Income Taxes |
6 Months Ended |
|---|---|
Dec. 31, 2022 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | 7. Income Taxes Fluctuations in our provision for/(benefit from) income taxes as a percentage of pre-tax earnings/(loss) (“effective tax rate”) are due to changes in international and U.S. state effective tax rates resulting from our business mix and discrete items. Effective Tax Rate During the three and six months ended December 31, 2022, the effective tax rate was 5.4 percent and 30.0 percent, respectively, and reflects the impact of the tax effects of the goodwill impairment charges recognized during the three and six months ended December 31, 2022. During the three and six months ended December 31, 2021, the effective tax rate was 105.0 percent and 153.1 percent, respectively, and reflects the impact of the tax effect of the goodwill impairment charge recognized during the three and six months ended December 31, 2021. Tax Effects of Goodwill Impairment Charges During the six months ended December 31, 2022, we recognized pre-tax goodwill impairment charges of $863 million related to the Medical Unit. The net tax benefit related to this charge is $68 million for fiscal 2023. Unless an item is considered discrete because it is unusual or infrequent, the tax impact of the item is included in our estimated annual effective tax rate. When items are recognized through our estimated annual effective tax rate, we apply our estimated annual effective tax rate to the earnings/(loss) before income taxes for the year-to-date period to compute our benefit from income taxes for the current quarter and year-to-date period. The tax impacts of discrete items are recognized in their entirety in the period in which they occur. The tax effect of the goodwill impairment charges during the six months ended December 31, 2022 was included in our estimated annual effective tax rate because it was not considered unusual or infrequent, given that we recorded goodwill impairment in prior fiscal years. The impact of the non-deductible goodwill significantly increased the estimated annual effective tax rate for fiscal 2023. Applying the higher tax rate to the pre-tax loss for the six months ended December 31, 2022 resulted in recognizing an incremental interim tax benefit of approximately $140 million, which impacted the benefit from income taxes in the condensed consolidated statements of earnings/(loss) during the six months ended December 31, 2022 and prepaid expenses and other assets in the condensed consolidated balance sheet at December 31, 2022. This incremental interim tax benefit will reverse in the future quarters of fiscal 2023. Unrecognized Tax Benefits We had $1.0 billion and $943 million of unrecognized tax benefits, at December 31, 2022 and June 30, 2022, respectively. The December 31, 2022 and June 30, 2022 balances include $889 million and $858 million of unrecognized tax benefits, respectively, that if recognized, would have an impact on the effective tax rate. At December 31, 2022 and June 30, 2022, we had $56 million and $48 million, respectively, accrued for the payment of interest and penalties related to unrecognized tax benefits, which we recognize in the provision for/(benefit from) income taxes in the condensed consolidated statements of earnings/(loss). These balances are gross amounts before any tax benefits and are included in deferred income taxes and other liabilities in the condensed consolidated balance sheets. It is reasonably possible that there could be a change in the amount of unrecognized tax benefits within the next 12 months due to activities of the U.S. Internal Revenue Service ("IRS") or other taxing authorities, possible settlement of IRS and other audit issues, reassessment of existing unrecognized tax benefits or the expiration of statutes of limitations. We estimate that the range of the possible change in unrecognized tax benefits within the next 12 months is between zero and a net decrease of up to $120 million, exclusive of penalties and interest. Other Tax Matters We file income tax returns in the U.S. federal jurisdiction, various U.S. state jurisdictions, and various foreign jurisdictions. With few exceptions, we are subject to audit by taxing authorities for fiscal years 2015 through the current fiscal year. We are a party to a tax matters agreement with CareFusion Corporation ("CareFusion"), a subsidiary of Becton, Dickinson and Company. Under the tax matters agreement, CareFusion is obligated to indemnify us for certain tax exposures and transaction taxes prior to our fiscal 2010 spin-off of CareFusion. The indemnification receivable was $78 million and $75 million at |