Income Taxes

3 Months Ended

Jun. 30, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Note 10 – Income Taxes

Our provision for income taxes was $54 million for the three months ended June 30, 2023, compared to $51 million for the same period in fiscal 2023. Our effective tax rate was 10 percent for the three months ended June 30, 2023, compared to 23 percent for the same period in fiscal 2023. The lower effective tax rate for the first quarter of fiscal 2024, compared to the same period in fiscal 2023, was primarily attributable to the increase in federal tax credit for commercial electric vehicles in the current period.

In August 2022, the Inflation Reduction Act (“the Act”) was signed into law. The Act modifies climate and clean energy corporate tax provisions, including amendments to the federal tax credit for plug-in vehicles available under current tax law. The Act also includes a 15 percent corporate alternative minimum tax based on modified financial statement net income, applying to tax years beginning after December 31, 2022, which is applicable in fiscal 2024. We do not expect to pay a significant amount of corporate alternative minimum tax in addition to our regular federal income tax in fiscal 2024.

Tax-related Contingencies

As of June 30, 2023, we remain under IRS examination for fiscal 2018 through fiscal 2024.

We periodically review our uncertain tax positions. Our assessment is based on many factors including any ongoing IRS audits. For the three months ended June 30, 2023, our assessment did not result in a material change in unrecognized tax benefits.

Our deferred tax assets include the cumulative federal and state net operating loss carry forwards, deferred deduction of allowance for credit losses and residual value loss estimates, mark-to-market adjustment of investment in marketable securities, and other deferred costs. The total deferred tax liability, net of these deferred tax assets, was $3.5 billion and $3.7 billion at June 30, 2023 and March 31, 2023, respectively. Although realization of the deferred tax assets is not assured, management believes it is more likely than not that the deferred tax assets will be realized. The amount of the deferred tax assets considered realizable could be reduced if management’s estimates change.