Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Schedule of income from continuing operations before income taxes

Income from continuing operations before income taxes consists of the following (in millions):

	Year Ended December 31,
	2017		2018		2019
Domestic operations	$	10,680	$	15,779	$	16,426
Foreign operations	16,513		19,134		23,199
Total	$	27,193	$	34,913	$	39,625

Schedule of components of income tax expense (benefit)

The provision for income taxes consists of the following (in millions):

	Year Ended December 31,
	2017			2018			2019
Current:
Federal and state	$	12,608		$	2,153		$	2,424
Foreign	1,746			1,251			2,713
Total	14,354			3,404			5,137
Deferred:
Federal and state	220			907			286
Foreign	(43		)	(134		)	(141		)
Total	177			773			145
Provision for income taxes	$	14,531		$	4,177		$	5,282

Schedule of effective income tax rate reconciliation

The reconciliation of federal statutory income tax rate to our effective income tax rate is as follows:

	Year Ended December 31,
	2017		2018		2019
U.S. federal statutory tax rate	35.0	%	21.0	%	21.0	%
Foreign income taxed at different rates	(14.2	)	(4.9	)	(5.6	)
Effect of the Tax Act
Transition tax	37.6		(0.1	)	(0.6	)
Deferred tax effects	(1.4	)	(1.2	)	0.0
Federal research credit	(1.8	)	(2.4	)	(2.5	)
Stock-based compensation expense	(4.5	)	(2.2	)	(0.7	)
European Commission fines	3.5		3.1		1.0
Deferred tax asset valuation allowance	0.9		(2.0	)	0.0
State and local income taxes	0.1		(0.4	)	1.1
Other adjustments	(1.8	)	1.1		(0.4	)
Effective tax rate	53.4	%	12.0	%	13.3	%

Schedule of deferred tax assets and liabilities

Significant components of our deferred tax assets and liabilities are as follows (in millions):

	As of December 31,
	2018			2019
Deferred tax assets:
Stock-based compensation expense	$	291		$	421
Accrued employee benefits	387			463
Accruals and reserves not currently deductible	902			1,047
Tax credits	1,979			3,264
Basis difference in investment in Arris	657			0
Prepaid cost sharing	597			0
Net operating losses	557			771
Operating leases	160			1,876
Other	21			390
Total deferred tax assets	5,551			8,232
Valuation allowance	(2,817		)	(3,502		)
Total deferred tax assets net of valuation allowance	2,734			4,730
Deferred tax liabilities:
Property and equipment, net	(1,382		)	(1,798		)
Renewable energy investments	(500		)	(466		)
Foreign Earnings	(111		)	(373		)
Net investment gains	(1,143		)	(1,074		)
Operating leases	0			(1,619		)
Other	(125		)	(380		)
Total deferred tax liabilities	(3,261		)	(5,710		)
Net deferred tax assets (liabilities)	$	(527	)	$	(980	)

Summary of income tax contingencies

The following table summarizes the activity related to our gross unrecognized tax benefits (in millions):

	Year Ended December 31,
	2017			2018			2019
Beginning gross unrecognized tax benefits	$	5,393		$	4,696		$	4,652
Increases related to prior year tax positions	685			321			938
Decreases related to prior year tax positions	(257		)	(623		)	(143		)
Decreases related to settlement with tax authorities	(1,875		)	(191		)	(2,886		)
Increases related to current year tax positions	750			449			816
Ending gross unrecognized tax benefits	$	4,696		$	4,652		$	3,377