541,416 $620,344 
Deferred(186,238)(136,178)(226,895)
379,868 405,238 393,449 
State:
Current20,081 32,082 20,759 
Deferred(15,118)(2,813)(19,096)
4,963 29,269 1,663 
Foreign:
Current143,595 196,842 204,163 
Deferred4,024 (33,070)(11,447)
147,619 163,772 192,716 
Total provision for income taxes$532,450 $598,279 $587,828 
Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, as well as the tax effect of carryforwards. Significant components of the Company’s net deferred tax assets and liabilities were as follows:
June 30,
2024		June 25,
2023
 (in thousands)
Deferred tax assets:
Tax carryforwards$396,036 $359,505 
Allowances and reserves189,429 192,374 
Equity-based compensation9,981 9,600 
Inventory valuation differences64,135 57,675 
Outside basis differences of foreign subsidiaries680,598 527,139 
R&D capitalization75,196 36,618 
Operating lease liabilities57,972 50,867 
Finance lease assets— 32,905 
Intangible assets4,908 4,108 
Other37,878 31,773 
Gross deferred tax assets1,516,133 1,302,564 
Valuation allowance(389,315)(352,377)
Net deferred tax assets1,126,818 950,187 
Deferred tax liabilities:
Capital assets(142,963)(121,948)
Amortization of goodwill(11,287)(12,515)
Right-of-use assets(57,337)(50,867)
Finance lease liabilities— (50,534)
Other(6,596)(1,974)
Gross deferred tax liabilities(218,183)(237,838)
Net deferred tax assets$908,635 $712,349 
The change in gross deferred tax assets, gross deferred tax liabilities, and valuation allowance between fiscal year 2024 and 2023 is primarily due to increases in gross deferred tax assets for outside basis differences of foreign subsidiaries, tax credits, and capitalized research and experimental expenditures.
The Company has an accounting policy election to record deferred taxes related to Global Intangible Low-Taxed Income (“GILTI”).
Realization of the Company’s net deferred tax assets is based upon the weighting of available evidence, including such factors as the recent earnings history and expected future taxable income. The Company believes it is more likely than not that such deferred tax assets will be realized with the exception of $389.3 million primarily related to California deferred tax assets. At June 30, 2024, the Company continued to record a valuation allowance to offset the entire California deferred tax asset balance due to the single sales factor apportionment resulting in lower taxable income in California.
At June 30, 2024, the Company had federal net operating loss carryforwards of $7.5 million. If not utilized, these losses will begin to expire in fiscal year 2026, and are subject to limitation on their utilization.
At June 30, 2024, the Company had state net operating loss carryforwards of $119.1 million. If not utilized, these losses will begin to expire in fiscal year 2025, and are subject to limitation on their utilization.
At June 30, 2024, the Company had foreign net operating loss carryforwards of $23.2 million. All of these losses can be carried forward indefinitely, and are subject to limitation on their utilization.
At June 30, 2024, the Company had state tax credit carryforwards of $587.5 million. Substantially all of these credits can be carried forward indefinitely.
A reconciliation of income tax expense provided at the federal statutory rate (21% in fiscal years 2024, 2023, and 2022) to actual income tax expense is as follows: 
Year Ended
June 30,
2024		June 25,
2023		June 26,
2022
 (in thousands)
Income tax expense computed at federal statutory rate$915,647 $1,072,934 $1,096,692 
State income taxes, net of federal tax benefit(37,965)(23,252)(35,584)
Foreign income taxed at different rates(313,795)(430,314)(407,989)
Settlements and reductions in uncertain tax positions(18,947)(28,968)(51,227)
Tax credits(125,523)(103,019)(96,440)
State valuation allowance, net of federal tax benefit44,916 49,073 43,502 
Equity-based compensation(11,296)15,816 (13,168)
Increases in uncertain tax positions 62,333 34,661 35,148 
Other permanent differences and miscellaneous items17,080 11,348 16,894 
$532,450 $598,279 $587,828 
Effective from fiscal year 2022, the Company has a 15-year tax incentive ruling in Malaysia for one of its foreign subsidiaries. The impact of the tax incentive decreased worldwide taxes by approximately $416.3 million, $576.0 million, and $574.7 million for fiscal years 2024, 2023, and 2022, respectively. The benefit of the tax incentive on diluted earnings per share was approximately $3.15, $4.24, and $4.09 in fiscal years 2024, 2023, and 2022, respectively.
