Income Taxes |
9 Months Ended |
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Sep. 25, 2020 | |
| Income taxes | |
| Income Taxes | INCOME TAXES The Company recorded income taxes of $441 million (20.2 percent effective tax rate) and $503 million (16.3 percent effective tax rate) during the three months ended September 25, 2020 and September 27, 2019, respectively. The Company recorded income taxes of $1,094 million (14.8 percent effective tax rate) and $1,446 million (17.3 percent effective tax rate) during the nine months ended September 25, 2020 and September 27, 2019, respectively.
The Company's effective tax rates for the three and nine months ended September 25, 2020 and September 27, 2019 vary from the statutory U.S. federal income tax rate of 21.0 percent primarily due to the tax impact of significant operating and nonoperating items, along with the tax benefits of having significant operations outside the United States and significant earnings generated in investments accounted for under the equity method, both of which are generally taxed at rates lower than the statutory U.S. rate.
The Company's effective tax rates for the three and nine months ended September 25, 2020 included $15 million of net tax expense and $138 million of net tax benefit, respectively, associated with various discrete tax items, including return to provision adjustments, excess tax benefits associated with the Company's stock-based compensation arrangements, the net tax impact of tax law changes in certain foreign jurisdictions, and net tax charges for changes to our uncertain tax positions, including interest and penalties. The Company's effective tax rate for the nine months ended September 25, 2020 also included a tax benefit of $40 million associated with the gain recorded upon the acquisition of the remaining interest in fairlife. Refer to Note 2 for additional information on the fairlife acquisition.
The Company's effective tax rates for the three and nine months ended September 27, 2019 included $213 million and $245 million, respectively, of net tax benefits recorded. These net tax benefits were primarily associated with return to provision adjustments, but also included excess tax benefits associated with the Company's stock-based compensation arrangements, net tax charges for various resolved tax audit issues, and net tax charges for changes to our uncertain tax positions, including interest and penalties. The Company's effective tax rate for the nine months ended September 27, 2019 also included a tax benefit of $199 million recorded as a result of CCBA no longer qualifying as a discontinued operation. Refer to Note 2 for additional information on CCBA.
On September 17, 2015, the Company received a Statutory Notice of Deficiency from the IRS for the tax years 2007 through 2009, after a five-year audit. The Company contested the proposed adjustments in U.S. Tax Court and is currently awaiting a decision. Refer to Note 8.
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