A provision for income taxes of $292 million, $110 million and $58 million has been recognized for the years ended December 31, 2020, 2019 and 2018, respectively, related primarily to our subsidiaries located outside of the U.S. Our income (loss) before provision for income taxes for the years ended December 31, 2020, 2019 and 2018 was as follows (in millions):

	Year Ended December 31,
	2020			2019			2018
Domestic	$	(198	)	$	(287	)	$	(412	)
Noncontrolling interest and redeemable noncontrolling interest		141			87			(87	)
Foreign		1,211			(465	)		(506	)
Income (loss) before income taxes	$	1,154		$	(665	)	$	(1,005	)

The components of the provision for income taxes for the years ended December 31, 2020, 2019 and 2018 consisted of the following (in millions):

	Year Ended December 31,
	2020		2019			2018
Current:
Federal	$	—	$	—		$	(1	)
State		4		5			3
Foreign		248		86			24
Total current		252		91			26
Deferred:
Federal		—		(4	)		—
State		—		—			—
Foreign		40		23			32
Total deferred		40		19			32
Total provision for income taxes	$	292	$	110		$	58

Deferred tax assets (liabilities) as of December 31, 2020 and 2019 consisted of the following (in millions):

	December 31,			December 31,
	2020			2019
Deferred tax assets:
Net operating loss carry-forwards	$	2,172		$	1,846
Research and development credits		624			486
Other tax credits		168			126
Deferred revenue		450			301
Inventory and warranty reserves		315			243
Stock-based compensation		98			102
Operating lease right-of-use liabilities		335			290
Deferred GILTI tax assets		581			—
Accruals and others		205			16
Total deferred tax assets		4,948			3,410
Valuation allowance		(2,930	)		(1,956	)
Deferred tax assets, net of valuation allowance		2,018			1,454
Deferred tax liabilities:
Depreciation and amortization		(1,488	)		(1,185	)
Investment in certain financing funds		(198	)		(17	)
Operating lease right-of-use assets		(305	)		(263	)
Deferred revenue		(50	)		—
Other		(61	)		(24	)
Total deferred tax liabilities		(2,102	)		(1,489	)
Deferred tax liabilities, net of valuation allowance and deferred tax assets	$	(84	)	$	(35	)

As of December 31, 2020, we recorded a valuation allowance of $2.93 billion for the portion of the deferred tax asset that we do not expect to be realized. The valuation allowance on our net deferred taxes increased by $974 million, increased by $150 million, and decreased by $38 million during the years ended December 31, 2020, 2019 and 2018, respectively. The changes in valuation allowance are primarily due to additional U.S. deferred tax assets and liabilities incurred in the respective year. We have net $260 million of deferred tax assets in foreign jurisdictions, which management believes are more-likely-than-not to be fully realized given the expectation of future earnings in these jurisdictions. We did not have material release of valuation allowance for the years ended December 31, 2020, 2019 and 2018. We continue to monitor the realizability of the U.S. deferred tax assets taking into account multiple factors, including the results of operations and magnitude of excess tax deductions for stock-based compensation. We intend to continue maintaining a full valuation allowance on our U.S. deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances. Given the improvement in our operating results and depending on the amount of stock-based compensation tax deduction available in the future, we may release the valuation allowance associated with the U.S. deferred tax assets in the next few years. Release of all, or a portion, of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period the release is recorded.

The reconciliation of taxes at the federal statutory rate to our provision for income taxes for the years ended December 31, 2020, 2019 and 2018 was as follows (in millions):

	Year Ended December 31,
	2020			2019			2018
Tax at statutory federal rate	$	242		$	(139	)	$	(211	)
State tax, net of federal benefit		4			5			3
Nondeductible executive compensations		184			62			39
Other nondeductible expenses		52			32			26
Excess tax benefits related to stock based compensation		(666	)		(7	)		(44	)
Foreign income rate differential		33			189			161
U.S. tax credits		(181	)		(107	)		(80	)
Noncontrolling interests and redeemable noncontrolling interests adjustment		5			(29	)		32
GILTI inclusion		133			—			—
Convertible debt		—			(4	)		—
Unrecognized tax benefits		1			17			1
Change in valuation allowance		485			91			131
Provision for income taxes	$	292		$	110		$	58

