Oracle 2015 Annual Report Download - page 128
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Table of Contents
ORACLE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
May 31, 2016
The provision for income taxes differed from the amount computed by applying the federal statutory rate to our income before provision for income taxes as
follows:
Year Ended May 31,
(in millions) 2016 2015 2014
Tax provision at statutory rate $ 4,005 $ 4,492 $ 4,796
Foreign earnings at other than United States rates (1,284) (1,627) (1,790)
State tax expense, net of federal benefit 176 176 154
Settlements and releases from judicial decisions and statute expirations, net (150) (85) (168)
Domestic production activity deduction (155) (188) (174)
Other, net (51) 128 (69)
Total provision for income taxes $ 2,541 $ 2,896 $ 2,749
The components of our deferred tax liabilities and assets were as follows:
May 31,
(in millions) 2016 2015
Deferred tax liabilities:
Unrealized gain on stock $ (130) $ (130)
Acquired intangible assets (1,482) (1,879)
Unremitted earnings (987) (646)
Other (33) (11)
Total deferred tax liabilities $ (2,632) $ (2,666)
Deferred tax assets:
Accruals and allowances $ 492 $ 421
Employee compensation and benefits 1,149 1,123
Differences in timing of revenue recognition 351 335
Depreciation and amortization 9 155
Tax credit and net operating loss carryforwards 2,935 2,649
Total deferred tax assets $ 4,936 $ 4,683
Valuation allowance $ (1,173) $ (1,024)
Net deferred tax assets $ 1,131 $ 993
Recorded as:
Non-current deferred tax assets 1,291 1,458
Non-current deferred tax liabilities (in other non-current liabilities) (160) (465)
Net deferred tax assets $ 1,131 $ 993
We provide for United States income taxes on the undistributed earnings and the other outside basis temporary differences of foreign subsidiaries unless they are
considered indefinitely reinvested outside the United States. At May 31, 2016, the amount of temporary differences related to undistributed earnings and other
outside basis temporary differences of investments in foreign subsidiaries upon which United States income taxes have not been provided was approximately $42.6
billion and $8.3 billion, respectively. If these undistributed earnings were repatriated to the United States, or if the other outside basis differences were recognized
in a taxable transaction, they would generate foreign tax credits that would reduce the federal tax liability associated with the foreign dividend or the otherwise
taxable transaction. At May 31, 2016, assuming a full utilization of the foreign tax credits, the potential net deferred tax liability associated with these temporary
differences of undistributed earnings and other outside basis temporary differences would be approximately $13.3 billion and $2.7 billion, respectively.
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