Income Taxes |
6 Months Ended |
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Jun. 29, 2024 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | Income Taxes The Company determines its income taxes for interim reporting periods by applying the Company’s estimated annual effective tax rate to the year-to-date results, adjusted for tax items discrete to each period.
For the three and six months ended June 29, 2024, the Company recorded an income tax provision of $41 million and an income tax benefit of $11 million representing an effective tax rate of 13.4% and (2.9)%, respectively. The difference between the U.S. federal statutory tax rate of 21% and the Company's estimated annual effective tax rate was primarily due to the income tax benefit from foreign-derived intangible income (FDII) and research and development (R&D) tax credits. The tax provision for the three months ended June 29, 2024 reflected a discrete tax expense of $21 million, primarily related to interest and penalties accrued for uncertain tax positions partially offset by the tax effects of stock-based compensation. The tax benefit for the six months ended June 29, 2024 reflected a discrete tax benefit of $40 million, primarily related to stock-based compensation.
For the three months and six months ended July 1, 2023, the Company recorded an income tax benefit of $23 million and $10 million representing an effective tax rate of (511.4)% and 8.0%, respectively. The difference between the U.S. federal statutory tax rate of 21% and the Company's estimated annual effective tax rate was primarily due to the income tax benefit from FDII and R&D tax credits. The tax benefit for the three months ended July 1, 2023 reflected a discrete tax benefit of $34 million that had a disproportionate impact on the effective tax rate because the pre-tax income was close to breakeven for the period. The tax benefit for the six months ended July 1, 2023, reflected a discrete tax benefit of $12 million which was not material to the total tax expense or the effective tax rate. As of June 29, 2024 and December 30, 2023, the Company had long-term income tax liabilities related to unrecognized tax benefits of $1.5 billion and $1.4 billion, respectively, recorded under Other long-term liabilities in the balance sheet.
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