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Income Taxes
 9 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Income tax expense related to continuing operations was as follows:
Three Months Ended December 31, Nine Months Ended December 31,
(Dollars in millions)2022202120222021
Income tax expense$329 $238 $799 $396 
Reported income tax rate22.7 %85.9 %21.6 %30.9 %
Fluctuations in the Company’s reported income tax rates were primarily due to non-cash charges related to remeasuring the value of the E.U. and U.K. disposal groups held for sale to fair value less costs to sell in fiscal 2022, changes in the mix of earnings between various taxing jurisdictions, and discrete items recognized in the quarters.
During the nine months ended December 31, 2022, the Company recognized net discrete tax benefits primarily related to the tax impact of share-based compensation of $55 million. During the third quarter of fiscal 2022, the Company recognized a net discrete tax benefit of $42 million primarily related to a decrease in the income recognized pursuant to the global intangible low-tax income (“GILTI”) regime in its 2021 U.S. Federal income tax return and the statute of limitation expirations in various taxing jurisdictions. During the nine months ended December 31, 2021, the Company recognized net discrete tax benefits primarily related to statute of limitation expirations of $115 million in various taxing jurisdictions and $81 million related to a reduction of GILTI income in the prior year.
During the nine months ended December 31, 2021, the Company recorded non-cash pre-tax charges of $517 million primarily to remeasure the E.U. disposal group to fair value less costs to sell, and, during the three and nine months ended December 31, 2021, recorded non-cash pre-tax charges of $853 million to remeasure the U.K. disposal group and the Austrian business to fair value less costs to sell, as described in Financial Note 2, “Business Acquisitions and Divestitures.” The Company’s reported income tax rates for the three and nine months ended December 31, 2021 were unfavorably impacted by this due to the non-deductible nature of the majority of these charges for income tax purposes.
As of December 31, 2022, the Company had $1.5 billion of unrecognized tax benefits, of which $1.4 billion would reduce income tax expense and the effective tax rate if recognized. During the next twelve months, it is reasonably possible that our unrecognized tax benefits may decrease by as much as $170 million to $195 million due to settlements of tax examinations and statute of limitation expirations based on the information currently available. However, this may change as the Company continues to have ongoing discussions with various taxing authorities throughout the year, and if the ultimate resolution of unrecognized tax benefits differs from this estimated range, the Company will record any additional income tax expense or benefit as necessary in the appropriate period. The unrecognized tax benefit may also increase or decrease due to future developments in opioid-related litigation and claims, as discussed in Financial Note 12, “Commitments and Contingent Liabilities.”
The Company files income tax returns in the U.S. federal jurisdiction, various U.S. state jurisdictions, and various foreign jurisdictions. The Internal Revenue Service (“IRS”) is currently examining the Company’s U.S. corporation income tax returns for 2018 and 2019. The Company is generally subject to audit by taxing authorities in various U.S. states and in foreign jurisdictions for fiscal years 2014 through the current fiscal year.