Reductions for settlements

  
    The Company accounts for its uncertain tax positions in accordance with ASC 740, "Income Taxes." At June 30, 2022 and 2021, unrecognized tax benefits totaled $195 million and $133 million, respectively, all of which would favorably impact the effective tax rate if recognized.  
    The Company recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense. During the fiscal years ended June 30, 2022, 2021, and 2020, the Company's accrual for interest and penalties for these uncertain tax positions was $12 million, $12 million, and $7 million, respectively. The Company does not currently anticipate that the total amount of unrecognized tax benefits will result in material changes to its financial position within the next 12 months.   
    A reconciliation of the beginning and ending amount of unrecognized tax benefits for the fiscal years presented is as follows:

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  | June 30,  |
| ($ in millions) |  | 2022 |  | 2021 |  | 2020 |
| Balance at the beginning of the year |  | $ | 133  |  |  | $ | 101  |  |  | $ | 102  |  |
| Additions based on tax positions related to the current year |  | 50  |  |  | 39  |  |  | 19  |  |
| Additions for tax positions of prior years |  | 19  |  |  | 7  |  |  | 2  |  |
| Reductions for tax positions from prior years |  | (6) |  |  | (12) |  |  | (13) |  |
| Reductions for settlements |  | —  |  |  | —  |  |  | (7) |  |
| Reductions due to lapse of statute of limitations |  | (1) |  |  | (2) |  |  | (2) |  |
|  |  |  |  |  |  |  |
| Balance at the end of the year |  | $ | 195  |  |  | $ | 133  |  |  | $ | 101  |  |

  
    The Company conducts business in a number of tax jurisdictions and, as such, is required to file income tax returns in multiple jurisdictions globally. The fiscal years 2016 through 2021 remain open for examination by the United States Internal Revenue Service ("IRS"), the fiscal year 2020 remains open for examination by Her Majesty’s Revenue & Customs ("HMRC"), and the fiscal years 2011 through 2021 are currently subject to audit or remain open for examination in various tax jurisdictions.  
    The Company believes that its income tax reserves are adequately maintained taking into consideration both the technical merits of its tax return positions and ongoing developments in its income tax audits. However, the final determination of the Company's tax return positions, if audited, is uncertain and therefore there is a possibility that final resolution of these matters could have a material impact on the Company's results of operations or cash flows.  
Swiss Tax Reform  
    During the fiscal year ended June 30, 2020, Swiss tax laws were changed in order to remove certain tax regimes and replace these with new measures that are hereafter referred to as "Swiss Tax Reform." In the fourth quarter of fiscal year 2020, the Company obtained confirmation from local authorities as to the methodology to calculate the future benefits and recorded the impact. The Company recorded a benefit of $22 million at June 30, 2020 related to a reduction in deferred tax expense from an allowed step-up of intangible assets for tax purposes, an additional benefit of $2 million during fiscal year 2021, and a decrease of $2 million during fiscal year 2022.  
  
92
