Income Taxes

3 Months Ended

Mar. 28, 2020

Note 5. Income Taxes

The provision for income taxes in the accompanying statement of income differs from the provision calculated by applying the statutory federal income tax rate to income before provision for income taxes due to the following:


	Three Months Ended
	March 28,			March 30,
(In millions)	2020			2019

Statutory Federal Income Tax Rate	21		%	21		%

Provision for Income Taxes at Statutory Rate	$	174		$	172

Increases (Decreases) Resulting From:
Foreign rate differential	(88)			(36)
Foreign exchange loss on inter-company debt refinancing	—			(62)
Income tax credits	(67)			(72)
Global intangible low-taxed income	61			70
Foreign-derived intangible income	(17)			(12)




Transition tax and other impacts of U.S. tax reform	—			(20)


Excess tax benefits from stock options and restricted stock units	(28)			(36)




Other, net	5			(2)

Provision for Income Taxes	$	40		$	2

The company has operations and a taxable presence in approximately 50 countries outside the U.S. The company's effective income tax rate differs from the U.S. federal statutory rate each year due to certain operations that are subject to tax incentives, state and local taxes, and foreign taxes that are different than the U.S. federal statutory rate.

Unrecognized Tax Benefits

As of March 28, 2020, the company had $1.55 billion of unrecognized tax benefits substantially all of which, if recognized, would reduce the effective tax rate.

A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:


(In millions)	2020

Balance at Beginning of Year	$	1,552


Additions for tax positions of current year	2



Settlements	(7)

Balance at End of Period	$	1,547