As of December 31, 2020, we had $9.65 billion of federal and $6.60 billion of state net operating loss carry-forwards available to offset future taxable income, which will not begin to significantly expire until 2024 for federal and 2031 for state purposes. A portion of these losses were generated by SolarCity and some of the companies we acquired, and therefore are subject to change of control provisions, which limit the amount of acquired tax attributes that can be utilized in a given tax year. We do not expect these change of control limitations to significantly impact our ability to utilize these attributes.

As of December 31, 2020, we had research and development tax credits of $417 million and $373 million for federal and state income tax purposes, respectively. If not utilized, the federal research and development tax credits will expire in various amounts beginning in 2024. However, the state of California research and development tax credits can be carried forward indefinitely. In addition, we have other general business tax credits of $167 million for federal income tax purposes, which will not begin to significantly expire until 2033.

Federal and state laws can impose substantial restrictions on the utilization of net operating loss and tax credit carry-forwards in the event of an “ownership change,” as defined in Section 382 of the Internal Revenue Code. We have determined that no significant limitation would be placed on the utilization of our net operating loss and tax credit carry-forwards due to prior ownership changes.

The local government of Shanghai granted a beneficial corporate income tax rate of 15% to certain eligible enterprises, compared to the 25% statutory corporate income tax rate in China. Our Gigafactory Shanghai subsidiary was granted this beneficial income tax rate of 15% for 2019 through 2023.

No deferred tax liabilities for foreign withholding taxes have been recorded relating to the earnings of our foreign subsidiaries since all such earnings are intended to be indefinitely reinvested. The amount of the unrecognized deferred tax liability associated with these earnings is immaterial.

The changes to our gross unrecognized tax benefits were as follows (in millions):


December 31, 2017	$	199
Decreases in balances related to prior year tax positions		(6	)
Increases in balances related to current year tax positions		60
December 31, 2018		253
Decreases in balances related to prior year tax positions		(39	)
Increases in balances related to current year tax positions		59
December 31, 2019		273
Increases in balances related to prior year tax positions		66
Increases in balances related to current year tax positions		41
December 31, 2020	$	380

As of December 31, 2020, accrued interest and penalties related to unrecognized tax benefits are classified as income tax expense and were immaterial. Unrecognized tax benefits of $353 million, if recognized, would not affect our effective tax rate since the tax benefits would increase a deferred tax asset that is currently fully offset by a full valuation allowance.

We file income tax returns in the U.S., California and various state and foreign jurisdictions. We are currently under examination by the IRS for the years 2015 to 2018. Additional tax years within the period 2004 to 2014 and 2019 remain subject to examination for federal income tax purposes, and tax years 2004 to 2019 remain subject to examination for California income tax purposes. All net operating losses and tax credits generated to date are subject to adjustment for U.S. federal and California income tax purposes. Tax years 2008 to 2019 remain subject to examination in other U.S. state and foreign jurisdictions.

The potential outcome of the current examination could result in a change to unrecognized tax benefits within the next twelve months. However, we cannot reasonably estimate possible adjustments at this time.

The U.S. Tax Court issued a decision in Altera Corp v. Commissioner related to the treatment of stock-based compensation expense in a cost-sharing arrangement. On June 7, 2019, the Ninth Circuit Court of Appeals (Ninth Circuit) reversed the Tax Court decision and upheld the validity of Treas. Reg. Section 1.482-7A(d)(2), requiring stock-based compensation costs be included in the costs shared under a cost sharing agreement. On June 22, 2020, the U.S. Supreme Court denied to review the Ninth Circuit decision. Prior to the U.S. Supreme Court’s denial, Tesla has already included stock-based compensation in cost sharing allocation agreement and hence retains its position.