Income Taxes (Tables)

12 Months Ended

Dec. 31, 2015

Components of Income Tax Expense (Benefit)

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



	Year Ended December 31,
	2015			2014			2013
Current taxes:
U.S. Federal	$	215		$	214		$	99
U.S. State	237			65			45
International	417			204			173
Current taxes	869			483			317
Deferred taxes:
U.S. Federal	473			(125		)	(114		)
U.S. State	(171		)	(11		)	(19		)
International	(221		)	(180		)	(23		)
Deferred taxes	81			(316		)	(156		)
Provision for income taxes, net	$	950		$	167		$	161

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,
	2015			2014			2013
U.S.	$	2,186		$	292		$	704
International	(618		)	(403		)	(198		)
Income (loss) before income taxes	$	1,568		$	(111	)	$	506

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 (in millions):



	Year Ended December 31,
	2015			2014			2013
Income taxes computed at the federal statutory rate	$	549		$	(39	)	$	177
Effect of:
Impact of foreign tax differential	350			136			(41		)
State taxes, net of federal benefits	37			29			14
Tax credits	(99		)	(85		)	(84		)
Nondeductible compensation	149			117			86
Domestic production activities deduction	(44		)	(20		)	(11		)
Other, net	8			29			20
Total	$	950		$	167		$	161

Deferred Tax Assets and Liabilities

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



	December 31,
	2015			2014
Deferred tax assets (1):
Net operating losses U.S. - Federal/States (2)	$	107		$	357
Net operating losses foreign (3)	856			669
Accrued liabilities, reserves, & other expenses	854			780
Stock-based compensation	727			534
Deferred revenue	189			156
Assets held for investment	148			154
Depreciation & amortization	222			117
Other items	268			125
Tax credits (4)	41			115
Total gross deferred tax assets	3,412			3,007
Less valuation allowance (5)	(1,069		)	(901		)
Deferred tax assets, net of valuation allowance	2,343			2,106
Deferred tax liabilities:
Depreciation & amortization	(1,970		)	(1,609		)
Acquisition related intangible assets	(203		)	(195		)
Other items	(88		)	(31		)
Net deferred tax assets, net of valuation allowance	$	82		$	271

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(1)	Deferred tax assets related to net operating losses and tax credits are presented net of tax contingencies.


(2)	Excluding $380 million and $261 million of deferred tax assets as of December 31, 2015 and 2014, 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 $2 million of deferred tax assets as of December 31, 2015 and 2014, related to net operating losses that result from excess stock-based compensation and for which any benefit realized will be recorded to stockholders’ equity.


(4)	Excluding $447 million and $268 million of deferred tax assets as of December 31, 2015 and 2014, related to tax credits that result from excess stock-based compensation and for which any benefit realized will be recorded to stockholders’ equity.


(5)	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,
	2015			2014			2013
Gross tax contingencies – January 1	$	710		$	407		$	294
Gross increases to tax positions in prior periods	254			351			78
Gross decreases to tax positions in prior periods	(22		)	(50		)	(18		)
Gross increases to current period tax positions	242			20			54
Audit settlements paid	—			(16		)	(1		)
Lapse of statute of limitations	(3		)	(2		)	—
Gross tax contingencies – December 31 (1)	$	1,181		$	710		$	407

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(1)	As of December 31, 2015, we had $1.2 billion of tax contingencies, of which $882 million, if fully recognized, would decrease our effective tax rate.