Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

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,
	2017			2018			2019
U.S. Federal:
Current	$	(137	)	$	(129	)	$	162
Deferred	(202		)	565			914
Total	(339		)	436			1,076
U.S. State:
Current	211			322			276
Deferred	(26		)	5			8
Total	185			327			284
International:
Current	724			563			1,140
Deferred	199			(129		)	(126		)
Total	923			434			1,014
Provision for income taxes, net	$	769		$	1,197		$	2,374

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,
	2017			2018		2019
U.S.	$	5,630		$	11,157	$	13,285
International	(1,824		)	104		691
Income before income taxes	$	3,806		$	11,261	$	13,976

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,
	2017			2018			2019
Income taxes computed at the federal statutory rate (1)	$	1,332		$	2,365		$	2,935
Effect of:
Tax impact of foreign earnings	1,178			119			381
State taxes, net of federal benefits	114			263			221
Tax credits	(220		)	(419		)	(466		)
Stock-based compensation (2)	(917		)	(1,086		)	(850		)
2017 Impact of U.S. Tax Act	(789		)	(157		)	—
Other, net	71			112			153
Total	$	769		$	1,197		$	2,374

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(1) The U.S. Tax Act reduced the U.S. federal statutory rate from 35% to 21% beginning in 2018.

(2)

Includes non-deductible stock-based compensation and excess tax benefits from stock-based compensation. Our tax provision includes $1.3 billion, $1.6 billion, and $1.4 billion of excess tax benefits from stock-based compensation for 2017, 2018, and 2019.

Deferred Tax Assets and Liabilities

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

	December 31,
	2018			2019
Deferred tax assets (1):
Loss carryforwards U.S. - Federal/States	222			188
Loss carryforwards - Foreign	2,551			3,232
Accrued liabilities, reserves, and other expenses	1,064			1,373
Stock-based compensation	1,293			1,585
Depreciation and amortization	2,386			2,385
Operating lease liabilities	—			6,648
Other items	484			728
Tax credits	734			772
Total gross deferred tax assets	8,734			16,911
Less valuation allowances (2)	(4,950		)	(5,754		)
Deferred tax assets, net of valuation allowances	3,784			11,157
Deferred tax liabilities:
Depreciation and amortization	(3,579		)	(5,507		)
Operating lease assets	—			(6,331		)
Other items	(749		)	(640		)
Net deferred tax assets (liabilities), net of valuation allowances	$	(544	)	$	(1,321	)

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(1) Deferred tax assets are presented after tax effects and net of tax contingencies.

(2)

Relates primarily to deferred tax assets that would only be realizable upon the generation of net income in certain foreign taxing jurisdictions.

Reconciliation of Tax Contingencies

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

	December 31,
	2017			2018			2019
Gross tax contingencies – January 1	$	1,710		$	2,309		$	3,414
Gross increases to tax positions in prior periods	223			164			216
Gross decreases to tax positions in prior periods	(139		)	(90		)	(181		)
Gross increases to current period tax positions	518			1,088			707
Settlements with tax authorities	—			(36		)	(207		)
Lapse of statute of limitations	(3		)	(21		)	(26		)
Gross tax contingencies – December 31 (1)	$	2,309		$	3,414		$	3,923

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(1)

As of December 31, 2019, we had approximately $3.9 billion of accrued tax contingencies of which $2.1 billion, if fully recognized, would decrease our effective tax rate.