Income Taxes (Tables)

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Components of Provision for Income Taxes, Net

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

	Year Ended December 31,
	2020		2021		2022
U.S. Federal:
Current	$	1,835	$	2,129	$	2,175
Deferred	(151)		155		(6,686)
Total	1,684		2,284		(4,511)
U.S. State:
Current	626		763		1,074
Deferred	(190)		(178)		(1,302)
Total	436		585		(228)
International:
Current	956		2,209		1,682
Deferred	(213)		(287)		(160)
Total	743		1,922		1,522
Provision (benefit) for income taxes, net	$	2,863	$	4,791	$	(3,217)

Components of Income Before Income Taxes, Domestic and Foreign

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

	Year Ended December 31,
	2020		2021		2022
U.S.	$	20,219	$	35,879	$	(8,225)
International	3,959		2,272		2,289
Income (loss) before income taxes	$	24,178	$	38,151	$	(5,936)

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,
	2020		2021		2022
Income taxes computed at the federal statutory rate	$	5,078	$	8,012	$	(1,246)
Effect of:
Tax impact of foreign earnings and losses	(538)		(1,349)		(370)
State taxes, net of federal benefits	343		465		(173)
Tax credits	(639)		(1,136)		(1,006)
Stock-based compensation (1)	(1,107)		(1,094)		612
Foreign income deduction (2)	(372)		(301)		(1,258)
Other, net	98		194		224
Total	$	2,863	$	4,791	$	(3,217)

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(1)Includes non-deductible stock-based compensation and excess tax benefits or shortfalls from stock-based compensation. Our tax provision includes $1.8 billion and $1.9 billion of excess tax benefits from stock-based compensation for 2020 and 2021, and a $33 million tax shortfall from stock-based compensation for 2022.

(2)U.S. companies are eligible for a deduction that lowers the effective tax rate on certain foreign income. This regime is referred to as the Foreign-Derived Intangible Income deduction.

Deferred Tax Assets and Liabilities

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

	December 31,
	2021		2022
Deferred tax assets (1):
Loss carryforwards U.S. - Federal/States	228		386
Loss carryforwards - Foreign	2,417		2,831
Accrued liabilities, reserves, and other expenses	2,821		3,280
Stock-based compensation	2,738		4,295
Depreciation and amortization	941		1,009
Operating lease liabilities	15,399		18,285
Capitalized research and development	—		6,824
Other items	603		1,023
Tax credits	626		950
Total gross deferred tax assets	25,773		38,883
Less valuation allowances (2)	(3,596)		(4,374)
Deferred tax assets, net of valuation allowances	22,177		34,509
Deferred tax liabilities:
Depreciation and amortization	(3,562)		(9,039)
Operating lease assets	(14,422)		(17,140)
Assets held for investment	(4,019)		—
Other items	(668)		(817)
Net deferred tax assets (liabilities), net of valuation allowances	$	(494)	$	7,513

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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 or future capital gains, as well as tax credits.

Reconciliation of Tax Contingencies

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

	December 31,
	2020		2021		2022
Gross tax contingencies – January 1	$	3,923	$	2,820	$	3,242
Gross increases to tax positions in prior periods	88		403		274
Gross decreases to tax positions in prior periods	(465)		(354)		(172)
Gross increases to current period tax positions	507		507		706
Settlements with tax authorities	(1,207)		(60)		(20)
Lapse of statute of limitations	(26)		(74)		(28)
Gross tax contingencies – December 31 (1)	$	2,820	$	3,242	$	4,002

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(1)As of December 31, 2022, we had approximately $4.0 billion of accrued tax contingencies of which $2.2 billion, if fully recognized, would decrease our effective tax rate.