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Income Taxes
6 Months Ended
Jan. 02, 2016
Income Tax Disclosure [Abstract]  
Income Taxes
Note 12. Income Taxes
The Company recorded an income tax benefit of $1.2 million and $0.4 million related to the income (loss) from continuing operations for the three and six months ended months ended January 2, 2016, respectively. The Company recorded an income tax expense of $8.5 million and $14.3 million related to the loss from continuing operations for the three and six months ended December 27, 2014, respectively.
The income tax benefit related to the income (loss) from continuing operations recorded for the three and six months ended January 2, 2016 and December 27, 2014 primarily relates to income tax in certain foreign and state jurisdictions based on the Company’s forecasted pre-tax income or loss for the respective year. In addition, for the three and six months ended January 2, 2016 the Company’s income tax provision includes a tax benefit of $8.8 million and $22.2 million, respectively, related to the income tax intraperiod tax allocation rules for discontinued operations and other comprehensive income. The income tax benefit related to the loss from continuing operations for the six months ended January 2, 2016 also includes a tax expense of $8.9 million related to a one-time increase in valuation allowance associated with deferred tax assets transferred to Lumentum in connection with the Separation.
The income tax expense (benefit) related to the income (loss) from continuing operations recorded differs from the expected tax expense (benefit) that would be calculated by applying the federal statutory rate to the Company’s income (loss) from continuing operations before taxes primarily due to the increases in valuation allowance for deferred tax assets attributable to the Company’s domestic and foreign losses from continuing operations, the income tax benefit recorded in continuing operations under the income tax intraperiod tax allocation rules, and the increase in valuation allowance associated with deferred tax assets transferred to Lumentum in connection with the separation.
At the beginning of the second quarter of fiscal 2016, the Company prospectively adopted the authoritative guidance on balance sheet classification of deferred taxes, which requires deferred tax assets and liabilities, and any related valuation allowance, to be classified as non-current on the balance sheet. The adoption resulted in a reclass of $3.1 million of current net deferred tax assets and $0.7 million of current net deferred tax liabilities to non-current deferred assets and liabilities netted on a jurisdiction by jurisdiction basis.
As of January 2, 2016 and June 27, 2015, the Company’s unrecognized tax benefits totaled $37.0 million and $37.4 million, respectively, and are included in deferred taxes and other non-current tax liabilities, net. The Company had $1.6 million accrued for the payment of interest and penalties at January 2, 2016. The unrecognized tax benefits that may be recognized during the next twelve months are approximately $0.1 million.