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INCOME TAXES (Tables)
12 Months Ended
May 31, 2020
Income Tax Disclosure [Abstract]  
Geographical Breakdown of Income Before Provision for Income Taxes

 

 

 

Year Ended May 31,

 

(in millions)

 

2020

 

 

2019

 

 

2018

 

Domestic

 

$

3,890

 

 

$

3,774

 

 

$

3,366

 

Foreign

 

 

8,173

 

 

 

8,494

 

 

 

9,058

 

Income before provision for income taxes

 

$

12,063

 

 

$

12,268

 

 

$

12,424

 

Components of Provision for Income Taxes

 

 

 

Year Ended May 31,

 

(Dollars in millions)

 

2020

 

 

2019

 

 

2018

 

Current provision:

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

$

1,616

 

 

$

979

 

 

$

8,320

 

State

 

 

19

 

 

 

300

 

 

 

264

 

Foreign

 

 

1,144

 

 

 

1,097

 

 

 

1,100

 

Total current provision

 

$

2,779

 

 

$

2,376

 

 

$

9,684

 

Deferred benefit:

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

$

(983

)

 

$

483

 

 

$

(827

)

State

 

 

50

 

 

 

(28

)

 

 

(26

)

Foreign

 

 

82

 

 

 

(1,646

)

 

 

6

 

Total deferred benefit

 

$

(851

)

 

$

(1,191

)

 

$

(847

)

Total provision for income taxes

 

$

1,928

 

 

$

1,185

 

 

$

8,837

 

Effective income tax rate

 

16.0%

 

 

9.7%

 

 

71.1%

 

Reconciliation of Differences Between Federal Statutory Tax Rate and Effective Tax Rate

 

 

 

Year Ended May 31,

 

(Dollars in millions)

 

2020

 

 

2019

 

 

2018

 

U.S. federal statutory tax rate

 

21.0%

 

 

21.0%

 

 

29.2%

 

Tax provision at statutory rate

 

$

2,533

 

 

$

2,576

 

 

$

3,629

 

Impact of the Tax Act of 2017:

 

 

 

 

 

 

 

 

 

 

 

 

One-time transition tax

 

 

 

 

 

(529

)

 

 

7,781

 

Deferred tax effects

 

 

 

 

 

140

 

 

 

(911

)

Foreign earnings at other than United States rates

 

 

(496

)

 

 

(1,053

)

 

 

(1,132

)

State tax expense, net of federal benefit

 

 

172

 

 

 

163

 

 

 

121

 

Settlements and releases from judicial decisions and statute expirations, net

 

 

(137

)

 

 

(132

)

 

 

(252

)

Tax contingency interest accrual, net

 

 

163

 

 

 

245

 

 

 

105

 

Domestic production activity deduction

 

 

 

 

 

 

 

 

(87

)

Federal research and development credit

 

 

(151

)

 

 

(159

)

 

 

(174

)

Stock-based compensation

 

 

(166

)

 

 

(201

)

 

 

(302

)

Other, net

 

 

10

 

 

 

135

 

 

 

59

 

Total provision for income taxes

 

$

1,928

 

 

$

1,185

 

 

$

8,837

 

Components of Deferred Tax Liabilities and Assets

 

 

 

May 31,

 

(in millions)

 

2020

 

 

2019

 

Deferred tax assets:

 

 

 

 

 

 

 

 

Accruals and allowances

 

$

469

 

 

$

541

 

Employee compensation and benefits

 

 

638

 

 

 

646

 

Differences in timing of revenue recognition

 

 

524

 

 

 

322

 

Lease liabilities

 

 

253

 

 

 

 

Basis of property, plant and equipment and intangible assets

 

 

1,115

 

 

 

1,238

 

Tax credit and net operating loss carryforwards

 

 

3,871

 

 

 

3,717

 

Total deferred tax assets

 

 

6,870

 

 

 

6,464

 

Valuation allowance

 

 

(1,359

)

 

 

(1,266

)

Total deferred tax assets, net

 

 

5,511

 

 

 

5,198

 

Deferred tax liabilities:

 

 

 

 

 

 

 

 

Unrealized gain on stock

 

 

(78

)

 

 

(78

)

Acquired intangible assets

 

 

(561

)

 

 

(973

)

GILTI deferred

 

 

(1,108

)

 

 

(1,515

)

ROU assets

 

 

(241

)

 

 

 

Withholding taxes on foreign earnings

 

 

(171

)

 

 

(91

)

Other

 

 

(141

)

 

 

(109

)

Total deferred tax liabilities

 

 

(2,300

)

 

 

(2,766

)

Net deferred tax assets

 

$

3,211

 

 

$

2,432

 

Recorded as:

 

 

 

 

 

 

 

 

Non-current deferred tax assets

 

$

3,252

 

 

$

2,696

 

Non-current deferred tax liabilities (in other non-current liabilities)

 

 

(41

)

 

 

(264

)

Net deferred tax assets

 

$

3,211

 

 

$

2,432

 

Gross Unrecognized Tax Benefits, Including Acquisitions

 

 

 

Year Ended May 31,

 

(in millions)

 

2020

 

 

2019

 

 

2018

 

Gross unrecognized tax benefits as of June 1

 

$

6,348

 

 

$

5,592

 

 

$

4,919

 

Increases related to tax positions from prior fiscal years

 

 

624

 

 

 

772

 

 

 

200

 

Decreases related to tax positions from prior fiscal years

 

 

(298

)

 

 

(135

)

 

 

(65

)

Increases related to tax positions taken during current fiscal year

 

 

628

 

 

 

540

 

 

 

840

 

Settlements with tax authorities

 

 

(177

)

 

 

(153

)

 

 

(42

)

Lapses of statutes of limitation

 

 

(116

)

 

 

(202

)

 

 

(273

)

Cumulative translation adjustments and other, net

 

 

(37

)

 

 

(66

)

 

 

13

 

Total gross unrecognized tax benefits as of May 31

 

$

6,972

 

 

$

6,348

 

 

$

5,592