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remeasurement of our deferred tax assets and liabilities to the new, lower U.S. corporate income tax rate,
effective January 1, 2018. The effect of the remeasurement was recorded in the fourth quarter of 2017,
consistent with the enactment date of the TCJ Act, and reflected in our provision for income taxes.
The provisional measurement period allowed by the SEC ended in the fourth quarter of 2018. As a result, in
2018, we recognized a net tax benefit of $28 million ($0.02 per share) related to the TCJ Act, primarily
reflecting the impact of the final analysis of certain foreign exchange gains or losses, substantiation of foreign
tax credits, as well as cash and cash equivalents as of November 30, 2018, the tax year-end of our foreign
subsidiaries, partially offset by additional transition tax guidance issued by the United States Department of
Treasury, as well as the TCJ Act impact of both the conclusion of certain international tax audits and the
resolution with the IRS of all open matters related to the audits of taxable years 2012 and 2013, each discussed
below.
While our accounting for the recorded impact of the TCJ Act was deemed to be complete, additional guidance
issued by the IRS impacted, and may continue to impact, our recorded amounts after December 29, 2018.
In 2019, we recognized a net tax benefit totaling $8 million ($0.01 per share) related to the TCJ Act, including
the impact of additional guidance issued by the IRS in the first quarter of 2019 and adjustments related to
the filing of our 2018 U.S. federal tax return.
As of December 28, 2019, our mandatory transition tax liability was $3.3 billion, which must be paid through
2026 under the provisions of the TCJ Act. We reduced our liability through cash payments and application
of tax overpayments by $663 million in 2019 and $150 million in 2018. We currently expect to pay
approximately $0.1 billion of this liability in 2020.
The TCJ Act also created a requirement that certain income earned by foreign subsidiaries, known as global
intangible low-tax income (GILTI), must be included in the gross income of their U.S. shareholder. The
FASB allows an accounting policy election of either recognizing deferred taxes for temporary differences
expected to reverse as GILTI in future years or recognizing such taxes as a current-period expense when
incurred. During the first quarter of 2018, we elected to treat the tax effect of GILTI as a current-period
expense when incurred.
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