Income Taxes

The provision for income taxes consists of the following:



	Years Ended
(In thousands)	March 30, 2019			March 31, 2018 *			April 1, 2017 *
Federal:
Current	$	90,674		$	565,765		$	(19,097	)
Deferred	(30,746		)	(370,893		)	65,049
	59,928			194,872			45,952
State:
Current	4,623			2,520			(938		)
Deferred	2,545			7,813			3,170
	7,168			10,333			2,232
Foreign:
Current	16,282			23,483			21,121
Deferred	(4,796		)	(1,290		)	638
	11,486			22,193			21,759
Total	$	78,582		$	227,398		$	69,943

* Prior year balances have been restated to reflect the retrospective application of the new revenue recognition accounting standard.

The domestic and foreign components of income before income taxes were as follows:



(In thousands)	March 30, 2019		March 31, 2018 *		April 1, 2017 *
Domestic	$	173,082	$	21,198	$	43,662
Foreign	795,250		670,181		654,414
Income before income taxes	$	968,332	$	691,379	$	698,076

* Prior year balances have been restated to reflect the retrospective application of the new revenue recognition accounting standard.

On December 22, 2017, the TCJA was enacted into law. The TCJA provides for numerous significant tax law changes and modifications including the reduction of the U.S. federal corporate income tax rate from 35% to 21%, the requirement for companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and the creation of new taxes on certain foreign-sourced earnings. Some provisions of the TCJA began to impact the Company in fiscal 2018, while other provisions impacted the Company beginning in fiscal 2019.

SAB 118 allows companies to record provisional amounts and recognize the effect of the tax law changes during a measurement period. The Company recorded provisional income tax expense of $214.7 million in its fiscal 2018 results. During fiscal 2019, the Company recorded income tax expense of $2.4 million as measurement period adjustments to the provisional amounts recorded in fiscal 2018. The measurement period adjustments include the impact of the Company's accounting policy election to recognize deferred taxes for temporary basis differences that are expected to reverse as GILTI income in future years. The measurement period ended in the third quarter of fiscal 2019. Although the measurement period has closed, further technical guidance related to the TCJA, including final regulations on a broad range of topics, is expected to be issued. In accordance with ASC 740, the Company will recognize any effects of the guidance in the period that such guidance is issued.

The Company recorded excess tax benefits associated with stock-based compensation of $14.2 million, $21.5 million, and $15.4 million in the provision for income taxes during fiscal 2019, 2018, and 2017 respectively.

As of March 30, 2019, the Company had state research tax credit carryforwards of approximately $195.9 million. The credits have no expiration date. Some of the state credit carryforwards are subject to change of ownership limitations provided by state provisions similar to that of the Internal Revenue Code. The state credit carryforwards include $148.0 million that is not likely to be recovered and has been reduced by a valuation allowance.

The provision for income taxes reconciles to the amount derived by applying the federal statutory income tax rate to income before provision for taxes as follows:



	Years Ended
(In thousands)	March 30, 2019			March 31, 2018 *			April 1, 2017 *
Income before provision for taxes	$	968,332		$	691,379		$	698,076
Federal statutory tax rate	21.0		%	31.5		%	35.0		%
Computed expected tax	203,350			217,784			244,327
State taxes, net of federal benefit	6,379			9,785			1,791
Foreign earnings at lower tax rates	(98,387		)	(188,174		)	(120,737		)
Tax credits	(31,679		)	(19,708		)	(34,146		)
Transition tax	21,063			208,523			—
Deferred tax remeasurement	—			21,834			—
Excess benefits from stock-based compensation	(14,196		)	(21,520		)	(15,396		)
Other	(7,948		)	(1,126		)	(5,896		)
Provision for income taxes	$	78,582		$	227,398		$	69,943

* Prior year balances have been restated to reflect the retrospective application of the new revenue recognition accounting standard.

