New federal tax legislation handed Microsoft a $17.8 billion tax bill on its overseas cash. But that was far lower than what it would have been under the previous tax regime.

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About 15 years ago, Microsoft made a bet that paid off to the tune of $27 billion after the December signing of tax overhaul legislation.

The scale of the benefits from that tax bill was revealed Wednesday when it released its fiscal second-quarter earnings, which included a charge to reflect the new tax regime.

Here’s how Microsoft’s wager worked:

The former U.S. corporate income tax rate, 35 percent, was among the highest in the world. Like many companies, Microsoft hoped that the U.S. tax system would get friendlier at some point, and lobbied to that effect.

In the meantime, the company tried to slash the portion of its profit taxable in the U.S. The tax code previously allowed companies to defer taxes on foreign earnings they deemed permanently reinvested outside the U.S.

As Microsoft grew in the 2000s, it structured its global subsidiaries to minimize its tax bill, placing key subsidiaries in Ireland, Singapore, Puerto Rico (foreign country per U.S. tax law) and Bermuda  — places with little or no corporate income tax.

Underpinning that system were intra-company payments, common among companies with international operations, for things like intellectual property and sharing the costs of building Microsoft products. They had the effect of pushing most of Microsoft’s profit outside the U.S. The company, for its part, has said its global footprint reflects its scale, and that it pays the appropriate amount of taxes to governments worldwide.

The portion of Microsoft’s sales and profit that came from the U.S. used to be about the same. In 2003, the U.S. was home to 68 percent of Microsoft’s sales, and 69 percent of its profit. In 2004, those figures were 68 percent and 67 percent.

That changed dramatically after Microsoft’s system of global subsidiaries took effect. On paper, Microsoft’s international business became extraordinarily profitable, while the profitability of sales in the U.S. cratered.

In the most recent five years, half of Microsoft’s sales came from customers located in the U.S., but just 18 percent of its profit. During the fiscal year ended in June,  Microsoft reported foreign income before taxes of $22.7 billion, and, just $453 million in the U.S.

Microsoft’s foreign income permanently reinvested abroad — taxed at a low single-digit effective rate, according to company filings — piled up, reaching $142 billion as of June 30.

If Microsoft had brought those earnings back to the U.S., the company said last year, its tax bill would have been $45 billion.

Instead of tapping that cash and triggering U.S. taxes, when Microsoft needed more money than its U.S. operations were generating, it borrowed, as it did when the company purchased professional social networking site LinkedIn for $26 billion in 2016.

The tax overhaul President Donald Trump signed in December, which cut the corporate rate to 21 percent, also eliminated deferrals on foreign income, assessing taxes of 8 percent to 15.5 percent on sums held abroad.

That meant a large tax bill for Microsoft, but one far smaller than under the prior tax structure.

Microsoft took a $17.8 billion charge to adjust its overseas books to the new law, Microsoft said in reporting quarterly earnings on Wednesday — or $27 billion less than Microsoft would have owed had it chosen to repatriate the cash last year.

(Accounting for a $4 billion benefit from the lower effective tax rates applied to other tax assets, Microsoft took a $13.8 billion charge in the second quarter ended in December.)