
	Fiscal Years Ended January 31,
(Amounts in millions)	2021		2020		2019
Current:
U.S. federal	$	2,991	$	2,794	$	2,763
U.S. state and local	742		587		493
International	1,127		1,205		1,495
Total current tax provision	4,860		4,586		4,751
Deferred:
U.S. federal	2,316		663		(361)
U.S. state and local	23		35		(16)
International	(341)		(369)		(93)
Total deferred tax expense (benefit)	1,998		329		(470)
Total provision for income taxes	$	6,858	$	4,915	$	4,281

In December 2017, the Tax Act was enacted and significantly changed U.S. income tax law. Beginning January 2018, the Tax Act reduced the U.S. statutory tax rate and created new taxes focused on foreign-sourced earnings and related-party payments, including the creation of the base erosion anti-abuse tax and a new tax on global intangible low-taxed income ("GILTI"). In addition, the Company was subject to a one-time transition tax in fiscal 2018 on accumulated foreign subsidiary earnings not previously subject to U.S. income tax.

The SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act ("SAB 118"), which allowed companies to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. Due to the timing of the enactment and the complexity involved in applying the provisions of the Tax Act, the Company made reasonable estimates of the effects and recorded provisional amounts in its financial statements as of January 31, 2018, in accordance with SAB 118. The Company elected to apply the measurement period provisions of this guidance to certain income tax effects of the Tax Act when it became effective. The provisional measurement period ended in the fourth quarter of fiscal 2019. Management completed the Company's accounting for tax reform in fiscal 2019 based on prevailing regulations and currently available information, and any additional guidance issued by the IRS could impact the aforementioned amounts in future periods. In fiscal 2019, the Company recorded $442 million of additional tax expense related to the Tax Act, included as a component of provision for income taxes.

The Tax Act required the Company to pay U.S. income taxes on accumulated foreign subsidiary earnings not previously subject to U.S. income tax at a rate of 15.5% to the extent of foreign cash and certain other net current assets, as defined by the Tax Act, and 8.0% on the remaining earnings. The Company calculated the transition tax liability and increased the provisional amount by $413 million, with the increase included as a component of provision for income taxes in fiscal 2019.


	Fiscal Years Ended January 31,
	2021		2020		2019
U.S. statutory tax rate	21.0	%	21.0	%	21.0	%
U.S. state income taxes, net of federal income tax benefit	2.9	%	2.2	%	3.0	%
Impact of the Tax Act:
One-time transition tax	—	%	—	%	3.6	%
Deferred tax effects	—	%	—	%	(0.7)	%
Income taxed outside the U.S.	(0.1)	%	(1.0)	%	(3.4)	%
Disposal and wind-down of certain business operations	7.1	%	—	%	6.7	%
Valuation allowance	2.3	%	2.3	%	6.3	%
Net impact of repatriated international earnings	(0.4)	%	0.4	%	0.8	%
Federal tax credits	(0.9)	%	(0.8)	%	(1.3)	%
Enacted change in tax laws	—	%	(1.9)	%	—	%
Change in reserve for tax contingencies	0.8	%	2.5	%	0.6	%
Other, net	0.6	%	(0.3)	%	0.8	%
Effective income tax rate	33.3	%	24.4	%	37.4	%

The following sections regarding deferred taxes, unremitted earnings, net operating losses, tax credit carryforwards, valuation allowances and uncertain tax positions exclude amounts related to operations classified as held for sale as of January 31, 2021.


	January 31,
(Amounts in millions)	2021		2020
Deferred tax assets:
Loss and tax credit carryforwards	$	9,179	$	9,056
Accrued liabilities	2,582		2,483
Share-based compensation	224		250
Lease obligations	4,450		4,098
Other	589		887
Total deferred tax assets	17,024		16,774
Valuation allowances	(8,782)		(8,588)
Deferred tax assets, net of valuation allowances	8,242		8,186
Deferred tax liabilities:
Property and equipment	4,802		4,364
Acquired intangibles	1,071		1,153
Inventory	1,235		1,414
Lease right of use assets	4,390		3,998
Mark-to-market investments	2,678		723
Other	675		824
Total deferred tax liabilities	14,851		12,476
Net deferred tax liabilities	$	6,609	$	4,290

Prior to the Tax Act, the Company asserted that all unremitted earnings of its foreign subsidiaries were considered indefinitely reinvested. As a result of the Tax Act, the Company reported and paid U.S. tax on the majority of its previously unremitted foreign earnings, and repatriations of foreign earnings will generally be free of U.S. federal tax, but may incur other taxes such as withholding or state taxes. As of January 31, 2021, the Company has not recorded approximately $2 billion of deferred tax liabilities associated with remaining unremitted foreign earnings considered indefinitely reinvested, for which U.S. and foreign income and withholding taxes would be due upon repatriation.

