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Excerpts from Starbucks Corporations tax note from the companys Form 10-K for the year ended September 27, 2015, follow.

page 793

	Sep. 27, 2015	Sep. 28, 2014
Deferred tax assets:
Property, plant and equipment	$ 121.4	$ 78.5
Accrued occupancy costs	98.4	58.8
Accrued compensation and related costs	81.7	75.3
Other accrued liabilities	49.0	27.6
Asset retirement obligation asset	29.0	18.6
Stored value card liability	99.1	63.4
Asset impairments	26.2	49.5
Tax credits	20.8	20.3
Stock-based compensation	135.5	131.5
Net operating losses	93.4	104.4
Litigation charge	931.0	1,002.0
Other	104.5	77.0
Total	1,790.0	1,706.9
Valuation allowance	(143.7)	(166.8)
Total deferred tax asset, net of valuation allowance	1,646.3	1,540.1
Deferred tax liabilities:
Property, plant and equipment	(217.5)	(148.2)
Intangible assets and goodwill	(177.3)	(92.9)
Other	(114.1)	(89.4)
Total	(508.9)	(330.5)
Net deferred tax asset	$ 1,137.4	$1,209.6
Reported as:
Current deferred income tax assets	$ 381.7	$ 317.4
Long-term deferred income tax assets	828.9	903.3
Current deferred income tax liabilities (included
in Accrued liabilities)	(5.4)	(4.2)
Long-term deferred income tax liabilities (included
in Other long-term liabilities)	(67.8)	(6.9)
Net deferred tax asset	$1,137.4	$1,209.6

Required:

1. Provide a journal entry to record the aggregate income tax expense for the year ended September 27, 2015.

2. What amount of Starbucks income tax expense for the year ended September 27, 2015, was deferred? Did this deferral result in an increase in deferred tax liabilities or a decrease in deferred tax assets?

3. Estimate Starbucks earnings before taxes in the year ended September 27, 2015.

4. What tax policy or operating decision accounts for the majority of the divergence between Starbucks statutory tax rate and effective tax rate?

5. Forecast Starbucks effective tax rate for the year ended September 25, 2016.

6. Starbucks included in its tax note the following statement:

Our effective tax rate in fiscal 2013 was significantly affected by the litigation charge we recorded as a result of the conclusion of our arbitration with Kraft. In order to provide a more meaningful analysis of tax expense and the effective tax rate, the tables above present separate reconciliations of the effect of the litigation charge.

What was the pre-tax amount of the litigation charge taken in fiscal 2013?

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