XML 28 R15.htm IDEA: XBRL DOCUMENT v3.8.0.1
Income Taxes
6 Months Ended
Sep. 30, 2017
Income Tax Disclosure [Abstract]  
Income Taxes
(9) INCOME TAXES
The provision for income taxes for the three and six months ended September 30, 2017 is based on our projected annual effective tax rate for fiscal year 2018, adjusted for specific items that are required to be recognized in the period in which they are incurred. Our effective tax rate for the three and six months ended September 30, 2017 was 42.1 percent and 12.5 percent, respectively, as compared to 26.9 percent and 19.6 percent, respectively, for the same period in fiscal year 2017. The effective tax rate for the three and six months ended September 30, 2017, as compared to the three and six months ended September 30, 2016, benefited primarily due to the impact of the adoption of ASU 2016-09, which required us to recognize during the three and six months ended September 30, 2017, $3 million and $42 million, respectively, of excess tax benefits as a component of the provision for income taxes (previously excess tax benefits and tax deficiencies were recognized in additional paid-in-capital). Although the $3 million of excess tax benefits for the three months ended September 30, 2017 reduced tax expense, the effective tax rate for the three months ended September 30, 2017 increased due to the pre-tax book loss for the three months ended September 30, 2017.
When compared to the statutory rate of 35.0 percent, the effective tax rate for the three and six months ended September 30, 2017 benefited primarily due to earnings realized in countries that have lower statutory tax rates and the recognition of excess tax benefits from stock-based compensation. We anticipate that the impact of excess tax benefits and tax deficiencies may result in significant fluctuations to our effective tax rate in the future. Excluding excess tax benefits, our effective tax rate would have been 34.2 percent and 18.4 percent, respectively, for the three and six months ended September 30, 2017.
We file income tax returns and are subject to income tax examinations in various jurisdictions with respect to fiscal years after 2008. The timing and potential resolution of income tax examinations is highly uncertain. While we continue to measure our uncertain tax positions, the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ materially from the amounts accrued. It is reasonably possible that a reduction of up to $55 million of unrecognized tax benefits may occur within the next 12 months, a portion of which would impact our effective tax rate. The actual amount could vary significantly depending on the ultimate timing and nature of any settlements.