Question
The following table provides the components of Income from continuing operations before provision (benefit) for taxes on income for a pharma company The following table
The following table provides the components of Income from continuing operations before provision (benefit) for taxes on income for a pharma company
The following table provides the components of Provision (benefit) for taxes on income based on the location of the taxing authorities:
In the fourth quarter of 2017, we recorded an estimate of certain tax effects of the TCJA, including (i) the impact on deferred tax assets and liabilities from the reduction in the U.S. Federal corporate tax rate from 35% to 21%, (ii) the impact on valuation allowances and other state income tax considerations, (iii) the $15.2 billion repatriation tax liability on accumulated post-1986 foreign earnings for which we plan to elect, with the filing of our 2018 U.S. Federal Consolidated Income Tax Return, payment over eight years through 2026 that is reported in Other taxes payable in our consolidated balance sheet as of December 31, 2017 and (iv) deferred taxes on basis differences expected to give rise to future taxes on global intangible low-taxed income. As a result of the TCJA, in the fourth quarter of 2017, we reversed an estimate of the deferred taxes that are no longer expected to be needed due to the change to the territorial tax system.
a. What is the amount of income tax expense reported by pharma company's for each year? What amount is current versus deferred?
b. What is the pharma company's effective (average) tax rate for each year?
c. Use the pretax information to determine the effective tax rate for U.S. operations for each year.
d. The footnote includes amounts related to the TCJA of 2017. What was the effect on the companys tax expense in 2017 and 2018 due to the TCJA
\begin{tabular}{|l|r|r|r|} \hline Year Ended December 31, \$ millions & 2018 & 2017 & 2016 \\ \hline United States & ($4,403) & ($6,879) & ($8,534) \\ \hline International & 16,288 & 19,184 & 16,886 \\ \hline Income from continuing operations before provision for taxes & $11,885 & $12,305 & $8,352 \\ \hline \end{tabular}Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started