P18-47. Analyzing and Interpreting Income Tax F Comider the blowing me foot infion for Chr Fede Defered b Fag The provision for income tax offered from the and US try a rate Impact of the Tax Act of 2017 One-mention Defened tax effects... State tax expense met of federal benef Forgings at other than Used Se Settlements and teases bom judicial c Demic production activity deduction Other, nat The components of our deferen May 31 (n) Deferred Deferred tax le - 140 915 142 May 11,31 2017 360% 1717 11.30 2875 (1254) What is the total amount of income tax expe that Oracle reposical 29 income t ment? What portion of this expense did Oracle pay during 2019 or expect to pay in 2000 Explain how the defened tas lubility called "Aspired intangible anetares Under what constances will the company sesle this liability? Under what cica deferred indefinitely Explain how the deferred tax amet called "Employer compen ce ghe this liability be wined as an a The provision for income taxes differed from the amount computed by applying the federal statutory rate to our income before provision for income taxes Year Ended May 31 (in millions) 2010 2018 2017 U.S. federal statutory tax rate. Tax provision at statutory rate 21.0% 29.2% 350% $2.570 $3.629 $4,08 Impact of the Tax Act of 2017 One-time transition tax... 7.781 Delamed tax effects. 140 (911) Foreign eamings at other than United States des (79) (1312) State tax expense, net of federal benef 197 142 150 Settlements and releases from judicial decisions and statute expirations, net.. (132) (252) Domestic production activity deduction (87) (119) Federal research and development cred (174) (127) Stock-based compensation 2011 (302) (149) Other, net. (114) Total provision for income taxes $1,185 $8.837 $2.226 The components of our deferred tax assets and abilities were as folows: continued May 31 (in millions) 2019 2018 Deferred tax asses Accruals and allowances. $541 $567 Employee compensation and benefits 646 664 Differences in timing of revenue recognition 322 330 Basis of property, plant and equipm 1238 Tax credt and net operating loss canyonwards. 3717 2.614 Total deferred tax asses 6454 4,183 Valuation allowance.... (1200) (1.308) Total deferred assets, net 5.19 2.875 Deferred tax lebites Unrealized gain on stock (78) Acquired intangible assets (78) (1.254) GILTI deemed... (1515) Basis of property, plant (158) Other Total deferred tax labides (2.766) (1.538) $1.337 Required . What is the total amount of income tax expense that Oracle reports in its fiscal 2019 income state- ment? What portion of this expense did Oracle pay during 2019 or expect to pay in 20202 b. Explain how the deferred tax liability called "Acquired intangible assets" arises. Under what cir- cumstances will the company settle this liability? Under what circumstances might this liability be deferred indefinitely? c. Explain how the deferred tux asset called "Employee compensation and benefits arises. Why is it recognized as an asset? d. Explain how the deferred tax asset called "Tax credit and net operating loss carryforwards" arises Under what circumstances will Oracle realize the benefits of this aset e. Oracle reports a 2019 valuation allowance of $1.266 million. How does this valuation allowance arise? How did the change in valuation allowance for 2019 affect net income? Valuation allowances typically relate to question about the realizability of tax loss carry forwards. Under what circum- stances might Oracle not realize the benefits of its tex loss carryforward? J. Calculate Oracle's effective (average) tax rate for each year. 2. Oracle reconciles the difference between its total provision for income tax and the statutory rate. What item explains most of the difference in fiscal 2017 compared to fiscal 2018? A. If not for the effects of the Tax Cuts and Jobs Act of 2017, what would have been Oracle's effective tax rate each year? It's Analyzing Financial Statement class. Please show your work with details Thank you ORACLE CORPORATION (ORCL) Consider the following income tax footnote information for Oracle for the fiscal year ended May 31, 2019 (fiscal year 2019). The following is a geographical breakdown of income before the provision for income taxes: Year Ended May 31 (in millions) Domestic.. Foreign.... Income before provision for income taxes. The provision for income taxes consisted of the following: 2019 2018 $ 3,774 8,494 $3,366 9,058 2017 $ 3,674 8,006 $12.268 $12,424 $11,680 Year Ended May 31 (S in millions) Current provision: Federal... State... Foreign.. Total current provision. 2019 2018 2017 $ 979 300 $8,320 $ 936 1,097 264 1,100 257 1,475 $2.376 $9.684 $2.668 Deferred benefit: Federal.. State... Foreign.. Total deferred benefit.. Total provision for income taxes.. $ 483 $ (827) $ (158) (28) (26) (1.646) (29) (253) $(1.191) $ (847) $ (440) $1,185 $8.837 $2.228 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 (S in millions) U.S. federal statutory tax rate... Tax provision at statutory rate a Impact of the Tax Act of 2017: One-time transition tax.. Deferred tax effects. Foreign earnings at other than United States rates State tax expense, net of federal benefit.. Settlements and releases from judicial decisions and statute expirations, net Domestic production activity deduction Federal research and development credit Stock-based compensation Other, net... Total provision for income taxes. 2019 2018 2017 21.0% 29.2% 35.0% $2.576 $3.629 $4,088 (529) 7,781 140 (911) (789) (995) (1.312) 197 142 150 (132) (252) (189) (87) (119) (158) (174) (127) (201) (302) (149) 81 6 (114) $1,185 $8,837 $2.228 continued continued from previous page The components of our deferred tax assets and liabilities were as follows: May 31 (in millions) 2019 2018 Deferred tax assets: Accruals and allowances... $ 541 $ 567 Employee compensation and benefits. 646 664 Differences in timing of revenue recognition. 322 338 Basis of property, plant and equipment and intangible assets. 1,238 Tax credit and net operating loss carryforwards 3,717 2,614 Total deferred tax assets.. 6,464 4,183 Valuation allowance... (1,266) (1,308) Total deferred tax assets, net.. 5,198 2.875 Deferred tax liabilities: Unrealized gain on stock. (78) (78) Acquired intangible assets. (973) (1,254) GILTI deferred... (1,515) Basis of property, plant and equipment and intangible assets. (158) Other.... (200) (48) Total deferred tax liabilities. (2,766) (1.538) Net deferred tax assets. $2,432 $1,337 Required a. What is the total amount of income tax expense that Oracle reports in its fiscal 2019 income state- ment? What portion of this expense did Oracle pay during 2019 or expect to pay in 2020? b. Explain how the deferred tax liability called "Acquired intangible assets" arises. Under what cir- cumstances will the company settle this liability? Under what circumstances might this liability be deferred indefinitely? c. Explain how the deferred tax asset called "Employee compensation and benefits" arises. Why is it recognized as an asset? d. Explain how the deferred tax asset called "Tax credit and net operating loss carryforwards" arises. Under what circumstances will Oracle realize the benefits of this asset? e. Oracle reports a 2019 valuation allowance of $1,266 million. How does this valuation allowance arise? How did the change in valuation allowance for 2019 affect net income? Valuation allowances typically relate to questions about the realizability of tax loss carryforwards. Under what circum- stances might Oracle not realize the benefits of its tax loss carryforwards? f. Calculate Oracle's effective (average) tax rate for each year. g. Oracle reconciles the difference between its total provision for income tax and the statutory rate. What item explains most of the difference in fiscal 2017 compared to fiscal 2018? h. If not for the effects of the Tax Cuts and Jobs Act of 2017, what would have been Oracle's effective tax rate each year