Income Taxes (Tables)

12 Months Ended

Dec. 31, 2020

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,
	2018		2019		2020
U.S. Federal:
Current	$	(129)	$	162	$	1,835
Deferred	565		914		(151)
Total	436		1,076		1,684
U.S. State:
Current	322		276		626
Deferred	5		8		(190)
Total	327		284		436
International:
Current	563		1,140		956
Deferred	(129)		(126)		(213)
Total	434		1,014		743
Provision for income taxes, net	$	1,197	$	2,374	$	2,863

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,
	2018		2019		2020
U.S.	$	11,157	$	13,285	$	20,219
International	104		691		3,959
Income before income taxes	$	11,261	$	13,976	$	24,178

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,
	2018		2019		2020
Income taxes computed at the federal statutory rate	$	2,365	$	2,935	$	5,078
Effect of:
Tax impact of foreign earnings and losses	162		453		(538)
State taxes, net of federal benefits	263		221		343
Tax credits	(419)		(466)		(639)
Stock-based compensation (1)	(1,086)		(850)		(1,107)
Foreign income deduction (FDII)	(43)		(72)		(372)
2017 Impact of U.S. Tax Act	(157)		—		—
Other, net	112		153		98
Total	$	1,197	$	2,374	$	2,863

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(1)Includes non-deductible stock-based compensation and excess tax benefits from stock-based compensation. Our tax provision includes $1.6 billion, $1.4 billion, and $1.8 billion of excess tax benefits from stock-based compensation for 2018, 2019, and 2020.

Deferred Tax Assets and Liabilities

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

	December 31,
	2019		2020
Deferred tax assets (1):
Loss carryforwards U.S. - Federal/States	188		245
Loss carryforwards - Foreign	3,232		3,876
Accrued liabilities, reserves, and other expenses	1,373		2,457
Stock-based compensation	1,585		2,033
Depreciation and amortization	2,385		1,886
Operating lease liabilities	6,648		10,183
Other items	728		559
Tax credits	772		207
Total gross deferred tax assets	16,911		21,446
Less valuation allowances (2)	(5,754)		(5,803)
Deferred tax assets, net of valuation allowances	11,157		15,643
Deferred tax liabilities:
Depreciation and amortization	(5,507)		(5,508)
Operating lease assets	(6,331)		(9,539)
Other items	(640)		(1,462)
Net deferred tax assets (liabilities), net of valuation allowances	$	(1,321)	$	(866)

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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,
	2018		2019		2020
Gross tax contingencies – January 1	$	2,309	$	3,414	$	3,923
Gross increases to tax positions in prior periods	164		216		88
Gross decreases to tax positions in prior periods	(90)		(181)		(465)
Gross increases to current period tax positions	1,088		707		507
Settlements with tax authorities	(36)		(207)		(1,207)
Lapse of statute of limitations	(21)		(26)		(26)
Gross tax contingencies – December 31 (1)	$	3,414	$	3,923	$	2,820

 ___________________

(1)As of December 31, 2020, we had approximately $2.8 billion of accrued tax contingencies of which $1.5 billion, if fully recognized, would decrease our effective tax rate. The decrease in our tax contingencies in 2020 was primarily a result of developments in our global tax controversies.