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Income Taxes
3 Months Ended
Nov. 30, 2016
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes
We have historically determined our interim income tax provision by applying our estimated effective income tax rate expected to be applicable for the full fiscal year to our income before income taxes for the period. Our effective income tax rate is dependent upon several factors, such as tax rates in state and foreign jurisdictions and the relative amount of income we earn in such jurisdictions. In determining our full year estimate, we do not include the estimated impact of unusual and/or infrequent items, which may cause significant variations in the customary relationship between income tax expense and income before income taxes. We exercise significant judgment in determining our income tax provision due to transactions, credits and calculations where the ultimate tax determination is uncertain.
Beginning in the first quarter of fiscal year 2016, we used the discrete method to calculate our interim tax provision based primarily on the significant uncertainty associated with our future operating results and the associated impact on our estimated year-to-date income tax expense. Under the discrete method, we determine our tax expense for interim periods based on actual results as if the interim period were an annual period. We have continued using the discrete method for interim periods through the first quarter of fiscal year 2017 as we believe the method provides a more reasonable interim income tax provision as compared to the estimated annual effective tax rate method.
During fiscal year 2015, the Internal Revenue Service (“IRS”) completed its review of our U.S. federal income tax return for fiscal year 2014. Our U.S. federal income tax return for fiscal year 2013 is currently open for review by the IRS and we are also participating in the IRS’s Compliance Assurance Process for fiscal years 2015, 2016 and 2017 which is a voluntary program in which taxpayers seek to resolve all or most issues with the IRS prior to or soon after filing their U.S. federal income tax returns. Additionally, we are subject to numerous ongoing audits by state, local and foreign tax authorities with various tax years as early as 2007 that remain subject to examination.
Although we believe our tax accruals are reasonable, the final determination of tax returns under review or returns that may be reviewed in the future and any related litigation could result in tax liabilities that materially differ from our historical income tax provisions and accruals.