v3.25.2
Income Taxes
 12 Months Ended
May 25, 2025
Income Taxes [Abstract]  
Income Taxes
NOTE 15. INCOME TAXES
 
The
 
components
 
of
 
earnings
 
before
 
income
 
taxes
 
and
 
after-tax
 
earnings
 
from
 
joint
 
ventures
 
and
 
the
 
corresponding
 
income
 
taxes
thereon are as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fiscal Year
In Millions
2025
2024
2023
Earnings before income taxes and after-tax earnings
 
from joint ventures:
United States
$
2,493.2
$
2,907.0
$
2,740.5
Foreign
341.8
121.3
400.0
Total earnings
 
before income taxes and after-tax earnings from joint ventures
$
2,835.0
$
3,028.3
$
3,140.5
Income taxes:
Currently payable:
Federal
$
549.0
$
512.8
$
487.1
State and local
80.1
72.0
82.2
Foreign
65.5
58.2
65.1
Total current
694.6
643.0
634.4
Deferred:
Federal
(62.6)
27.4
9.6
State and local
(3.3)
9.7
(8.1)
Foreign
(55.0)
(85.6)
(23.7)
Total deferred
(120.9)
(48.5)
(22.2)
Total income
 
taxes
$
573.7
$
594.5
$
612.2
The following table reconciles the United States statutory income tax rate
 
with our effective income tax rate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fiscal Year
2025
2024
2023
United States statutory rate
21.0
%
21.0
%
21.0
%
State and local income taxes, net of federal tax benefits
2.1
2.1
1.5
Foreign rate differences
(1.7)
(1.6)
(1.0)
Research and development tax credit
(1.5)
(1.2)
-
Stock based compensation
(0.2)
(0.3)
(1.0)
Divestitures, net
(0.3)
-
(0.8)
Other, net
0.8
(0.4)
(0.2)
Effective income tax rate
20.2
%
19.6
%
19.5
%
The tax effects of temporary differences that
 
give rise to deferred tax assets and liabilities are as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
In Millions
May 25, 2025
May 26, 2024
Accrued liabilities
$
42.9
$
43.6
Compensation and employee benefits
144.3
147.7
Unrealized hedges
23.1
-
Pension
74.2
83.0
Tax credit carryforwards
58.1
48.6
Stock, partnership, and miscellaneous investments
4.0
3.6
Capitalized research and development
305.5
103.6
Prepayments
65.9
-
Capital losses
28.5
71.7
Net operating losses
265.2
259.6
Other
161.1
92.3
Gross deferred tax assets
1,172.8
853.7
Valuation
 
allowance
253.7
255.5
Net deferred tax assets
919.1
598.2
Brands
1,436.0
1,429.4
Fixed assets
496.1
393.2
Intangible assets
247.3
195.8
Tax lease transactions
-
3.4
Inventories
31.3
34.2
Stock, partnership, and miscellaneous investments
512.2
439.7
Unrealized hedges
-
20.2
Other
110.9
115.4
Gross deferred tax liabilities
2,833.8
2,631.3
Net deferred tax liability
$
1,914.7
$
2,033.1
We
 
have established a
 
valuation allowance against
 
certain of the
 
categories of deferred
 
tax assets described
 
above as current
 
evidence
does
 
not
 
suggest
 
we
 
will
 
realize
 
sufficient
 
taxable
 
income
 
of
 
the
 
appropriate
 
character
 
(e.g.,
 
ordinary
 
income
 
versus
 
capital
 
gain
income) within the carryforward period to allow us to realize these deferred tax
 
benefits.
Information about our valuation allowance follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
In Millions
May 25, 2025
Pillsbury acquisition losses
$
106.4
State and foreign loss carryforwards
59.0
Capital loss carryforwards
20.9
Other
67.4
Total
$
253.7
As of May 25, 2025, we believe it is more-likely-than-not that the remainder
 
of our deferred tax assets are realizable.
 
