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Income Taxes (Tables)
 12 Months Ended
Dec. 31, 2017
Income Tax Disclosure [Abstract]  
Components of Provision for Income Taxes, Net
The components of the provision for income taxes, net are as follows (in millions):
 
Year Ended December 31,
 
2015
 
2016
 
2017
Current taxes:
 
 
 
 
 
U.S. Federal
$
215

 
$
1,136

 
$
(137
)
U.S. State
237

 
208

 
211

International
417

 
327

 
724

Current taxes
869

 
1,671

 
798

Deferred taxes:
 
 
 
 
 
U.S. Federal
473

 
116

 
(202
)
U.S. State
(171
)
 
(31
)
 
(26
)
International
(221
)
 
(331
)
 
199

Deferred taxes
81

 
(246
)
 
(29
)
Provision for income taxes, net
$
950

 
$
1,425

 
$
769
Components of Income Before Income Taxes, Domestic and Foreign
U.S. and international components of income before income taxes are as follows (in millions):
 
Year Ended December 31,
 
2015
 
2016
 
2017
U.S.
$
2,186

 
$
4,551

 
$
5,630

International
(618
)
 
(659
)
 
(1,824
)
Income (loss) before income taxes
$
1,568

 
$
3,892

 
$
3,806
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
 
2016
 
2017
Income taxes computed at the federal statutory rate
$
549

 
$
1,362

 
$
1,332

Effect of:
 
 
 
 
 
Impact of foreign tax differential
350

 
(69
)
 
1,178

State taxes, net of federal benefits
37

 
110

 
114

Tax credits
(99
)
 
(119
)
 
(220
)
Stock-based compensation (1)
149

 
189

 
(917
)
Domestic production activities deduction
(44
)
 
(94
)
 
—

Impact of 2017 Tax Act
—

 
—

 
(789
)
Other, net
8

 
46

 
71

Total
$
950

 
$
1,425

 
$
769


___________________
(1)
Includes non-deductible stock-based compensation and beginning in 2017, excess tax benefits from stock-based compensation. For 2017, our tax provision includes $1.3 billion of excess tax benefits from stock-based compensation.
Deferred Tax Assets and Liabilities
Deferred income tax assets and liabilities are as follows (in millions):
 
December 31,
 
2016
 
2017 (6)
Deferred tax assets (1):
 
 
 
Loss carryforwards U.S. - Federal/States (2)
$
198

 
$
211

Loss carryforwards - Foreign (3)
1,062

 
2,149

Accrued liabilities, reserves, & other expenses
968

 
901

Stock-based compensation
1,073

 
1,026

Deferred revenue
330

 
349

Assets held for investment
66

 
35

Depreciation & amortization
179

 
279

Other items
171

 
167

Tax credits (4)
39

 
381

Total gross deferred tax assets
4,086

 
5,498

Less valuation allowance (5)
(1,012
)
 
(2,538
)
Deferred tax assets, net of valuation allowance
3,074

 
2,960

Deferred tax liabilities:
 
 
 
Depreciation & amortization
(2,332
)
 
(2,568
)
Acquisition related intangible assets
(226
)
 
(531
)
Other items
(62
)
 
(58
)
Net deferred tax assets (liabilities), net of valuation allowance
$
454

 
$
(197
)
 ___________________
(1)
Deferred tax assets related to net operating losses and tax credits are presented net of tax contingencies.
(2)
Excluding $18 million of deferred tax assets as of December 31, 2016, related to net operating losses that result from excess stock-based compensation. Beginning in 2017, losses resulting from excess stock-based compensation are now recognized immediately as a result of the adoption of new accounting guidance.
(3)
Excluding $9 million of deferred tax assets as of December 31, 2016, related to net operating losses that result from excess stock-based compensation. Beginning in 2017, losses resulting from excess stock-based compensation are now recognized immediately as a result of the adoption of new accounting guidance.
(4)
Excluding $659 million of deferred tax assets as of December 31, 2016, related to tax credits that result from excess stock-based compensation. Beginning in 2017, losses resulting from excess stock-based compensation are now recognized immediately as a result of the adoption of new accounting guidance.
(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.
Reconciliation of Tax Contingencies
The reconciliation of our tax contingencies is as follows (in millions):
 
December 31,
 
2015
 
2016
 
2017
Gross tax contingencies – January 1
$
710

 
$
1,181

 
$
1,710

Gross increases to tax positions in prior periods
254

 
355

 
223

Gross decreases to tax positions in prior periods
(22
)
 
(133
)
 
(139
)
Gross increases to current period tax positions
242

 
308

 
518

Lapse of statute of limitations
(3
)
 
(1
)
 
(3
)
Gross tax contingencies – December 31 (1)
$
1,181

 
$
1,710

 
$
2,309

 ___________________
(1)
As of December 31, 2017, we had $2.3 billion of accrued tax contingencies, of which $1.2 billion, if fully recognized, would decrease our effective tax rate.