Microsoft 2010 Annual Report Download - page 59

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58
NOTE 13 — INCOME TAXES
The components of the provision for income taxes were as follows:
(In millions)
Y
ear Ended June 30, 2010
2009 2008
Current Taxes
U.S. federal $ 4,415
$ 3,159 $ 4,357
U.S. state and local 357
192 256
International 1,701
1,139 1,007
Current taxes 6,473
4,490 5,620
Deferred Taxes
Deferred taxes (220 )
762 513
Provision for income taxes $6,253
$ 5,252 $ 6,133
U.S. and international components of income before income taxes were as follows:
(In millions)
Y
ear Ended June 30, 2010
2009 2008
U.S. $9,575
$ 5,529 $ 12,682
International 15,438
14,292 11,132
Income before income taxes $ 25,013
$ 19,821 $ 23,814
The items accounting for the difference between income taxes computed at the federal statutory rate and the
provision for income taxes were as follows:
Y
ear Ended June 30, 2010
2009 2008
Federal statutory rate 35.0%
35.0% 35.0%
Effect of:
Foreign earnings taxed at lower rates (12.1)%
(9.3)% (7.0)%
Internal Revenue Service settlement 0%
0% (5.8)%
European Commission fine 0%
0% 2.1%
Other reconciling items, net 2.1%
0.8% 1.5%
Effective rate 25.0%
26.5% 25.8%
In general, other reconciling items consist of interest, U.S. state income taxes, domestic production deductions, and
research credits. In fiscal years 2010, 2009 and 2008, there were no individually significant other reconciling items.