Information about our tax loss carryforwards follows
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
In Millions
May 25, 2025
Foreign loss carryforwards
$
256.0
Federal operating loss carryforwards
2.3
State operating loss carryforwards
6.9
Total tax loss carryforwards
$
265.2
Our foreign loss carryforwards expire as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
In Millions
May 25, 2025
Expire in fiscal 2026 and 2027
$
2.9
Expire in fiscal 2028 and beyond
13.9
Do not expire (a)
239.2
Total foreign loss carryforwards
$
256.0
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a)
 
Of the total foreign loss carryforwards, $
218.6
 
million are held in Brazil for which we have not recorded a valuation allowance.
The United States Congress
 
is currently drafting new
 
tax legislation referred to
 
as the One Big Beautiful
 
Bill Act. We
 
will continue to
monitor developments as the legislation progresses and evaluate any
 
potential impacts on our financial statements.
In
 
December
 
2021,
 
the
 
Organization
 
for
 
Economic
 
Cooperation
 
and
 
Development
 
(OECD)
 
established
 
a
 
framework,
 
referred
 
to
 
as
Pillar
 
2,
 
designed
 
to
 
ensure
 
large
 
multinational
 
enterprises
 
pay
 
a
 
minimum
 
15
 
percent
 
level
 
of
 
tax
 
on
 
the
 
income
 
arising
 
in
 
each
jurisdiction
 
in
 
which
 
they
 
operate.
 
Numerous
 
countries
 
have
 
already
 
enacted
 
the
 
OECD
 
model
 
rules
 
effective
 
for
 
taxable
 
years
beginning
 
after
 
December
 
31,
 
2023,
 
which
 
for
 
us
 
was
 
fiscal
 
2025.
 
There
 
was
 
no
 
material
 
impact
 
on
 
our
 
consolidated
 
financial
statements.
 
Several
 
other
 
countries
 
have
 
enacted
 
or
 
drafted
 
legislation
 
that
 
is
 
not
 
yet
 
effective
 
for
 
us,
 
and
 
we
 
do
 
not
 
expect
 
this
legislation
 
to
 
have
 
a
 
material
 
impact
 
on
 
our
 
consolidated
 
financial
 
statements.
 
We
 
will
 
continue
 
to monitor
 
for
 
new
 
legislation
 
and
guidance and evaluate any potential impact on our consolidated financial
 
statements.
On August
 
16, 2022,
 
the Inflation
 
Reduction Act
 
(IRA) was
 
signed into
 
law.
 
The IRA
 
introduces
 
a Corporate
 
Alternative Minimum
Tax beginning
 
in our fiscal 2024 and an excise tax on the repurchase of corporate stock starting after
 
January 1, 2023. The IRA did not
have a material impact on our financial results, including our annual
 
effective tax rates and liquidity.
As of
 
May 25,
 
2025, we
 
have
no
t recognized
 
a deferred
 
tax liability
 
for unremitted
 
earnings of
 
approximately $
2.3
 
billion from
 
our
foreign operations
 
because we
 
currently believe
 
our subsidiaries
 
have invested
 
the undistributed
 
earnings indefinitely
 
or the
 
earnings
will be remitted
 
in a tax-neutral
 
transaction. It
 
is not practicable
 
for us to
 
determine the amount
 
of unrecognized
 
tax expense on
 
these
reinvested earnings.
 
Deferred taxes
 
are recorded
 
for earnings
 
of our
 
foreign operations
 
when we
 
determine that
 
such earnings
 
are no
longer indefinitely reinvested. All
 
earnings prior to fiscal 2018
 
remain permanently reinvested. Earnings
 
from fiscal 2018 and later
 
are
not permanently reinvested and local country withholding taxes are
 
recorded on earnings each year.
 
We are
 
subject to federal income
 
taxes in the United States
 
as well as various state, local,
 
and foreign jurisdictions. A
 
number of years
may elapse before an uncertain tax position is audited and finally resolved.
 
While it is often difficult to predict the final outcome or the
timing
 
of
 
resolution
 
of
 
any
 
particular
 
uncertain
 
tax
 
position,
 
we
 
believe
 
that
 
our
 
liabilities
 
for
 
income
 
taxes
 
reflect
 
the
 
most
 
likely
outcome.
 
We
 
adjust
 
these
 
liabilities,
 
as
 
well
 
as
 
the
 
related
 
interest,
 
in
 
light
 
of
 
changing
 
facts
 
and
 
circumstances.
 
Settlement
 
of
 
any
particular position would usually require the use of cash.
The number
 
of years
 
with open
 
tax audits
 
varies depending
 
on the
 
tax jurisdiction.
 
Our major
 
taxing jurisdiction
 
is the
 
United States
(federal and state). Various
 
tax examinations by United States state taxing
 
authorities could be conducted for any
 
open tax year,
 
which
vary by jurisdiction, but are generally from
3
 
to
5
 
years.
The Internal Revenue Service (IRS) is currently auditing
 
our federal tax returns for fiscal 2018 through 2022.
 
