Income Taxes (Tables)

12 Months Ended

May 31, 2020

Schedule of Components of Provision for Income Taxes

The components of the provision for income taxes for the years ended May 31 were as follows (in millions):

	2020			2019			2018
Current provision (benefit)
Domestic:
Federal	$	(230	)	$	(107	)	$	(540	)
State and local		67			64			43
Foreign		198			243			461
		35			200			(36	)
Deferred provision (benefit)
Domestic:
Federal		475			(61	)		271
State and local		1			(7	)		125
Foreign		(128	)		(17	)		(579	)
		348			(85	)		(183	)
	$	383		$	115		$	(219	)

Schedule of Reconciliation of Total Income Tax Expense and Amount Computed by Statutory Federal Income Tax Rate to Income Before Taxes

A reconciliation of total income tax expense and the amount computed by applying the statutory federal income tax rate (21% in 2020, 21% in 2019 and 29.2% in 2018) to income before taxes for the years ended May 31 is as follows (in millions):

	2020			2019			2018
Taxes computed at federal statutory rate	$	350		$	138		$	1,271
(Decreases) increases in income tax from:
Valuation allowance		(129	)		(79	)		31
Goodwill impairment charge		75			—			109
Benefit from U.S. tax loss carryback to prior years		(71	)		—			—
Non-deductible expenses		70			79			81
State and local income taxes, net of federal benefit		53			44			119
U.S. deferred tax adjustments related to foreign operations		51			—			—
Foreign operations		38			(1	)		25
Uncertain tax positions		(14	)		8			86
Foreign tax rate enactments		(10	)		50			6
Benefits from share-based payments		(5	)		(18	)		(60	)
TCJA⁽¹⁾		—			(71	)		(1,354	)
Foreign tax credits from distributions		—			(8	)		(225	)
Corporate structuring transactions⁽²⁾		—			—			(255	)
Other, net		(25	)		(27	)		(53	)
Provision for income taxes (benefit)	$	383		$	115		$	(219	)
Effective Tax Rate		23.0	%		17.6	%		(5.0	)%

⁽¹⁾	Primary components in 2018 were a $1.15 billion benefit from the remeasurement of our net U.S. deferred tax liability and a $204 million one-time benefit from a contribution to our U.S. Pension Plans in 2018.

⁽²⁾	The 2018 net benefit consists of foreign deferred tax benefits of $434 million, which were partially offset by U.S. deferred tax expenses of $179 million.

Schedule of Significant Components of Deferred Tax Assets and Liabilities

The significant components of deferred tax assets and liabilities as of May 31 were as follows (in millions):

	2020					2019
	Deferred Tax Assets			Deferred Tax Liabilities		Deferred Tax Assets			Deferred Tax Liabilities
Property, equipment, leases and intangibles⁽¹⁾	$	3,819		$	8,745	$	592		$	4,633
Employee benefits		1,448			—		1,256			—
Self-insurance accruals		647			—		585			—
Other		579			375		510			340
Net operating loss/credit carryforwards		1,262			—		1,139			—
Valuation allowances		(450	)		—		(590	)		—
	$	7,305		$	9,120	$	3,492		$	4,973

⁽¹⁾	^{Includes impact from adoption of the new lease accounting standard in 2020. See Note 7 for additional information.}

Schedule of Net Deferred Tax Liabilities

The net deferred tax liabilities as of May 31 have been classified in the balance sheets as follows (in millions):

	2020			2019
Noncurrent deferred tax assets⁽¹⁾	$	1,347		$	1,340
Noncurrent deferred tax liabilities		(3,162	)		(2,821	)
	$	(1,815	)	$	(1,481	)

⁽¹⁾	Noncurrent deferred tax assets are included in the line item “Other Assets” in our accompanying consolidated balance sheets.

Reconciliation of Beginning and Ending Amount of Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in millions):

	2020			2019			2018
Balance at beginning of year	$	164		$	161		$	67
Increases for tax positions taken in the current year		3			—			3
Increases for tax positions taken in prior years		4			31			103
Increase for business acquisition		—			—			—
Decreases for tax positions taken in prior years		(10	)		(4	)		(10	)
Settlements		(31	)		(21	)		(2	)
Decreases from lapse of statute of limitations		—			—			—
Changes due to currency translation		(1	)		(3	)		—
Balance at end of year	$	129		$	164		$	161