Income Taxes (Tables)

12 Months Ended

Dec. 31, 2013

Income Tax Disclosure [Abstract]

Components of Income Tax Expense (Benefit)

The components of the provision for income taxes, net are as follows (in millions):

	Year Ended December 31,
	2013			2012			2011
Current taxes:
U.S. and state	$	144		$	562		$	103
International	173			131			52
Current taxes	317			693			155
Deferred taxes:
U.S. and state	(133		)	(156		)	157
International	(23		)	(109		)	(21		)
Deferred taxes	(156		)	(265		)	136
Provision for income taxes, net	$	161		$	428		$	291

Income before Income Tax, Domestic and Foreign

U.S. and international components of income before income taxes are as follows (in millions):

	Year Ended December 31,
	2013			2012			2011
U.S.	$	704		$	882		$	658
International	(198		)	(338		)	276
Income before income taxes	$	506		$	544		$	934

Effective Income Tax Rate Reconciliation

The items accounting for differences between income taxes computed at the federal statutory rate and the provision recorded for income taxes are as follows:

	Year Ended December 31,
	2013		2012		2011
Federal statutory rate	35.0	%	35.0	%	35.0	%
Effect of:
Impact of foreign tax differential	(8.1	)	31.5		(8.4	)
State taxes, net of federal benefits	2.7		0.2		1.5
Tax credits	(16.6	)	(4.4	)	(3.2	)
Nondeductible compensation	16.9		13.3		4.9
Domestic production activities deduction	(2.1	)	—		—
Other, net	4.0		3.0		1.4
Total	31.8	%	78.6	%	31.2	%

Deferred Tax Assets and Liabilities

Deferred income tax assets and liabilities are as follows (in millions):

	December 31,
	2013			2012
Deferred tax assets:
Net operating losses U.S. - Federal/States (1)	$	53		$	47
Net operating losses foreign (2)	427			289
Accrued liabilities, reserves, & other expenses	590			482
Stock-based compensation	396			281
Deferred revenue	249			129
Assets held for investment	164			129
Other items	177			133
Tax credits (3)	107			12
Total gross deferred tax assets	2,163			1,502
Less valuation allowance (4)	(698		)	(415		)
Deferred tax assets, net of valuation allowance	1,465			1,087
Deferred tax liabilities:
Depreciation & amortization	(1,021		)	(698		)
Acquisition related intangible assets	(201		)	(274		)
Other items	(16		)	(29		)
Net deferred tax assets, net of valuation allowance	$	227		$	86

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(1) Excluding $81 million and $9 million of deferred tax assets as of December 31, 2013 and 2012, related to net operating losses that result from excess stock-based compensation and for which any benefit realized will be recorded to stockholders’ equity.

(2) Excluding $2 million and $2 million of deferred tax assets as of December 31, 2013 and 2012, related to net operating losses that result from excess stock-based compensation and for which any benefit realized will be recorded to stockholders’ equity.

(3) Excluding $227 million and $146 million of deferred tax assets as of December 31, 2013 and 2012, related to tax credits that result from excess stock-based compensation and for which any benefit realized will be recorded to stockholders’ equity.

(4) Relates primarily to deferred tax assets that would only be realizable upon the generation of net income in certain foreign taxing jurisdictions and future capital gains.

Summary of Income Tax Contingencies

The reconciliation of our tax contingencies is as follows (in millions):

	December 31,
	2013			2012			2011
Gross tax contingencies – January 1	$	294		$	229		$	213
Gross increases to tax positions in prior periods	78			91			22
Gross decreases to tax positions in prior periods	(18		)	(47		)	(3		)
Gross increases to current period tax positions	54			26			4
Audit settlements paid	(1		)	(4		)	(1		)
Lapse of statute of limitations	—			(1		)	(6		)
Gross tax contingencies – December 31 (1)	$	407		$	294		$	229

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(1) As of December 31, 2013, we had $407 million of tax contingencies, of which $346 million, if fully recognized, would decrease our effective tax rate.