Not just that US income tax needs to be paid, but also that cash needs to be converted into USD, which poses a problem in relation to fluctuating rates on currency conversion. Currency conversion rates is a running theme in Apple's SEC filings and was also mentioned in yesterday's call. In fact, there is an entire paragraph in last year's annual report that discusses how they built a model to not just optimize conversion to USD, but also predict the total cost so that they could also hedge against it. There's also a note which says their foreign tax obligations are still under review from 2016 forward, so they might be prevented from moving the money until that picture becomes more clear as to how much is owed.

What do you mean when you say that their cash is overseas? I assume Apple does not have stacks of green bills in giant vaults overseas. Is it in foreign banks?

Apple runs what may be the world's largest hedge fund, Braeburn Capital [0], that it uses to invest its cash reserves. But yes, I'm sure a fair amount of it is in foreign bank accounts.

https://en.wikipedia.org/wiki/Braeburn_Capital

A lot of Apple's non-US profits were/are in Bermuda. See https://en.wikipedia.org/wiki/Double_Irish_arrangement .

Indeed, some of it is in banks in tax havens such as Ireland and Singapore. They are also in the form of US treasury bills bought through their offshore entities in the same havens. So I guess at least some money does make it back to the US ;-)

The cash (or other short-term investments) could even be held in US bank accounts owned by non-US subsidiaries of Apple.

For sure! With this offshore thingy one could create a mind bending structure to trap tax authorities in an infinite loop trying to trace the origin.

I was completely ignorant about this menace until I started reading couple of books to educate myself —- Treasure Islands and Moneyland...recommend them both.

Since then I just use the term offshore to encompass any of those hundreds or so possible structures.

It's in bank accounts in Ireland.

Paying taxes in a country doesn't mean the realized income stays in that country.