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Note 5 – Income Taxes
The provision for income taxes for 2015, 2014 and 2013, consisted of the following (in millions):
2015 2014 2013
Federal:
Current $ 11,730 $ 8,624 $ 9,334
Deferred 3,408 3,183 1,878
15,138 11,807 11,212
State:
Current 1,265 855 1,084
Deferred (220) (178) (311)
1,045 677 773
Foreign:
Current 4,744 2,147 1,559
Deferred (1,806) (658) (426)
2,938 1,489 1,133
Provision for income taxes $ 19,121 $ 13,973 $ 13,118
The foreign provision for income taxes is based on foreign pre-tax earnings of $47.6 billion, $33.6 billion and $30.5 billion in 2015, 2014
and 2013, respectively. The Company’s consolidated financial statements provide for any related tax liability on undistributed earnings that
the Company does not intend to be indefinitely reinvested outside the U.S. Substantially all of the Company’s undistributed international
earnings intended to be indefinitely reinvested in operations outside the U.S. were generated by subsidiaries organized in Ireland, which
has a statutory tax rate of 12.5%. As of September 26, 2015, U.S. income taxes have not been provided on a cumulative total of $91.5
billion of such earnings. The amount of unrecognized deferred tax liability related to these temporary differences is estimated to be $30.0
billion.
As of September 26, 2015 and September 27, 2014, $186.9 billion and $137.1 billion, respectively, of the Company’s cash, cash
equivalents and marketable securities were held by foreign subsidiaries and are generally based in U.S. dollar-denominated holdings.
Amounts held by foreign subsidiaries are generally subject to U.S. income taxation on repatriation to the U.S.
A reconciliation of the provision for income taxes, with the amount computed by applying the statutory federal income tax rate (35% in
2015, 2014 and 2013) to income before provision for income taxes for 2015, 2014 and 2013, is as follows (dollars in millions):
2015 2014 2013
Computed expected tax $ 25,380 $ 18,719 $ 17,554
State taxes, net of federal effect 680 469 508
Indefinitely invested earnings of foreign subsidiaries (6,470) (4,744) (4,614)
Domestic production activities deduction (426) (495) (308)
Research and development credit, net (171) (88) (287)
Other 128 112 265
Provision for income taxes $ 19,121 $ 13,973 $ 13,118
Effective tax rate 26.4% 26.1% 26.2%
The Company’s income taxes payable have been reduced by the tax benefits from employee stock plan awards. For stock options, the
Company receives an income tax benefit calculated as the tax effect of the difference between the fair market value of the stock issued at
the time of the exercise and the exercise price. For RSUs, the Company receives an income tax benefit upon the award’s vesting equal to
the tax effect of the underlying stock’s fair market value. The Company had net excess tax benefits from equity awards of $748 million,
$706 million and $643 million in 2015, 2014 and 2013, respectively, which were reflected as increases to common stock.
Apple Inc. | 2015 Form 10-K | 55