Income Taxes (Tables)

12 Months Ended

Jan. 26, 2020

Schedule of income tax expense (benefit)

The income tax expense (benefit) applicable to income before income taxes consists of the following:



	Year Ended
	January 26, 2020		January 27, 2019			January 28, 2018
	(In millions)
Current income taxes:
Federal	$	65	$	1		$	464
State	4		—			1
Foreign	87		69			43
Total current	156		70			508
Deferred taxes:
Federal	2		(315		)	(376		)
State	—		—			—
Foreign	16		—			17
Total deferred	18		(315		)	(359		)
Income tax expense (benefit)	$	174	$	(245	)	$	149

Schedule of income before income tax

Income before income tax consists of the following:



	Year Ended
	January 26, 2020		January 27, 2019		January 28, 2018
	(In millions)
Domestic	$	620	$	1,843	$	1,600
Foreign	2,350		2,053		1,596
Income before income tax	$	2,970	$	3,896	$	3,196

Schedule of effective income tax rate reconciliation

The income tax expense (benefit) differs from the amount computed by applying the U.S. federal statutory rate of 21%, 21%, and 33.9% for fiscal years 2020, 2019, and 2018, respectively, to income before income taxes as follows:



	Year Ended
	January 26, 2020			January 27, 2019			January 28, 2018
	(In millions)
Tax expense computed at federal statutory rate	$	624		$	818		$	1,084
Expense (benefit) resulting from:
State income taxes, net of federal tax effect	12			23			10
Foreign tax rate differential	(301		)	(412		)	(545		)
Stock-based compensation	(60		)	(191		)	(181		)
Tax Cuts and Jobs Act of 2017	—			(368		)	(133		)
U.S. federal R&D tax credit	(110		)	(141		)	(87		)
Other	9			26			1
Income tax expense (benefit)	$	174		$	(245	)	$	149

Schedule of deferred tax assets and liabilities

The tax effect of temporary differences that gives rise to significant portions of the deferred tax assets and liabilities are presented below:



	January 26, 2020			January 27, 2019
	(In millions)
Deferred tax assets:
Net operating loss carryforwards	$	62		$	70
Accruals and reserves, not currently deductible for tax purposes	39			41
Property, equipment and intangible assets	12			2
Operating lease liabilities	114			—
Research and other tax credit carryforwards	605			626
Stock-based compensation	28			25
GILTI deferred tax assets	428			376
Gross deferred tax assets	1,288			1,140
Less valuation allowance	(621		)	(562		)
Total deferred tax assets	667			578
Deferred tax liabilities:
Acquired intangibles	(1		)	(2		)
Unremitted earnings of foreign subsidiaries	(40		)	(35		)
Operating lease assets	(107		)	—
Gross deferred tax liabilities	(148		)	(37		)
Net deferred tax asset (1)	$	519		$	541

(1) Net deferred tax asset includes long-term deferred tax assets of $548 million and $560 million and long-term deferred tax liabilities of $29 million and $19 million for fiscal years 2020 and 2019, respectively. Long-term deferred tax assets are included in Other assets and long-term deferred tax liabilities are included in Other long-term liabilities on our Consolidated Balance Sheets.

Summary of gross unrecognized tax benefits

A reconciliation of gross unrecognized tax benefits is as follows:



	January 26, 2020			January 27, 2019			January 28, 2018
	(In millions)
Balance at beginning of period	$	477		$	447		$	224
Increases in tax positions for prior years	7			52			7
Decreases in tax positions for prior years	—			(141		)	(1		)
Increases in tax positions for current year	104			129			222
Lapse in statute of limitations	(5		)	(10		)	(5		)
Balance at end of period	$	583		$	477		$	447