LOS E3-33.Determine Marginal Tax Rate and the Tax on Operating Profit ANALYST ADJUSTMENTS 3.3 Amgen Inc. reported the following in its tax footnote to its 201 8 financial statements. Use this information to answer the requirements .

The reconciliations between the federal statutory tax rate applied to income before income taxes and our effective tax rate were as follows.

Year ended December 31 2018 2017 2016 Federal statutory tax rate ........ .. . . .. . .. . .... . ... . ...... 21.0% 35.0% 35.0%

2017 Tax Act, net repatriation tax .......... . ................ 70.7 Foreign earnings .. .. . .......... .. ..... .. .. ... .. . ..... ... (4.3) (15.8) (1 5.5)

2017 Tax Act, net deferred tax remeasurement. ... . .. . ........ (6.9)

Credits, Puerto Rico Excise Tax . .. .. .. ...... . .. . . . . ....... . (2.5) (2.2) (2.3)

2017 Tax Act, net impact on intercompany sales . ... . .......... (1.8)

Interest on uncertain tax positions .... . .. . .. .. .. . .. . ....... . 1.2 0.6 0.5 Credits, primarily federal R&D . . .. .. ... . . .. .... . .. . ..... ... (0.8) (0.6) (0.7)

Share-based payments ........ .. . .. .. .. . ... . .. . .. . ...... (0.2) (0.7) (1.3)

Other, net .. . .. .. .. ...... .. . .. .. .. . . ....... . . . . ....... . (0.5) (0.7)

Effective tax rate ..................... . ................ 12.1% 79.4% 15.7%

a. Determine the tax rate that we should use to compute tax on operating profit for each year.

b. Compute the amount of tax on net Ol(Jerating profit for 2018. The company reported the following items on its 2018 income statement ($ millions).

Interest expense, net ............ .

Interest and other income, net ..... .

Provision for income taxes ........ .

$1,392 674 1,151 AMGEN

(AMGN) •