The Company has manufacturing operations in Singapore where the Company has been granted "Pioneer Status" that is effective through fiscal 2021. The Pioneer Status reduces the Company's tax on the majority of Singapore income from 17% to zero percent. The benefits of Pioneer Status in Singapore for fiscal 2019, fiscal 2018 and fiscal 2017 were approximately $48.0 million ($0.19 per diluted share), $61.5 million ($0.24 per diluted share), and $56.2 million ($0.21 per diluted share), respectively. The tax effect of operations in low tax jurisdictions on the Company's overall tax rate is reflected in the table above.

The major components of deferred tax assets and liabilities consisted of the following:



(In thousands)	March 30, 2019			March 31,2018*
Deferred tax assets:
Stock-based compensation	$	18,514		$	17,213
Accrued expenses	7,744			7,340
Tax credit carryforwards	155,036			140,406
Deferred compensation plan	27,186			24,121
Low income housing and other investments	6,366			5,836
GILTI deferred taxes	38,410			—
Other	22,997			15,338
Subtotal	276,253			210,254
Valuation allowance	(118,773		)	(101,383		)
Total deferred tax assets	157,480			108,871
Deferred tax liabilities:
Unremitted foreign earnings	(5,142		)	(6,185		)
Intangible assets	(20,775		)	(762		)
Distributor price adjustments	(11,464		)	(168		)
Other	(4,975		)	(5,028		)
Total deferred tax liabilities	(42,356		)	(12,143		)
Total net deferred tax assets	$	115,124		$	96,728

* Prior year balances have been restated to reflect the retrospective application of the new revenue recognition accounting standard.

Long-term deferred tax assets of $126.7 million and $96.8 million as of March 30, 2019 and March 31, 2018, respectively, were included in other assets on the consolidated balance sheet.

As of March 30, 2019 and March 31, 2018, gross deferred tax assets were offset by valuation allowances of $118.8 million and $101.4 million, respectively, which were primarily associated with state tax credit carryforwards.

The aggregate changes in the balance of gross unrecognized tax benefits were as follows:



(In thousands)	March 30, 2019			March 31, 2018
Balance as of beginning of fiscal year	$	125,148		$	30,437
Increases in tax positions for prior years	18,156			90,716
Decreases in tax positions for prior years	(666		)	(1,063		)
Increases in tax positions for current year	5,132			5,158
Settlements	—			—
Lapses in statutes of limitation	(154		)	(100		)
Balance as of end of fiscal year	$	147,616		$	125,148

The Company’s total gross unrecognized tax benefits increased by $22.5 million during fiscal 2019. If the remaining balance of $147.6 million and $125.1 million of unrecognized tax benefits as of March 30, 2019 and March 31, 2018, respectively, were realized in a future period, it would result in a tax benefit of $35.3 million and $15.1 million, respectively, thereby reducing the effective tax rate. Another $85.5 million would increase additional paid-in capital. The $85.5 million relates to an additional deduction claimed on federal and state amended tax returns for fiscal 2014 for repurchase premium paid in that year in connection with the early redemption of the Company’s 3.125% Junior Convertible debenture due March 15, 2037.

The Company's policy is to include interest and penalties related to income tax liabilities within the provision for income taxes on the consolidated statements of income. The balances of accrued interest and penalties recorded in the consolidated balance sheets and the amounts of interest and penalties included in the Company's provisions for income taxes were not material for any period presented.

The statutes of limitations have closed for U.S. federal income tax purposes for years through fiscal 2014, for U.S. state income tax purposes for years through fiscal 2010, and for Ireland income tax purposes for years through fiscal 2014.

The Company believes its provision for unrecognized tax benefits is adequate for adjustments that may result from tax audits. However, the outcome of tax audits cannot be predicted with certainty. If any issues addressed in the Company's tax audits are resolved in a manner not consistent with management's expectations, the Company could be required to adjust its provision for income taxes in the period such resolution occurs. It is reasonably possible that changes to the Company's unrecognized tax benefits could be significant in the next twelve months due to tax audit settlements and lapses of statutes of limitation. As a result of uncertainties regarding tax audits and their possible outcomes, an estimate of the range of increase or decrease that could occur in the next twelve months cannot be made at this time.