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Income Taxes
9 Months Ended
Jan. 02, 2015
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes
The effective tax rate was approximately 29% and 26% for the three and nine months ended January 2, 2015, and 27% and 21% for the three and nine months ended December 27, 2013, respectively.
For the three and nine months ended January 2, 2015, the tax expense was reduced by $8 million and $28 million, respectively, in tax benefits primarily resulting from tax settlements, lapses of statutes of limitations, and prior year items. The tax provision was also reduced by $2 million in tax benefits for the three and nine months ended January 2, 2015 resulting from the extension of the U.S. federal research and development tax credit through 2014 ("R&D credit") as part of the Tax Increase Prevention Act of 2014. There was no benefit to the tax provision, in the three and nine months ended January 2, 2015, resulting from separation costs incurred in these periods.
For the three and nine months ended December 27, 2013, the tax provision was reduced by a net tax benefit of $7 million related to certain foreign operations. The tax provision for the three and nine months ended December 27, 2013 was also reduced by $2 million and $13 million in tax benefits, respectively, primarily resulting from individually insignificant tax settlements, lapses of statutes of limitations, and prior year items. For the nine months ended December 27, 2013, the tax provision was further reduced by $33 million for the resolution of a tax matter related to the sale of our 49% ownership interest in the joint venture with Huawei during the fourth quarter of fiscal 2012, as well as by $24 million for tax benefits related to the settlement of the Symantec 2005 through 2008 Internal Revenue Service (“IRS”) audit. These tax benefits were partially offset by $12 million in tax expense, in the nine months ended December 27, 2013, resulting from the sale of short-term investments.
The provision for the three and nine months ended January 2, 2015 and December 27, 2013 otherwise reflects a forecasted tax rate of 28% and 29%, for each period, respectively. The forecasted tax rates for all periods presented reflect the benefits of lower-taxed international earnings and domestic manufacturing incentives, and the R&D credit, partially offset by state income taxes. The forecasted tax rate for the period ended January 2, 2015 includes the partial benefit of the R&D credit which expired on December 31, 2014.
We are a U.S.-based multinational company subject to tax in multiple U.S. and international tax jurisdictions. A substantial portion of our international earnings were generated from subsidiaries organized in Ireland and Singapore. Our results of operations would be adversely affected to the extent that our geographical mix of income becomes more weighted toward jurisdictions with higher tax rates and would be favorably affected to the extent the relative geographic mix shifts to lower tax jurisdictions. Any change in our mix of earnings is dependent upon many factors and is therefore difficult to predict.
The timing of the resolution of income tax examinations is highly uncertain, and the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ materially from the amounts accrued for each year. Although potential resolution of uncertain tax positions involve multiple tax periods and jurisdictions, it is reasonably possible that the gross unrecognized tax benefits related to these audits could decrease, whether by payment, remeasurement, and/or release in the next 12 months, by between $30 million and $150 million. Depending on the nature and timing of such settlements and expiration of statutes of limitations during the next 12 months, we estimate between $15 million and $70 million could affect our income tax provision and therefore benefit the resulting effective tax rate. As of January 2, 2015, we have $127 million on deposit with the IRS pertaining to U.S. tax matters in the Symantec fiscal 2009 through 2013 audit cycle, and it is reasonably possible that additional cash payments between $15 million and $65 million will be made in the next 12 months.
We continue to monitor the progress of ongoing tax controversies and the impact, if any, of the expected expiration of the statute of limitations in various taxing jurisdictions.