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Income Taxes
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Net income before provision for (benefit from) income taxes consists of the following (in thousands):
 Year Ended December 31,
 202220212020
Domestic$268,097 $378,478 $173,099 
Foreign330,960 633,945 205,850 
Net income before provision for (benefit from) income taxes$599,057 $1,012,423 $378,949 

The provision for (benefit from) income taxes consists of the following (in thousands):
 Year Ended December 31,
 202220212020
Federal
Current$188,050 $157,383 $55,291 
Deferred(55,579)(25,598)(11,749)
132,471 131,785 43,542 
State
Current34,621 28,365 8,862 
Deferred(12,265)(5,860)(2,121)
22,356 22,505 6,741 
Foreign
Current56,537 42,681 29,399 
Deferred26,120 43,432 (1,476,621)
82,657 86,113 (1,447,222)
Provision for (benefit from) income taxes$237,484 $240,403 $(1,396,939)
The differences between income taxes using the federal statutory income tax rate for 2022, 2021 and 2020 and our effective tax rates are as follows: 
 Year Ended December 31,
 202220212020
U.S. federal statutory income tax rate21.0 %21.0 %21.0 %
State income taxes, net of federal tax benefit3.7 2.2 1.5 
U.S. tax on foreign earnings5.6 2.5 (1.2)
Impact of differences in foreign tax rates3.3 (2.0)5.6 
Stock-based compensation2.1 (0.3)1.1 
Impact of intra-entity intellectual property rights transfer— — (395.6)
Settlement on audits1.9 — (1.4)
Change in valuation allowance1.7 1.1 0.1 
Other items not individually material0.3 (0.8)0.3 
Effective tax rate39.6 %23.7 %(368.6)%

We intend to continue reinvesting our foreign subsidiary earnings indefinitely and do not expect any additional costs that we may incur upon repatriation of these foreign earnings to be significant.

During the year ended December 31, 2020, we completed an intra-entity transfer of certain intellectual property rights and fixed assets to our new Swiss subsidiary, where our EMEA regional headquarters is located beginning January 1, 2020. The transfer of intellectual property rights did not result in a taxable gain; however, it did result in a step-up of the Swiss tax deductible basis in the transferred assets, and accordingly, created a temporary difference between the book basis and the tax basis of such intellectual property rights. Consequently, this transaction resulted in the recognition of a deferred tax asset and related one-time tax benefit of approximately $1,493.5 million during the year ended December 31, 2020, which is the net impact of the deferred tax asset recognized as a result of the additional Swiss tax deductible basis in the transferred assets and certain costs related to the transfer of fixed assets and inventory.

As of December 31, 2022 and 2021, the significant components of our deferred tax assets and liabilities are (in thousands):
 December 31,
 20222021
Deferred tax assets:
Net operating loss and capital loss carryforwards$15,380 $11,069 
Reserves and accruals32,759 47,641 
Stock-based compensation19,469 13,576 
Deferred revenue117,039 83,514 
Capitalized research & development54,293 413 
Amortizable tax basis in intangibles1,350,434 1,392,471 
Other16,645 15,645 
Deferred tax assets before valuation allowance1,606,019 1,564,329 
Valuation allowance(23,286)(12,938)
Total deferred tax assets1,582,733 1,551,391 
Deferred tax liabilities:
Depreciation and amortization11,407 12,328 
Acquisition-related intangibles26,008 28,989 
Other3,438 6,931 
Total deferred tax liabilities40,853 48,248 
Net deferred tax assets 1,541,880 1,503,143 

The available positive evidence at December 31, 2022 included historical operating profits and a projection of future income sufficient to realize most of our remaining deferred tax assets. As of December 31, 2022, it was considered more likely
than not that our deferred tax assets would be realized with the exception of certain net operating loss, capital loss carryovers and unrealized translation losses as we are unable to forecast sufficient future profits to realize the deferred tax assets. The total valuation allowance as of December 31, 2022 was $23.3 million. During the year ended December 31, 2022, the valuation allowance increased by $10.3 million primarily due to deferred tax assets related to unrealized translation losses and net operating loss from one of our German subsidiaries and the deferred tax assets from our Russian commercial entity are not more likely than not to be realized.

As of December 31, 2022, we have foreign net operating loss carryforwards of approximately $48.2 million, attributed mainly to losses in China, Italy and Germany. The losses in Italy and Germany can be carried forward indefinitely. The operating loss carryforwards in China, if not utilized, will expire beginning 2026.

The changes in the balance of gross unrecognized tax benefits, which exclude interest and penalties, for the year ended December 31, 2022, 2021 and 2020, are as follows (in thousands):
Year Ended December 31,
202220212020
Gross unrecognized tax benefits at January 1,$63,295 $46,320 $46,650 
Increases related to tax positions taken during the current year84,249 27,710 20,592 
Increases related to tax positions taken during a prior year 15,411 5,471 10,201 
Decreases related to tax positions taken during a prior year(2,647)(5,804)(29,977)
Decreases related to expiration of statute of limitations(4,582)(8,986)— 
Decreases related to settlement with tax authorities(14,166)(1,416)(1,146)
Gross unrecognized tax benefits at December 31,$141,560 $63,295 $46,320 

The total amount of gross unrecognized tax benefits as of December 31, 2022 was $141.6 million, of which $134.3 million would impact our effective tax rate if recognized.

We file U.S. federal, U.S. state, and non-U.S. income tax returns. Our major tax jurisdictions include U.S. federal, the State of California and Switzerland. For U.S. federal and state tax returns, we are no longer subject to tax examinations for years before 2017 and 2015, respectively. Our Israeli subsidiary was under tax audit for years 2016 through 2019. During the fourth quarter of 2022, we settled the audit with the Israel Tax Authority in connection with a 2016 transaction to which our Israeli subsidiary was a party. As a result, we are no longer subject to tax examinations for years through 2021 in Israel. With few exceptions, we are no longer subject to examination by other foreign tax authorities for years before 2015.

We have elected to recognize interest and penalties related to unrecognized tax benefits as a component of income taxes. Interest and penalties included in tax expense for the year ended December 31, 2022, 2021 and 2020 as well as accrued as of December 31, 2022 and 2021 were not material. While we defend income tax audits in various jurisdictions and the results of such audits may differ materially from the amounts accrued for each year, we cannot currently ascertain the bases on which any given audit will be ultimately resolved. Accordingly, we are unable to estimate the range of possible adjustments to our balance of gross unrecognized tax benefits in the next 12 months.