
	Fiscal Year Ended March 31,
	2020		2019		2018
Domestic	$	322,297	$	134,265	$	136,239
Foreign	136,142		98,520		386
Income before income taxes	$	458,439	$	232,785	$	136,625


	Fiscal Year Ended March 31,
	2020		2019		2018
Current:
U.S. federal	$	26,561	$	8,240	$	(7,327)
U.S. state and local	3,575		2,857		(1,266)
Foreign	10,061		22,274		4,208
Total current income taxes	40,197		33,371		(4,385)
Deferred:
U.S. federal	45,079		(128,317)		(13,530)
U.S. state and local	1,317		(9,157)		195
Foreign	(32,613)		3,051		(19,188)
Total deferred income taxes	13,783		(134,423)		(32,523)
Provision for (benefit from) income taxes	$	53,980	$	(101,052)	$	(36,908)


	Fiscal Year Ended March 31,
	2020		2019		2018
U.S. federal statutory rate	21.0	%	21.0	%	31.6	%
State and local taxes, net of U.S. federal benefit	2.1	%	2.9	%	0.5	%
Foreign tax rate differential⁽¹⁾	1.0	%	(9.0)	%	(6.9)	%
Foreign earnings⁽²⁾	(9.3)	%	5.1	%	1.2	%
Tax credits⁽³⁾	(8.3)	%	(15.0)	%	(16.5)	%
Excess tax benefits from stock-based compensation	(1.8)	%	(5.7)	%	(38.9)	%
One-time transition tax	—	%	(2.0)	%	19.5	%
Domestic production deduction	—	%	—	%	(2.8)	%
Valuation allowance—domestic	0.2	%	(46.0)	%	(0.5)	%
Valuation allowance—foreign⁽²⁾	7.3	%	—	%	(2.5)	%
Change in reserves	(2.0)	%	1.3	%	(11.0)	%
Other	1.6	%	4.0	%	(0.7)	%
Effective tax rate	11.8	%	(43.4)	%	(27.0)	%

(1) The foreign rate differentials in relation to foreign earnings, for all periods presented, are primarily driven by changes in the mix of our foreign earnings and the difference between the foreign and U.S. income tax rates. Includes the impact of the reversal of a net deferred tax asset of $19,826 related to the effects of stock-based compensation from our intercompany cost-sharing arrangements due to an appeals court decision issued in Altera Corp. v. Commissioner for the fiscal year ended March 31, 2020.

(2) Includes effects of a deferred tax asset and valuation allowance associated with a tax basis step up received in Switzerland related to the Federal Act on Tax Reform and AVH Financing ("TRAF") enacted on January 1, 2020.

(3) Tax benefits were recorded for fiscal years ended March 31, 2020, 2019, and 2018 attributable to certain tax credits related to software development activities.


	March 31,
	2020		2019
Deferred tax assets:
Accrued compensation expense	$	124,276	$	113,517
Equity-based compensation	66,253		82,720
Tax credit carryforward	45,746		72,408
Tax basis step up related to TRAF	45,266		—
Operating lease liabilities	39,512		—
Net operating loss carryforward	5,555		27,498
Business reorganization	1,874		158
Deferred rent	—		5,965
Other	7,785		411
Total deferred tax assets	336,267		302,677
Less: Valuation allowance	(86,937)		(49,413)
Net deferred tax assets	249,330		253,264
Deferred tax liabilities:
Capitalized software and depreciation	(74,006)		(101,168)
Right of use assets	(36,947)		—
Intangible amortization	(18,206)		(22,486)
Deferred revenue	(5,038)		(17,100)
Other	(3,587)		(4,690)
Total deferred tax liabilities	(137,784)		(145,444)
Net deferred tax asset / (liability) ⁽¹⁾	111,546		107,820

(1) As of March 31, 2020, $116,676 is included in Deferred tax assets and $5,130 is included in Other long-term liabilities. As of March 31, 2019, $134,732 is included in Deferred tax assets and $26,912 is included in Other long-term liabilities.

At March 31, 2020, we had domestic net operating loss carryforwards totaling $39,506 of which $24,019 will expire in 2022 to 2027, $13,195 will expire from 2029 to 2032, and $2,292 will expire in 2038 to 2040. In addition, we had foreign net operating loss carryforwards of $12,351, of which $3,606 will expire from 2021 and the remainder may be carried forward indefinitely.

At March 31, 2020, we had domestic tax credit carryforwards totaling $160,793, of which $60,248 expire in 2038 to 2040, and the remainder may be carried forward indefinitely.

The total amount of undistributed earnings of foreign subsidiaries was approximately $562,269 at March 31, 2020 and $410,095 at March 31, 2019. As of March 31, 2020, it is our intention to reinvest indefinitely undistributed earnings of our foreign subsidiaries. Accordingly, no provision has been made for foreign withholding taxes or U.S. income taxes which may become payable if undistributed earnings of foreign subsidiaries are repatriated. It is not practicable to estimate the tax liability that would arise if these earnings were remitted.

We are regularly audited by domestic and foreign taxing authorities. Audits may result in tax assessments in excess of amounts claimed and the payment of additional taxes. We believe that our tax return positions comply with applicable tax law and that we have adequately provided for reasonably foreseeable assessments of additional taxes. Additionally, we believe that any assessments in excess of the amounts provided for will not have a material adverse effect on the Consolidated Financial Statements. It is possible that settlement of audits or the expiration of the statute of limitations may have an impact on our effective tax rate in future periods.

We recognize interest and penalties related to uncertain tax positions in the provision for income taxes in our Consolidated Statements of Operations. For the fiscal years ended March 31, 2020, 2019 and 2018, we recognized an increase of $71, $232 and $2,363, respectively. The gross amount of interest and penalties accrued as of March 31, 2020 and 2019 was $6,757 and $6,686, respectively.

As of March 31, 2020, we had gross unrecognized tax benefits, including interest and penalties, of $134,269, of which $30,658 would affect our effective tax rate if realized. For the fiscal year ended March 31, 2020, gross unrecognized tax benefits decreased by $4,737.

We are no longer subject to audit for U.S. federal income tax returns for periods prior to our fiscal year ended March 31, 2017 and state income tax returns for periods prior to the fiscal year ended March 31, 2016. With few exceptions, we are no longer subject to income tax examinations in non-U.S. jurisdictions for years prior to fiscal year ended March 31, 2014. Certain U.S. state and foreign taxing authorities are currently examining our income tax returns for the fiscal years ended March 31, 2015 through March 31, 2018.

The timing of the resolution of income tax examinations is highly uncertain, and the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ materially from the amounts accrued for each year. Although potential resolution of uncertain tax positions involve multiple tax periods and jurisdictions, it is reasonably possible that a reduction of $24,983 of unrecognized tax benefits may occur within the next 12 months, some of which, depending on the nature of the settlement or expiration of statutes of limitations, may affect our income tax provision and therefore benefit the resulting effective tax rate. The actual amount could vary significantly depending on the ultimate timing and nature of any settlements.


	Fiscal Year Ended March 31,
	2020		2019		2018
Balance, beginning of period	$	132,320	$	122,056	$	116,085
Additions:
Current year tax positions	8,596		13,281		23,007
Prior year tax positions	1,404		288		7,406
Reduction of prior year tax positions	(14,270)		(1,700)		(436)
Lapse of statute of limitations	(538)		(1,605)		(24,006)

Balance, end of period	$	127,512	$	132,320	$	122,056

We believe that we have provided for any reasonably foreseeable outcomes related to our tax audits and that any settlement will not have a material adverse effect on our consolidated financial statements. However, there can be no assurances as to the possible outcomes.