Earnings of the Company’s foreign subsidiaries included in consolidated retained earnings that are indefinitely reinvested in foreign operations aggregated to approximately $1.1 billion at June 30, 2024. If these earnings were remitted to the United States, they would be subject to foreign withholding taxes of approximately $130.8 million at the current statutory rates. The potential tax expense associated with these foreign withholding taxes would be offset by $104.7 million of foreign tax credits that would be generated in the United States upon remittance.
On August 16, 2022, the IRA was signed into law. In general, the provisions of the IRA are effective beginning with the Company’s fiscal year 2024, with certain exceptions. The IRA includes a new 15% corporate alternative minimum tax. The Company has evaluated the impacts of the IRA, including guidance issued by the Treasury Department, and does not expect it to have a material impact on the effective tax rate.
The Company’s gross uncertain tax positions were $723.8 million, $640.2 million, and $617.4 million as of June 30, 2024, June 25, 2023, and June 26, 2022, respectively. During fiscal year 2024, gross uncertain tax positions increased by $83.6 million. The amount
of uncertain tax positions that, if recognized, would impact the effective tax rate was $622.6 million, $550.1 million, and $539.6 million, as of June 30, 2024, June 25, 2023, and June 26, 2022, respectively.
The aggregate changes in the balance of gross uncertain tax positions were as follows: 
(in thousands)
Balance as of June 27, 2021$566,771 
Settlements and effective settlements with tax authorities(14,440)
Lapse of statute of limitations(8,021)
Increases in balances related to tax positions taken during prior periods6,468 
Decreases in balances related to tax positions taken during prior periods(28,376)
Increases in balances related to tax positions taken during current period94,971 
Balance as of June 26, 2022617,373 
Settlements and effective settlements with tax authorities(50,238)
Lapse of statute of limitations(22,103)
Increases in balances related to tax positions taken during prior periods5,841 
Decreases in balances related to tax positions taken during prior periods(4,316)
Increases in balances related to tax positions taken during current period93,615 
Balance as of June 25, 2023640,172 
Settlements and effective settlements with tax authorities(9,548)
Lapse of statute of limitations(10,114)
Decreases in balances related to tax positions taken during prior periods(12,326)
Increases in balances related to tax positions taken during current period115,600 
Balance as of June 30, 2024$723,784 
The Company recognizes interest expense and penalties related to the above uncertain tax positions within income tax expense. The Company had accrued $105.7 million, $74.4 million, and $61.2 million cumulatively for gross interest and penalties as of June 30, 2024, June 25, 2023, and June 26, 2022, respectively.
The Company is subject to audits by state and foreign tax authorities. The Company is unable to make a reasonable estimate as to when cash settlements, if any, with the relevant taxing authorities will occur.
The Company files U.S. federal, U.S. state, and foreign income tax returns. As of June 30, 2024, tax years 2006-2024 remain subject to examination in the jurisdictions where the Company operates.
The IRS is examining the Company’s U.S. federal income tax returns for the fiscal years ended June 30, 2019, June 28, 2020, and June 27, 2021. To date, no significant adjustments have been proposed by the IRS. The Company is unable to make a reasonable estimate as to when cash settlements, if any, with the IRS will occur.
The Company is in various stages of examinations in connection with all of its tax audits worldwide, and it is difficult to determine when these examinations will be settled. It is reasonably possible that over the next 12-month period the Company may experience an increase or decrease in its uncertain tax positions as a result of tax examinations or lapses of statutes of limitation. The change in uncertain tax positions as a result of lapses of statutes of limitation may range up to $212.2 million.