As of January 31, 2021, the Company's net operating loss and capital loss carryforwards totaled approximately $38.4 billion. Of these carryforwards, approximately $26.4 billion will expire, if not utilized, in various years through 2041. The remaining carryforwards have no expiration.

The recoverability of these future tax deductions and credits is evaluated by assessing the adequacy of future expected taxable income from all sources, including taxable income in prior carryback years, reversal of taxable temporary differences, forecasted operating earnings and available tax planning strategies. To the extent the Company does not consider it more likely than not that a deferred tax asset will be recovered, a valuation allowance is generally established. To the extent that a valuation allowance was established and it is subsequently determined that it is more likely than not that the deferred tax assets will be recovered, the change in the valuation allowance is recognized in the Consolidated Statements of Income.

The Company had valuation allowances of $8.8 billion and $8.6 billion as of January 31, 2021 and 2020, respectively, on deferred tax assets associated primarily with the net operating loss carryforwards. Activity in the valuation allowance during fiscal 2021 related to valuation allowance builds in multiple markets, as well as releases due to the expiration of underlying deferred tax assets.

The benefits of uncertain tax positions are recorded in the Company's Consolidated Financial Statements only after determining a more-likely-than-not probability that the uncertain tax positions will withstand challenge, if any, from taxing authorities.

As of January 31, 2021 and 2020, the amount of gross unrecognized tax benefits related to continuing operations was $3.1 billion and $1.8 billion, respectively. The amount of unrecognized tax benefits that would affect the Company's effective income tax rate was $1.7 billion and $1.6 billion as of January 31, 2021 and 2020, respectively.


	Fiscal Years Ended January 31,
(Amounts in millions)	2021		2020		2019
Gross unrecognized tax benefits, beginning of year	$	1,817	$	1,305	$	1,010
Increases related to prior year tax positions	92		516		620
Decreases related to prior year tax positions	(264)		(15)		(107)
Increases related to current year tax positions	1,582		66		203
Settlements during the period	(64)		(29)		(390)
Lapse in statutes of limitations	(28)		(26)		(31)
Gross unrecognized tax benefits, end of year	$	3,135	$	1,817	$	1,305

The Company classifies interest and penalties related to uncertain tax benefits as interest expense and as operating, selling, general and administrative expenses, respectively. Interest expense and penalties related to these positions were immaterial for fiscal 2021, 2020 and 2019. During the next twelve months, it is reasonably possible that tax audit resolutions could reduce unrecognized tax benefits by an immaterial amount, either because the tax positions are sustained on audit or because the Company agrees to their disallowance. The Company is focused on resolving tax audits as expeditiously as possible. As a result of these efforts, unrecognized tax benefits could potentially be reduced beyond the provided range during the next twelve months. The Company does not expect any change to have a material impact to its Consolidated Financial Statements.

The Company remains subject to income tax examinations for its U.S. federal income taxes generally for fiscal 2014, and 2018 through 2021. The Company also remains subject to income tax examinations for international income taxes for fiscal 2013 through 2021, and for U.S. state and local income taxes generally for the fiscal years ended 2013 through 2021. With few exceptions, the Company is no longer subject to U.S. federal, state, local, or foreign examinations by tax authorities for years before fiscal 2012.

The Company is subject to tax examinations for value added, sales-based, payroll and other non-income taxes. A number of these examinations are ongoing in various jurisdictions. In certain cases, the Company has received assessments from the respective taxing authorities in connection with these examinations. Unless otherwise indicated, the possible losses or range of possible losses associated with these matters are individually immaterial, but a group of related matters, if decided adversely to the Company, could result in a liability material to the Company's Consolidated Financial Statements.