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Income Taxes
 12 Months Ended
Jul. 31, 2022
Income Tax Disclosure [Abstract]  
Income Taxes
11. Income Taxes
The provision for income taxes consisted of the following for the periods indicated:
 Twelve Months Ended July 31,
(In millions)202220212020
Current:   
Federal$253 $399 $372 
State93 121 79 
Foreign31 17 21 
 Total current377 537 472 
Deferred:   
Federal85 (33)(47)
State18 (11)(47)
Foreign(4)1 (6)
Total deferred99 (43)(100)
Total provision for income taxes$476 $494 $372 
We recognized excess tax benefits on share-based compensation of $134 million, $126 million, and $90 million in the provision for income taxes for the twelve months ended July 31, 2022, 2021, and 2020, respectively.
The sources of income before the provision for income taxes consisted of the following for the periods indicated:
 Twelve Months Ended July 31,
(In millions)202220212020
United States$2,433 $2,497 $2,206 
Foreign109 59 (8)
Total$2,542 $2,556 $2,198 
Differences between income taxes calculated using the federal statutory income tax rate and the provision for income taxes were as follows for the periods indicated:
 Twelve Months Ended July 31,
(In millions)202220212020
Income before income taxes$2,542 $2,556 $2,198 
Statutory federal income tax$534 $537 $462 
State income tax, net of federal benefit87 87 25 
Federal research and experimentation credits(94)(70)(54)
Share-based compensation54 38 22 
Federal excess tax benefits related to share-based compensation(112)(105)(79)
Effects of non-U.S. operations4 4 13 
Other, net3 3 (17)
Total provision for income taxes$476 $494 $372 
The state income tax line in the table above includes excess tax benefits related to share-based compensation of $22 million, $21 million and $11 million for the twelve months ended July 31, 2022, 2021 and 2020, respectively.
In the current global tax policy environment, the U.S. and other domestic and foreign governments continue to consider, and in some cases enact, changes in corporate tax laws. As changes occur, we account for finalized legislation in the period of enactment.
Significant deferred tax assets and liabilities were as follows at the dates indicated:
 July 31,
(In millions)20222021
Deferred tax assets:  
Accruals and reserves not currently deductible$84 $48 
Operating lease liabilities168 113 
Accrued and deferred compensation84 132 
Loss and tax credit carryforwards224 282 
Intangible assets25 33 
Share-based compensation97 59 
Other, net23 16 
Total gross deferred tax assets705 683 
Valuation allowance(244)(205)
Total deferred tax assets461 478 
Deferred tax liabilities:  
Operating lease right-of-use assets149 96 
Intangibles868 844 
Property and equipment9 10 
Other, net43 45 
Total deferred tax liabilities1,069 995 
Net deferred tax assets (liabilities)$(608)$(517)
The components of total net deferred tax assets (liabilities), net of valuation allowances, as shown on our consolidated balance sheets were as follows at the dates indicated:
 July 31,
(In millions)20222021
Long-term deferred income tax assets$11 $8 
Long-term deferred income tax liabilities(619)(525)
Net deferred tax assets (liabilities)$(608)$(517)
We have provided a valuation allowance related to state research and experimentation tax credit carryforwards, foreign loss carryforwards, foreign intangible deferred tax assets and state operating loss carryforwards that we believe are unlikely to be realized. Changes in the valuation allowance during the twelve months ended July 31, 2022 and July 31, 2021 were primarily
related to state research and experimentation tax credit carryforwards, foreign intangible deferred tax assets, foreign loss carryforwards and state operating loss carryforwards.
At July 31, 2022, we had total federal net operating loss carryforwards of approximately $22 million that will start to expire in fiscal 2032. Utilization of the net operating losses is subject to annual limitation. The annual limitation may result in the expiration of net operating losses before utilization.
At July 31, 2022, we had total state net operating loss carryforwards of approximately $86 million for which we have recorded a deferred tax asset of $6 million and a valuation allowance of $3 million. The state net operating loss carryforwards will start to expire in fiscal 2028. Utilization of the net operating losses is subject to annual limitation. The annual limitation may result in the expiration of net operating losses before utilization.
At July 31, 2022, we had Singapore operating loss carryforwards of approximately $78 million, Brazil operating loss carryforwards of approximately $69 million and United Kingdom operating loss carryforwards of approximately $36 million which have an indefinite carryforward period. We maintain a full valuation allowance with respect to operating losses in Singapore, Brazil and United Kingdom jurisdictions, as there is not sufficient evidence of future sources of taxable income required to utilize such carryforwards.
At July 31, 2022, we had federal research and experimentation credit carryforwards of approximately $3 million that will start
to expire in fiscal 2039. Utilization of the Federal research and experimentation credit is subject to annual limitation. The
annual limitation may result in the expiration of the Federal research and experimentation credit before utilization.
At July 31, 2022, we had California research and experimentation credit carryforwards of approximately $289 million. The California research and experimentation credit will carryforward indefinitely. We recorded a full valuation on the related deferred tax asset, as we believe it is more likely than not that these credits will not be utilized.
Unrecognized Tax Benefits
The aggregate changes in the balance of our gross unrecognized tax benefits were as follows for the periods indicated:
 Twelve Months Ended July 31,
(In millions)202220212020
Gross unrecognized tax benefits, beginning balance$190 $101 $120 
Increases related to tax positions from prior fiscal years, including acquisitions9 69 2 
Decreases related to tax positions from prior fiscal years(13)— (35)
Increases related to tax positions taken during current fiscal year31 31 21 
Settlements with tax authorities— — (1)
Lapse of statute of limitations(1)(11)(6)
Gross unrecognized tax benefits, ending balance$216 $190 $101 
The total amount of our unrecognized tax benefits at July 31, 2022 was $216 million. If we were to recognize these net benefits, our income tax expense would reflect a favorable net impact of $123 million. We do not believe that it is reasonably possible that there will be a significant increase or decrease in unrecognized tax benefits over the next 12 months.
We file U.S. federal, U.S. state, and foreign tax returns. Our major tax jurisdictions are the U.S. federal jurisdiction and California. For U.S. federal tax returns, we are no longer subject to tax examinations for fiscal 2017 and for years prior to fiscal 2016. For California tax returns, we are no longer subject to tax examination for years prior to fiscal 2016.
We recognize interest and penalties related to unrecognized tax benefits within the provision for income taxes. Amounts accrued at July 31, 2022 and July 31, 2021 for the payment of interest and penalties were not significant. The amounts of interest and penalties that we recognized during the twelve months ended July 31, 2022, 2021 and 2020 were also not significant.
We offset a $89 million and $75 million long-term liability for uncertain tax positions against our long-term income tax receivable at July 31, 2022 and July 31, 2021, respectively. The long-term income tax receivable at July 31, 2022 and July 31, 2021 was primarily related to the government’s approval of a method of accounting change request for fiscal 2018 and a refund claim related to Credit Karma’s alternative minimum tax credit that was recorded as part of the acquisition.