90.2K

Verified Solution

Link Copied!

(a) 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.

Required a. What is the amount of income tax expense reported by Pfizer for each year? What amount is current versus deferred?

Analyzing and Interpreting Effects of TCJA Tax Law Changes Pfizer Inc. reports the following footnote disclosure in its 2018 Form 10-K. The following table provides the components of Income from continuing operations before provision (benefit) for taxes on income: b. What is Pfizer's effective (average) tax rate for each year? Note: Round your percentage to one decimal place (for example, enter 6.7% for 6.6655% ). c. Use the pretax information to determine the effective tax rate for U.S. operations for each year. Note: Round your percentage to one decimal place (for example, enter 6.7% for 6.6655% ). d. The footnote includes amounts related to the TCJA of 2017. What was the effect on the company's tax expense in 2017 and 2018 due to the TCJA? Note: Do not use a negative sign with your answer. 2017 effect: \$ 2018 effect: \$ tax expense tax expense Please answer all parts of the question. \begin{tabular}{|c|c|c|c|} \hline \$ millions & 2018 & 2017 & 2016 \\ \hline \multicolumn{4}{|l|}{ United States } \\ \hline \multicolumn{4}{|l|}{ Current income taxes: } \\ \hline Federal & $668 & $1,267 & $342 \\ \hline State and local & 10 & 49 & (56) \\ \hline \multicolumn{4}{|l|}{ Deferred income taxes: } \\ \hline Federal & $(1,796) & $(2,229) & $(453) \\ \hline State and local & 17 & (328) & (114) \\ \hline Total U.S. tax provision & $(1,101) & $(1,241) & $(281) \\ \hline \multicolumn{4}{|l|}{ TCJA(a) } \\ \hline Current income taxes & $(3,278) & $14,186 & $ \\ \hline Deferred income taxes & 2,634 & $(25,699) & 0 \\ \hline Total TCJA tax provision & $(644) & $(11,513) & $ \\ \hline \multicolumn{4}{|l|}{ International } \\ \hline Current income taxes & $3,057 & $2,926 & $1,655 \\ \hline Deferred income taxes & (603) & (45) & (189) \\ \hline Total international tax pro & $2,454 & $2,881 & $1,466 \\ \hline \end{tabular}

Answer & Explanation Solved by verified expert

See Answer