Income Taxes (Tables)

12 Months Ended

Jan. 27, 2019

Schedule of income tax expense (benefit)

The income tax expense (benefit) applicable to income before income taxes consists of the following:



	Year Ended
	January 27, 2019			January 28, 2018			January 29, 2017
	(In millions)
Current income taxes:
Federal	$	1		$	464		$	7
State	—			1			1
Foreign	69			43			34
Total current	70			508			42
Deferred taxes:
Federal	(315		)	(376		)	199
State	—			—			—
Foreign	—			17			(2		)
Total deferred	(315		)	(359		)	197
Income tax expense (benefit)	$	(245	)	$	149		$	239

Schedule of income before income tax

Income before income tax consists of the following:



	Year Ended
	January 27, 2019		January 28, 2018		January 29, 2017
	(In millions)
Domestic (1)	$	1,843	$	1,600	$	600
Foreign	2,053		1,596		1,305
Income before income tax	$	3,896	$	3,196	$	1,905


(1)	The increase in domestic income is primarily due to jurisdictional allocation of stock-based compensation charges.

Schedule of effective income tax rate reconciliation

The income tax expense (benefit) differs from the amount computed by applying the U.S. federal statutory rate of 21%, 33.9%, and 35% for fiscal years 2019, 2018, and 2017, respectively, to income before income taxes as follows:



	Year Ended
	January 27, 2019			January 28, 2018			January 29, 2017
	(In millions)
Tax expense computed at federal statutory rate	$	818		$	1,084		$	667
Expense (benefit) resulting from:
State income taxes, net of federal tax effect	23			10			4
Foreign tax rate differential	(412		)	(545		)	(315		)
Stock-based compensation	(191		)	(181		)	(70		)
Tax Cuts and Jobs Act of 2017	(368		)	(133		)	—
U.S. federal R&D tax credit	(141		)	(87		)	(52		)
Other	26			1			5
Income tax expense (benefit)	$	(245	)	$	149		$	239

Schedule of deferred tax assets and liabilities

The tax effect of temporary differences that gives rise to significant portions of the deferred tax assets and liabilities are presented below:



	January 27, 2019			January 28, 2018
	(In millions)
Deferred tax assets:
Net operating loss carryforwards	$	70		$	67
Accruals and reserves, not currently deductible for tax purposes	41			24
Property, equipment and intangible assets	2			32
Research and other tax credit carryforwards	626			579
Stock-based compensation	25			24
GILTI deferred tax assets	376			—
Gross deferred tax assets	1,140			726
Less valuation allowance	(562		)	(469		)
Total deferred tax assets	578			257
Deferred tax liabilities:
Acquired intangibles	(2		)	(4		)
Unremitted earnings of foreign subsidiaries	(35		)	(26		)
Gross deferred tax liabilities	(37		)	(30		)
Net deferred tax asset (1)	$	541		$	227

(1) Net deferred tax asset includes long-term deferred tax assets of $560 million and $245 million and long-term deferred tax liabilities of $19 million and $18 million for fiscal years 2019 and 2018, respectively. Long-term deferred tax assets are included in Other assets and long-term deferred tax liabilities are included in Other long-term liabilities on our Consolidated Balance Sheets.

Summary of income tax contingencies

A reconciliation of gross unrecognized tax benefits is as follows:



	January 27, 2019			January 28, 2018			January 29, 2017
	(In millions)
Balance at beginning of period	$	447		$	224		$	230
Increases in tax positions for prior years	52			7			3
Decreases in tax positions for prior years	(141		)	(1		)	—
Increases in tax positions for current year	129			222			46
Settlements	—			—			(48		)
Lapse in statute of limitations	(10		)	(5		)	(7		)
Balance at end of period	$	477		$	447		$	224