Income Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The following table presents the components of income (loss) from continuing operations before taxes for the periods indicated (in millions):

	Year Ended December 31,
	2024		2023		2022
United States	$	1,286	$	704	$	123
International	992		3,003		(1,724)
	$	2,278	$	3,707	$	(1,601)

The following table summarizes the income tax provision (benefit) for the periods indicated (in millions):

	Year Ended December 31,
	2024		2023		2022
Current:
Federal	$	985	$	488	$	350
State and local	89		94		36
Foreign	97		95		67
	$	1,171	$	677	$	453
Deferred:
Federal	$	(993)	$	112	$	(847)
State and local	(46)		(41)		(50)
Foreign	165		184		117
	(874)		255		(780)
	$	297	$	932	$	(327)

The following table presents a reconciliation of the difference between the actual provision for income taxes and the provision computed by applying the federal statutory rate of 21% to income (loss) before income taxes for the periods indicated (in millions):

	Year Ended December 31,
	2024		2023		2022
Provision (benefit) at statutory rate	$	478	$	778	$	(337)
Foreign income taxed at different rates	5		8		7
Other taxes on foreign operations	(157)		72		13
Change in valuation allowance	—		(62)		—
Stock-based compensation	7		33		17
State taxes, net of federal benefit	43		53		(14)
Research and other tax credits	(83)		(44)		(45)
Penalties	(13)		14		11
Impact of tax rate change	—		73		—
Other	17		7		21
	$	297	$	932	$	(327)

Deferred tax assets and liabilities are recognized for the future tax consequences of differences between the carrying amounts of assets and liabilities and their respective tax bases using enacted tax rates in effect for the year in which the differences are expected to be reversed. The following table summarizes significant deferred tax assets and liabilities as of the dates indicated (in millions):

	As of December 31,
	2024		2023
Deferred tax assets:
Net operating loss, capital loss and credits	$	181	$	200
Accruals and allowances	554		560
Capitalized research expense	475		334
Stock-based compensation	10		12
Amortizable tax basis in intangibles	2,701		2,872
Net deferred tax assets	3,921		3,978
Valuation allowance	(163)		(143)
	3,758		3,835
Deferred tax liabilities:
Outside basis differences	(1,970)		(2,817)
Acquisition-related intangibles	(57)		(65)
Depreciation and amortization	(197)		(213)
Net unrealized gain on investments	(3)		(60)
	(2,227)		(3,155)
	$	1,531	$	680

As of December 31, 2024, our federal, state and foreign net operating loss carryforwards for income tax purposes were $27 million, $34 million and $126 million, respectively. The federal and state net operating loss carryforwards are subject to various limitations under Section 382 of the Internal Revenue Code and applicable state tax laws. If not utilized, the federal and state net operating loss carryforwards will begin to expire in 2027 and 2025, respectively. The carryforward periods on our foreign net operating loss carryforwards are as follows: $4 million do not expire and $122 million are subject to valuation allowance and begin to expire in 2025. As of December 31, 2024, state tax credit carryforwards for income tax purposes were $205 million. Most of the state tax credits carry forward indefinitely.

As of December 31, 2024 and 2023, we maintained a valuation allowance with respect to certain of our deferred tax assets relating primarily to operating losses in certain non-U.S. jurisdictions and certain state tax credits and capital losses that we believe are not likely to be realized.

We have recognized the tax consequences of all foreign unremitted earnings and management has no specific plans to indefinitely reinvest the unremitted earnings of our foreign subsidiaries as of the balance sheet date. As of December 31, 2024, $292 million of our liability for deemed repatriation of foreign earnings was included in “Income taxes payable” in our consolidated balance sheet. As of December 31, 2023, $292 million of our liability for deemed repatriation of foreign earnings was included in “Other liabilities” in our consolidated balance sheet. We have not provided for deferred taxes on outside basis differences in our investments in our foreign subsidiaries that are unrelated to unremitted earnings. These basis differences will be indefinitely reinvested. A determination of the unrecognized deferred taxes related to these other components of our outside basis difference is not practicable.

The following table presents changes in unrecognized tax benefits for the periods indicated (in millions):

	Year Ended December 31,
	2024		2023		2022
Gross amounts of unrecognized tax benefits as of the beginning of the period	$	613	$	493	$	461
Increases related to prior period tax positions	22		120		4
Decreases related to prior period tax positions	(23)		(45)		(7)
Increases related to current period tax positions	67		53		40
Settlements	(5)		(8)		(5)
Gross amounts of unrecognized tax benefits as of the end of the period	$	674	$	613	$	493

As of December 31, 2024, gross amounts of unrecognized tax benefits of $674 million included $45 million of unrecognized tax benefits indemnified by PayPal. As of December 31, 2023, gross amounts of unrecognized tax benefits of $613 million included $51 million of unrecognized tax benefits indemnified by PayPal. If total unrecognized tax benefits were realized in a future period, it would result in a tax benefit of $499 million. Of this amount, $41 million of unrecognized tax benefit is indemnified by PayPal and a corresponding receivable would be reduced upon a future realization. As of December 31, 2024, our liabilities for unrecognized tax benefits were included in “Accrued expenses and other current liabilities” and “Other liabilities” in our consolidated balance sheet.

As of December 31, 2024, and 2023 we had accrued interest and penalty expense related to uncertain tax positions of $130 million and $94 million, respectively, net of income tax benefits. The “Income tax (benefit) provision” for 2024 and 2023 included interest expense related to uncertain tax positions of $31 million and $30 million, respectively, net of tax benefits. The “Income (loss) from discontinued operations, net of income taxes,” for 2024 and 2023 included interest expense related to uncertain tax positions of $1 million and $7 million, respectively, net of tax benefits.

We are subject to both direct and indirect taxation in the United States and various states and foreign jurisdictions. We are under examination by certain tax authorities for the 2010 to 2022 tax years. We believe that adequate amounts have been reserved for any adjustments that may ultimately result from these or other examinations. The material jurisdictions where we are subject to potential examination by tax authorities for tax years after 2009 include, among others, the United States (Federal and California), Germany, India, Israel, Switzerland and the United Kingdom.

The timing of the resolution and/or closure of audits is highly uncertain. Given the number of years remaining subject to examination and the number of matters being examined, we are unable to estimate the full range of possible adjustments to the balance of gross unrecognized tax benefits. We expect the gross amount of unrecognized tax benefits to be reduced within the next 12 months by at least $170 million.