Income Taxes (Tables)

12 Months Ended

May 31, 2023

Income Tax Disclosure [Abstract]

Schedule of Income before Income Tax, Domestic and Foreign

Income before income taxes is as follows:

	YEAR ENDED MAY 31,
(Dollars in millions)	2023		2022		2021
Income before income taxes:
United States	$	4,663	$	6,020	$	5,723
Foreign	1,538		631		938
TOTAL INCOME BEFORE INCOME TAXES	$	6,201	$	6,651	$	6,661

Schedule of Components of Income Tax Expense (Benefit)

The provision for income taxes is as follows:

	YEAR ENDED MAY 31,
(Dollars in millions)	2023		2022		2021
Current:
United States
Federal	$	430	$	231	$	328
State	184		98		134
Foreign	634		926		857
Total Current	1,248		1,255		1,319
Deferred:
United States
Federal	(162)		(522)		(371)
State	(25)		(16)		(34)
Foreign	70		(112)		20
Total Deferred	(117)		(650)		(385)
TOTAL INCOME TAX EXPENSE	$	1,131	$	605	$	934

Schedule of Effective Income Tax Rate Reconciliation

A reconciliation from the U.S. statutory federal income tax rate to the effective income tax rate is as follows:

	YEAR ENDED MAY 31,
	2023		2022		2021
Federal income tax rate	21.0	%	21.0	%	21.0	%
State taxes, net of federal benefit	1.5	%	1.4	%	1.3	%
Foreign earnings	1.7	%	-1.8	%	0.2	%
Subpart F deferred tax benefit	0.0	%	-4.7	%	0.0	%
Foreign-derived intangible income benefit	-6.1	%	-4.1	%	-3.7	%
Excess tax benefits from stock-based compensation	-1.1	%	-4.9	%	-4.5	%
Income tax audits and contingency reserves	1.0	%	1.5	%	1.5	%
U.S. research and development tax credit	-1.2	%	-1.0	%	-0.9	%
Other, net	1.4	%	1.7	%	-0.9	%
EFFECTIVE INCOME TAX RATE	18.2	%	9.1	%	14.0	%

Schedule of Deferred Tax Assets and Liabilities

Deferred tax assets and liabilities comprise the following as of: 

	MAY 31,
(Dollars in millions)	2023		2022
Deferred tax assets:
Inventories(1)	$	79	$	136
Sales return reserves(1)	89		109
Deferred compensation(1)	321		313
Stock-based compensation	261		195
Reserves and accrued liabilities(1)	144		145
Operating lease liabilities	511		508
Intangibles	255		275
Capitalized research and development expenditures	548		353
Net operating loss carry-forwards	15		8
Subpart F deferred tax	374		313
Foreign tax credit carry-forward	—		103
Other(1)	183		148
Total deferred tax assets	2,780		2,606
Valuation allowance	(22)		(19)
Total deferred tax assets after valuation allowance	2,758		2,587
Deferred tax liabilities:
Foreign withholding tax on undistributed earnings of foreign subsidiaries	(186)		(146)
Property, plant and equipment(1)	(276)		(247)
Right-of-use assets	(441)		(437)
Other(1)	(56)		(92)
Total deferred tax liabilities	(959)		(922)
NET DEFERRED TAX ASSET (2)	$	1,799	$	1,665

(1)The above amounts exclude deferred taxes held-for-sale as of May 31, 2022. See Note 18 — Acquisitions and Divestitures for additional information.

(2)Of the total $1,799 million net deferred tax asset for the period ended May 31, 2023, $2,026 million was included within Deferred income taxes and other assets and $(227) million was included within Deferred income taxes and other liabilities on the Consolidated Balance Sheets. Of the total $1,665 million net deferred tax asset for the period ended May 31, 2022, $1,891 million was included within Deferred income taxes and other assets and $(226) million was included within Deferred income taxes and other liabilities on the Consolidated Balance Sheets.

Unrecognized Tax Benefits Reconciliation

The following is a reconciliation of the changes in the gross balance of unrecognized tax benefits as of:

	MAY 31,
(Dollars in millions)	2023		2022		2021
Unrecognized tax benefits, beginning of the period	$	848	$	896	$	771
Gross increases related to prior period tax positions	95		71		77
Gross decreases related to prior period tax positions	(17)		(145)		(22)
Gross increases related to current period tax positions	50		62		59
Settlements	(18)		(17)		(5)
Lapse of statute of limitations	(7)		(10)		(6)
Changes due to currency translation	(15)		(9)		22
UNRECOGNIZED TAX BENEFITS, END OF THE PERIOD	$	936	$	848	$	896