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Experts from Starbucks Corporations tax note from the companys Forem 10-K for the year ended September 27, 2015, follow. Sep. 29, 2013 Fiscal Year Ended

Experts from Starbucks Corporations tax note from the companys Forem 10-K for the year ended September 27, 2015, follow.

Sep. 29, 2013
Fiscal Year Ended Sep.27, 2015 Sep. 28, 2014 Total Litigation Charge All Other
Current taxes:
Federal $801.0 $822.7 $616.6 $616.6
State 150.1 132.9 93.8 93.8
Foreign 172.2 128.8 95.9 0.0 95.9
Total current taxes 1,123.3 1,084.4 806.3 0.0 806.3
Deferred taxes:
Federal 56.5 12.0 (898.8) (922.3) 23.5
State 4.0 (4.9) (144.0) (148.7) 4.7
Foreign (40.1) 0.5 (2.2) 0.0 (2.2)
Total deferred taxes 20.4 7.6 (1,045.0) (1,071.0) 26.0
Total provision for income taxes $1,143.7 $1,092.0 ($238.7) ($1,071.0) $832.3

Sep. 29, 2013
Fiscal Year Ended Sep.27, 2015 Sep. 28, 2014 Total Litigation Charge All Other
Statutory rate 35.0% 35.0% 35.0% 35.0% 35.0%
State income tax, net of federal tax benefits 2.8 2.6 15.8 3.5 2.4
Benefits and taxes related to foreign operations (2.1) (1.9) 37.5 (3.4)
Domestic production activity deduction (2.2) (0.7) 8.1 (0.7)
Domestic tax credits (0.2) (0.2) 2.8 (0.3)
Charitable contributions (0.3) (0.4) 3.9 (0.3)
Gain resulting from acquisitions of joint venture (3.7)
Other, net 0.0 0.2 0.7 0.0 (0.1)
Effective tax rate 29.3% 34.6% 103.8% 38.5% 32.6%

Sep. 27, 2015 Sep. 28, 2014
Deferred tax assets:
Property, plant, and equipment $121.4 $78.5
Accrued occupancy costs 98.4 58.8
Accrued compensation and related costs 81.7 75.3
Other accrued liabilities 49.0 27.6
Asset retainment obligation asset 29.0 18.6
Stored value card liability 99.1 63.4
Asset impairments 26.6 49.5
Tax credits 20.8 20.3
Stock-based compensation 135.5 131.5
Net operating losses 93.4 104.4
Litigation charge 931.0 1,002.0
Other 104.5 77.0
Total 1,790.0 1,706.9
Valuation allowance (143.7) (166.8
Total deferred ta asset, net of valuation allowance 1,646.3 1,540.1
Deferred tax liabilities:
Property, plant, and equipment (217.5) (148.2)
Intangible assets and goodwill (177.3) (92.9)
Other (114.1) (89.4)
Total (508.9) (330.5)
Net deferred tax asset $1,138.4 $1,209.6
Reported as:
Current deferred income tax assets $381.7 $317.4
Long-term deferred income tax assets 828.9 903.3
Current deferred income tax liabilities (included in Accrued liabilities)

(5.4)

(4.2)

Long-term deferred income tax liabilities (included in Other long-term liabilities)

(67.8)

(6.9)

Net deferred tax assets $1,137.4 $1,209.6

Required:

  1. Provide a journal entry to record the aggregate income tax expense for the year ended September 27, 2015.
  2. What amount of Starbucks income tax expense for the year ended September 27, 2015 was deferred? Did this deferred result in an increase in deferred tax liabilities or a decrease in deferred tax assets?
  3. Estimate Starbucks earnings before taxes in the year ended September 27, 2015.
  4. What tax policy or operating decision accounts for the majority of the divergence between Starbucks statutory tax rate and effective tax rate?
  5. Forecast Starbucks effective tax rate for the year ended September 25, 2016.
  6. Starbucks included in its tax note the following statement:

Our effective tax rate in fiscal 2013 was significantly affected by the litigation charge we recorded as a result of the conclusion of our arbitration with Kraft. In order to provide a more meaningful analysis of tax expense and the effective tax rate, the tables above present separate reconciliations of the effect of the litigation charge.

What was the pre-tax amount of the litigation charge taken in fiscal 2013?

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