INCOME TAXES (Tables)

12 Months Ended

Jun. 30, 2017

The components of the provision for income taxes were as follows:

U.S. and foreign components of income (loss) before income taxes were as follows:

The items accounting for the difference between income taxes computed at the U.S. federal statutory rate and our effective rate were as follows:



Year Ended June 30,	2017		2016		2015

Federal statutory rate		35.0%		35.0%		35.0%
Effect of:
Foreign earnings taxed at lower rates		(15.7)%		(19.4)%		(20.9)%
Phone business losses		(7.3)%		1.3%		19.1%
Excess tax benefits relating to stock-based compensation		(2.7)%		(2.0)%		0%
Domestic production activities deduction		(1.4)%		(0.6)%		(2.4)%
Interest, net		1.8%		1.2%		1.5%
Other reconciling items, net		(1.3)%		(0.5)%		1.8%


Effective rate		8.4%		15.0%		34.1%

The components of the deferred income tax assets and liabilities were as follows:

(In millions)


June 30,	2017			2016

Deferred Income Tax Assets

Stock-based compensation expense	$	777		$	809
Other expense items		1,550			1,609
Restructuring charges		66			284
Unearned revenue		1,889			494
Impaired investments		59			226
Loss carryforwards		4,809			4,252
Depreciation and amortization		53			115
Other revenue items		130			89


Deferred income tax assets		9,333			7,878
Less valuation allowance		(3,310	)		(4,729	)


Deferred income tax assets, net of valuation allowance	$	6,023		$	3,149


Deferred Income Tax Liabilities

Foreign earnings	$	(1,107	)	$	(1,242	)
Unrealized gain on investments and debt		(1,384	)		(2,102	)
Depreciation and amortization		(1,630	)		(1,008	)
Other		(21	)		(54	)


Deferred income tax liabilities		(4,142	)		(4,406	)


Net deferred income tax assets (liabilities)	$	1,881		$	(1,257	)


Reported As

Other long-term assets	$	2,412		$	219
Long-term deferred income tax liabilities		(531	)		(1,476	)


Net deferred income tax assets (liabilities)	$	1,881		$	(1,257	)

The aggregate changes in the balance of unrecognized tax benefits were as follows:

(In millions)


Year Ended June 30,	2017			2016			2015

Balance, beginning of year	$	10,164		$	9,599		$	8,714
Decreases related to settlements		(4	)		(201	)		(50	)
Increases for tax positions related to the current year		1,277			1,086			1,091
Increases for tax positions related to prior years		397			115			94
Decreases for tax positions related to prior years		(49	)		(317	)		(144	)
Decreases due to lapsed statutes of limitations		(48	)		(118	)		(106	)


Balance, end of year	$	11,737		$	10,164		$	9,599