Several state and foreign
examinations are currently in
 
progress. We
 
do not expect these examinations
 
to result in a material
 
impact on our results
 
of operations
or financial position. During fiscal 2024,
 
we received a notice of proposed adjustment
 
from the IRS associated with a
 
capital loss from
fiscal 2019.
 
We
 
believe that we
 
have meritorious defense
 
against this assessment
 
and will vigorously
 
defend our position.
 
We
 
do not
expect the
 
resolution of
 
the proposed
 
adjustment to
 
have a material
 
impact on
 
our financial
 
position or
 
liquidity.
 
We
 
have effectively
settled all issues with the IRS for fiscal years 2015 and prior.
The Brazilian
 
tax authority,
 
Secretaria da
 
Receita Federal
 
do Brasil (RFB),
 
has concluded
 
audits of
 
our 2012
 
through 2020
 
tax return
years. These
 
audits included
 
a review
 
of our
 
determinations of
 
amortization of
 
certain goodwill
 
arising from
 
the acquisition
 
of Yoki
Alimentos
 
S.A.
 
The
 
RFB
 
has
 
proposed
 
adjustments
 
that
 
effectively
 
eliminate
 
the
 
goodwill
 
amortization
 
benefits
 
related
 
to
 
this
transaction. We
 
believe we have meritorious defenses
 
and intend to continue to contest
 
the disallowance for all years.
 
Tax return
 
years
2012 through 2013 have been resolved with no adjustments.
 
We
 
apply a more-likely-than-not
 
threshold to the
 
recognition and derecognition
 
of uncertain tax
 
positions. Accordingly,
 
we recognize
the amount of
 
tax benefit that
 
has a greater
 
than 50 percent
 
likelihood of being
 
ultimately realized upon
 
settlement. Future changes
 
in
judgment related to the expected ultimate resolution of uncertain tax positions
 
will affect earnings in the period of such change.
The following table sets forth
 
changes in our total gross
 
unrecognized tax benefit liabilities,
 
excluding accrued interest,
 
for fiscal 2025
and
 
fiscal 2024.
 
Approximately
 
$
98.2
 
million of
 
this total
 
in fiscal
 
2025
 
represents the
 
amount that,
 
if recognized,
 
would affect
 
our
effective income tax rate in future periods.
 
This amount differs from the gross unrecognized
 
tax benefits presented in the table because
certain
 
portions of
 
the liabilities
 
below
 
would
 
impact deferred
 
taxes if
 
recognized.
We
also would
 
record
 
a decrease
 
in U.S.
 
federal
income taxes upon recognition of the state tax benefits included therein.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fiscal Year
In Millions
2025
2024
Balance, beginning of year
$
149.0
$
181.2
Tax positions related
 
to current year:
Additions
48.7
24.6
Tax positions related
 
to prior years:
Additions
13.0
6.3
Reductions
(2.8)
(55.2)
Settlements
(2.6)
(0.8)
Lapses in statutes of limitations
(6.3)
(7.1)
Balance, end of year
$
199.0
$
149.0
As of
 
May 25,
 
2025, we do
no
t expect
 
to pay unrecognized
 
tax benefit
 
liabilities and
 
accrued interest
 
within the
 
next 12
 
months. We
are not
 
able to
 
reasonably estimate
 
the timing
 
of future
 
cash flows
 
beyond 12
 
months due
 
to uncertainties
 
in the
 
timing of
 
tax audit
outcomes. Our unrecognized tax benefit liability was classified in other
 
liabilities.
We
 
report
 
accrued
 
interest
 
and
 
penalties
 
related
 
to
 
unrecognized
 
tax
 
benefit
 
liabilities
 
in
 
income
 
tax
 
expense.
 
For
 
fiscal
 
2025,
 
we
recognized
 
a
 
net
 
expense
 
of
 
$
2.7
 
million
 
of
 
tax-related
 
net
 
interest
 
and
 
penalties,
 
and
 
had
 
$
27.0
 
million
 
of
 
accrued
 
interest
 
and
penalties as of
 
May 25, 2025. For
 
fiscal 2024, we recognized
 
a net benefit of
 
$
6.1
 
million of tax-related net
 
interest and penalties, and
had $
24.2
 
million of accrued interest and penalties as of May 26, 2024.