Income Taxes (Tables)

12 Months Ended

Mar. 31, 2022

Income Tax Disclosure [Abstract]

Schedule of income (loss) from continuing operations before income taxes

	Years Ended March 31,
(In millions)	2022		2021		2020
Income (loss) from continuing operations before income taxes
U.S.	$	1,944	$	(6,019)	$	216
Foreign	(16)		985		928
Income (loss) from continuing operations before income taxes	$	1,928	$	(5,034)	$	1,144

Schedule of income tax expense (benefit) related to continuing operations

Income tax expense (benefit) related to continuing operations consists of the following:

	Years Ended March 31,
(In millions)	2022		2021		2020
Current
Federal	$	233	$	(15)	$	170
State	129		47		48
Foreign	240		181		142
Total current	602		213		360
Deferred
Federal	88		(562)		(204)
State	(16)		(204)		(105)
Foreign	(38)		(142)		(33)
Total deferred	34		(908)		(342)
Income tax expense (benefit)	$	636	$	(695)	$	18

Schedule of reconciliation between effective tax rate on income from continuing operations and statutory tax rate

The reconciliation of income tax expense (benefit) and the amount computed by applying the statutory federal income tax rate of 21.0% to income before income taxes is as follows:

	Years Ended March 31,
(In millions)	2022		2021		2020
Income tax expense (benefit) at federal statutory rate	$	405	$	(1,057)	$	240
State income taxes, net of federal tax benefit	83		(206)		(41)
Tax effect of foreign operations	(186)		(77)		(81)
Unrecognized tax benefits and settlements	(26)		41		(7)
Opioid-related litigation and claims	38		715		—
Net tax benefit on intellectual property transfer	—		(105)		—
Tax-free gain on investment exit (1)	—		—		(87)
E.U. disposal transaction loss	345		—		—
Capital loss carryback	—		—		(19)
Other, net (2)	(23)		(6)		13
Income tax expense (benefit)	$	636	$	(695)	$	18

(1)Refer to Financial Note 4, “Business Acquisitions and Divestitures,” for additional information regarding the separation of the Change Healthcare JV.

(2)The Company’s effective tax rates were impacted by other favorable U.S. federal permanent differences including research and development credits of $4 million, $5 million, and $7 million in 2022, 2021, and 2020.

Schedule of deferred tax balances

Deferred tax balances consisted of the following:

	March 31,
(In millions)	2022		2021
Assets
Receivable allowances	$	49	$	69
Opioid-related litigation and claims	755		724
Compensation and benefit related accruals	285		305
Net operating loss and credit carryforwards	739		974
Lease obligations	422		539
Other	83		115
Subtotal	2,333		2,726
Less: valuation allowance	(726)		(864)
Total assets	1,607		1,862
Liabilities
Inventory valuation and other assets	(1,993)		(1,939)
Fixed assets and systems development costs	(184)		(196)
Intangibles	(233)		(411)
Lease right-of-use assets	(401)		(505)
Other	(17)		(37)
Total liabilities	(2,828)		(3,088)
Net deferred tax liability	$	(1,221)	$	(1,226)
Long-term deferred tax asset	$	197	$	185
Long-term deferred tax liability	(1,418)		(1,411)
Net deferred tax liability	$	(1,221)	$	(1,226)

Excluded from the amounts above were $48 million of net deferred tax liabilities which were classified as held for sale for European divestitures at March 31, 2022, as discussed in Financial Note 2, “Held for Sale.”

Schedule of gross unrecognized tax benefits

The following table summarizes the activity related to the Company’s gross unrecognized tax benefits for the last three years:

	Years Ended March 31,
(In millions)	2022		2021		2020
Unrecognized tax benefits at beginning of period	$	1,754	$	958	$	1,052
Additions based on tax positions related to prior years	14		53		20
Reductions based on tax positions related to prior years	(131)		(5)		(168)
Additions based on tax positions related to current year	14		755		82
Reductions based on settlements	(20)		(8)		(8)
Reductions based on the lapse of the applicable statutes of limitations	(102)		(12)		(13)
Exchange rate fluctuations	(6)		13		(7)
Unrecognized tax benefits at end of period	$	1,523	$	1,754	$	958