XML 35 R17.htm IDEA: XBRL DOCUMENT v3.22.0.1
Taxes
 12 Months Ended
Jan. 31, 2022
Income Tax Disclosure [Abstract]  
Taxes Taxes
The components of income before income taxes are as follows:
 Fiscal Years Ended January 31,
(Amounts in millions)202220212020
U.S.$15,536 $18,068 $15,019 
Non-U.S.3,160 2,496 5,097 
Total income before income taxes$18,696 $20,564 $20,116 
A summary of the provision for income taxes is as follows:
 Fiscal Years Ended January 31,
(Amounts in millions)202220212020
Current:
U.S. federal$3,313 $2,991 $2,794 
U.S. state and local649 742 587 
International1,553 1,127 1,205 
Total current tax provision5,515 4,860 4,586 
Deferred:
U.S. federal(671)2,316 663 
U.S. state and local41 23 35 
International(129)(341)(369)
Total deferred tax expense (benefit)(759)1,998 329 
Total provision for income taxes$4,756 $6,858 $4,915 
Effective Income Tax Rate Reconciliation
A reconciliation of the significant differences between the U.S. statutory tax rate and the effective income tax rate on pre-tax income from continuing operations is as follows:
 Fiscal Years Ended January 31,
 202220212020
U.S. statutory tax rate21.0 %21.0 %21.0 %
U.S. state income taxes, net of federal income tax benefit2.8 %2.9 %2.2 %
Income taxed outside the U.S.(1.5)%(0.1)%(1.0)%
Disposal and wind-down of certain business operations0.5 %7.1 %— %
Valuation allowance4.4 %2.3 %2.3 %
Net impact of repatriated international earnings(0.3)%(0.4)%0.4 %
Federal tax credits(1.1)%(0.9)%(0.8)%
Enacted change in tax laws— %— %(1.9)%
Change in reserve for tax contingencies0.2 %0.8 %2.5 %
Other, net(0.6)%0.6 %(0.3)%
Effective income tax rate25.4 %33.3 %24.4 %
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.
Deferred Taxes
The significant components of the Company's deferred tax account balances are as follows:
 January 31,
(Amounts in millions)20222021
Deferred tax assets:
Loss and tax credit carryforwards$9,456 $9,179 
Accrued liabilities2,752 2,582 
Share-based compensation231 224 
Lease obligations4,320 4,450 
Other893 589 
Total deferred tax assets17,652 17,024 
Valuation allowances(9,542)(8,782)
Deferred tax assets, net of valuation allowances8,110 8,242 
Deferred tax liabilities:
Property and equipment4,414 4,802 
Acquired intangibles1,065 1,071 
Inventory1,588 1,235 
Lease right of use assets4,355 4,390 
Mark-to-market investments1,825 2,678 
Other307 675 
Total deferred tax liabilities13,554 14,851 
Net deferred tax liabilities$5,444 $6,609 
The deferred taxes noted above are classified as follows in the Company's Consolidated Balance Sheets:
  January 31,
(Amounts in millions)20222021
Balance Sheet classification
Assets:
Other long-term assets$1,473 $1,836 
Liabilities:
Deferred income taxes and other6,917 8,445 
Net deferred tax liabilities$5,444 $6,609 
Unremitted Earnings
Prior to the Tax Cuts and Jobs Act of 2017 (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, 2022, the Company has not recorded approximately $3 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.
Net Operating Losses, Tax Credit Carryforwards and Valuation Allowances
As of January 31, 2022, the Company's net operating loss and capital loss carryforwards totaled approximately $39.3 billion. Of these carryforwards, approximately $26.6 billion will expire, if not utilized, in various years through 2042. 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 $9.5 billion and $8.8 billion as of January 31, 2022 and 2021, respectively, on deferred tax assets associated primarily with the net operating loss carryforwards. Activity in the valuation allowance during fiscal 2022 related to valuation allowance builds in multiple markets, as well as releases due to the expiration of underlying deferred tax assets.
Uncertain Tax Positions
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, 2022 and 2021, the amount of gross unrecognized tax benefits related to continuing operations was $3.2 billion and $3.1 billion, respectively. The amount of unrecognized tax benefits that would affect the Company's effective income tax rate was $1.8 billion and $1.7 billion as of January 31, 2022 and 2021, respectively.
A reconciliation of gross unrecognized tax benefits from continuing operations is as follows:
 Fiscal Years Ended January 31,
(Amounts in millions)202220212020
Gross unrecognized tax benefits, beginning of year$3,135 $1,817 $1,305 
Increases related to prior year tax positions170 92 516 
Decreases related to prior year tax positions(97)(264)(15)
Increases related to current year tax positions75 1,582 66 
Settlements during the period(5)(64)(29)
Lapse in statutes of limitations(33)(28)(26)
Gross unrecognized tax benefits, end of year$3,245 $3,135 $1,817 
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 2022, 2021 and 2020. 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 2022. The Company also remains subject to income tax examinations for international income taxes for fiscal 2013 through 2022, and for U.S. state and local income taxes generally for the fiscal years ended 2013 through 2022. 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 2013.
Other Taxes
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 and judgments 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.