Income Taxes (Tables)

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Income before income tax provision and the income tax expense

Income before income tax expense and the income tax expense consist of the following:

	For the Years Ended December 31,
(In millions)	2020		2019		2018
Income before income taxes (benefit):
Domestic	$	3,290.0	$	4,725.3	$	3,877.0
Foreign	1,757.5		2,400.6		2,022.6
Total	$	5,047.5	$	7,125.9	$	5,899.6
Income tax expense (benefit):
Current:
Federal	$	647.0	$	947.4	$	1,131.8
State	41.2		59.1		45.5
Foreign	155.1		84.4		140.0
Total	843.3		1,090.9		1,317.3
Deferred:
Federal	$	(1,749.9)	$	1,143.9	$	(62.0)
State	(6.8)		(2.3)		(7.4)
Foreign	1,905.7		(1,074.5)		177.7
Total	149.0		67.1		108.3
Total income tax expense	$	992.3	$	1,158.0	$	1,425.6

Components of deferred tax assets and liabilities

Significant components of our deferred tax assets and liabilities are summarized as follows:

	As of December 31,
(In millions)	2020		2019
Deferred tax assets:
Tax credits	$	113.4	$	106.6
Inventory, other reserves and accruals	165.9		162.0
Intangibles, net	1,546.0		3,380.0
Net operating loss	2,080.3		130.4
Share-based compensation	23.3		23.8
Other	103.1		103.7
Valuation allowance	(1,753.9)		(1.1)
Total deferred tax assets	$	2,278.1	$	3,905.4
Deferred tax liabilities:
Purchased intangible assets	$	(396.2)	$	(350.3)
GILTI	(1,143.7)		(1,381.6)
Tax credits	(174.6)		(1,617.2)
Depreciation, amortization and other	(227.0)		(135.0)
Total deferred tax liabilities	$	(1,941.5)	$	(3,484.1)

The change in the valuation allowance between December 31, 2020 and 2019, was primarily related to the establishment of a valuation allowance against certain deferred tax assets, the realization of which is dependent on future sales of TECFIDERA in the U.S., as discussed above.

Reconciliation between the U.S. federal statutory tax rate and effective tax rate

A reconciliation between the U.S. federal statutory tax rate and our effective tax rate is summarized as follows:

	For the Years Ended December 31,
	2020		2019		2018
Statutory rate	21.0	%	21.0	%	21.0	%
State taxes	0.7		0.8		0.6
Taxes on foreign earnings	(3.3)		(4.5)		(1.9)
Credits and net operating loss utilization	(1.2)		(1.1)		(0.9)
Purchased intangible assets	0.7		0.4		1.2
Divestiture of Denmark manufacturing operations	(0.4)		1.0		—
Internal reorganization of certain intellectual property rights	—		(2.1)		—
TECFIDERA impairment	1.8		—		—
GILTI	1.3		1.5		1.6
U.S. tax reform	—		—		2.1
Swiss tax reform	—		(0.8)		—
Other	(0.9)		0.1		0.5
Effective tax rate	19.7	%	16.3	%	24.2	%

Reconciliation of beginning and ending amount of unrecognized tax benefits

A reconciliation of the beginning and ending amount of our unrecognized tax benefits is summarized as follows:

(In millions)	2020		2019		2018
Beginning balance at January 1,	$	129.9	$	114.2	$	66.8
Additions based on tax positions related to the current period	1.5		5.3		0.5
Additions for tax positions of prior periods	51.7		17.2		58.7
Reductions for tax positions of prior periods	(63.6)		(10.3)		(13.6)
Statute expirations	(7.9)		(0.1)		(2.9)
Settlement refund (payment)	(35.9)		3.6		4.7
Ending balance ar December 31,	$	75.7	$	129.9	$	114.2