Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Schedule of Components of Income Before Provision for Income Taxes

The components of income before provision for income taxes are as follows (in millions):



	Year Ended December 31,
	2019		2018		2017
Domestic	$	5,317	$	8,800	$	7,079
Foreign	19,495		16,561		13,515
Income before provision for income taxes	$	24,812	$	25,361	$	20,594

Schedule of Provision for Income Taxes

The provision for income taxes consisted of the following (in millions):



	Year Ended December 31,
	2019			2018			2017
Current:
Federal	$	4,321		$	1,747		$	4,455
State	565			176			190
Foreign	1,481			1,031			389
Total current tax expense	6,367			2,954			5,034
Deferred:
Federal	(39		)	316			(296		)
State	19			34			(33		)
Foreign	(20		)	(55		)	(45		)
Total deferred tax (benefits)/expense	(40		)	295			(374		)
Provision for income taxes	$	6,327		$	3,249		$	4,660

Schedule of Reconciliation of U.S. Federal Statutory Income Tax Rate to Effective Tax Rate

A reconciliation of the U.S. federal statutory income tax rates to our effective tax rate is as follows (in percentages):



	Year Ended December 31,
	2019		2018		2017
U.S. federal statutory income tax rate	21.0	%	21.0	%	35.0	%
State income taxes, net of federal benefit	1.8		0.7		0.6
Research tax credits	(0.8	)	(1.0	)	(0.9	)
Share-based compensation	4.5		0.3		0.4
Excess tax benefits related to share-based compensation	(0.7	)	(2.6	)	(5.8	)
Effect of non-U.S. operations	(5.8	)	(5.9	)	(18.6	)
Effect of U.S. tax law change ⁽¹⁾	—		—		11.0
Non-deductible FTC settlement accrual	4.5		—		—
Other	1.0		0.3		0.9
Effective tax rate	25.5	%	12.8	%	22.6	%

_________________________

(1) Due to the 2017 Tax Cuts and Jobs Act, provisional one-time mandatory transition tax on accumulated foreign earnings was accrued as of December 31, 2017. In addition, deferred taxes were derecognized for previous estimated tax liabilities that would arise upon repatriation of a portion of these earnings in the foreign jurisdictions.

Schedule of Deferred Tax Assets and Liabilities

Our deferred tax assets (liabilities) are as follows (in millions):



	December 31,
	2019			2018
Deferred tax assets:
Net operating loss carryforward	$	2,051		$	1,825
Tax credit carryforward	1,333			668
Share-based compensation	135			270
Accrued expenses and other liabilities	798			487
Lease liabilities	1,999			—
Other	149			153
Total deferred tax assets	6,465			3,403
Less: valuation allowance	(1,012		)	(600		)
Deferred tax assets, net of valuation allowance	5,453			2,803

Deferred tax liabilities:
Depreciation and amortization	(2,387		)	(1,401		)
Right-of-use assets	(1,910		)	—
Purchased intangible assets	—			(195		)
Total deferred tax liabilities	(4,297		)	(1,596		)
Net deferred tax assets	$	1,156		$	1,207

Schedule of Gross Unrecognized Tax Benefits Roll Forward

The following table reflects changes in the gross unrecognized tax benefits (in millions):



	Year Ended December 31,
	2019			2018			2017
Gross unrecognized tax benefits ‑ beginning of period	$	4,678		$	3,870		$	3,309
Increases related to prior year tax positions	2,309			457			72
Decreases related to prior year tax positions	(525		)	(396		)	(34		)
Increases related to current year tax positions	1,402			831			536
Decreases related to settlements of prior year tax positions	(1		)	(84		)	(13		)
Gross unrecognized tax benefits ‑ end of period	$	7,863		$	4,678		$	3,870