Income Taxes (Tables)

12 Months Ended

Jan. 31, 2021

Schedule of income tax expense (benefit)

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


	Year Ended
	January 31, 2021		January 26, 2020		January 27, 2019

	(In millions)
Current income taxes:
Federal	$	197	$	65	$	1
State	1		4		—
Foreign	161		87		69
Total current	359		156		70
Deferred taxes:
Federal	(246)		2		(315)

Foreign	(36)		16		—
Total deferred	(282)		18		(315)

Income tax expense (benefit)	$	77	$	174	$	(245)

Schedule of income before income tax

Income before income tax consists of the following:


	Year Ended
	January 31, 2021		January 26, 2020		January 27, 2019

	(In millions)
Domestic	$	1,437	$	620	$	1,843
Foreign	2,972		2,350		2,053
Income before income tax	$	4,409	$	2,970	$	3,896

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% to income before income taxes as follows:


	Year Ended
	January 31, 2021		January 26, 2020		January 27, 2019

	(In millions)
Tax expense computed at federal statutory rate	$	926	$	624	$	818
Expense (benefit) resulting from:
State income taxes, net of federal tax effect	10		12		23
Foreign tax rate differential	(561)		(301)		(412)
U.S. federal R&D tax credit	(173)		(110)		(141)
Stock-based compensation	(136)		(60)		(191)
Tax Cuts and Jobs Act of 2017	—		—		(368)


Other	11		9		26
Income tax expense (benefit)	$	77	$	174	$	(245)

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 31, 2021		January 26, 2020

	(In millions)
Deferred tax assets:
GILTI deferred tax assets	$	709	$	428
Research and other tax credit carryforwards	650		605
Operating lease liabilities	120		114
Net operating loss carryforwards	100		62
Accruals and reserves, not currently deductible for tax purposes	59		39
Stock-based compensation	36		28
Property, equipment and intangible assets	32		12
Gross deferred tax assets	1,706		1,288
Less valuation allowance	(728)		(621)
Total deferred tax assets	978		667
Deferred tax liabilities:
Acquired intangibles	(191)		(1)
Unremitted earnings of foreign subsidiaries	(111)		(40)
Operating lease assets	(111)		(107)
Gross deferred tax liabilities	(413)		(148)
Net deferred tax asset (1)	$	565	$	519

(1) Net deferred tax asset includes long-term deferred tax assets of $806 million and $548 million and long-term deferred tax liabilities of $241 million and $29 million for fiscal years 2021 and 2020, respectively. 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 31, 2021		January 26, 2020		January 27, 2019

	(In millions)
Balance at beginning of period	$	583	$	477	$	447
Increases in tax positions for current year	158		104		129
Increases in tax positions for prior years (1)	60		7		52
Decreases in tax positions for prior years	(11)		—		(141)
Settlements	(5)		—		—
Lapse in statute of limitations	(9)		(5)		(10)
Balance at end of period	$	776	$	583	$	477

(1) The fiscal year 2021 balance represents prior year gross unrecognized tax benefits recorded as a result of the Mellanox acquisition.