Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes Income before provision for income taxes was as follows:
The components of provision for income taxes for all periods presented were as follows:
A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory Federal income tax rate to income before income taxes is as follows:
The components of deferred tax assets and liabilities were as follows:
The following table shows the deferred tax assets and liabilities within our Consolidated Balance Sheets:
As of December 31, 2023, for tax return purposes, the Company had $582 million of California R&D tax credit carryforwards which can be carried forward indefinitely, $838 million of state net operating loss carryforwards which will begin to expire in 2026, $19 million of foreign tax credit carryforwards which will begin to expire in 2033, and $421 million of foreign net operating loss carryforwards which will begin to expire in 2024. In evaluating its ability to realize the net deferred tax assets, the Company considered all available positive and negative evidence, including its past operating results and the forecast of future market growth, forecasted earnings, future taxable income, and prudent and feasible tax planning strategies. As of December 31, 2023, the valuation allowance of $442 million was primarily related to California R&D tax credits, state net operating loss carryforwards, and foreign tax credits that the Company does not expect to realize. At December 31, 2023, we have not provided for applicable U.S. income and foreign withholding taxes on approximately $52 million of our foreign undistributed earnings because such earnings are intended to be indefinitely reinvested. At December 31, 2023, we provided taxes and recorded a deferred tax liability on our undistributed foreign earnings for which we are not indefinitely reinvested. The unrecognized tax benefits that are not expected to result in payment or receipt of cash within one year are classified as “Other non-current liabilities” and a reduction of deferred tax assets which is classified as "Other non-current assets" in the Consolidated Balance Sheets. As of December 31, 2023 and 2022, the total amount of gross unrecognized tax benefits was $327 million and $227 million, respectively, of which $188 million and $155 million, respectively, if recognized, would favorably impact the Company’s effective tax rate. The aggregate changes in the Company’s total gross amount of unrecognized tax benefits are summarized as follows:
The Company includes interest and penalties related to unrecognized tax benefits within the provision for income taxes and in “Other non-current liabilities” in the Consolidated Balance Sheets. During the years ended December 31, 2023, 2022 and 2021, the Company recorded $25 million, $2 million, and less than $1 million, respectively, of interest and penalties in the provision for income taxes. The amount of interest and penalties accrued at December 31, 2023 and 2022 was $28 million and $3 million, respectively. The Company files U.S. Federal, state and foreign tax returns. The Company is currently under examination by the IRS for years 2016 through 2018 and is subject to examination for 2019 through 2022. The foreign and state tax returns for years 2016 through 2022 are subject to examination by various state and foreign jurisdictions. While the Company is in various stages of inquiry and examination with certain taxing authorities and we believe that our tax positions will more likely than not be sustained, it is nonetheless possible that future obligations related to these matters could arise. We believe that adequate amounts have been reserved for any adjustments that may ultimately result from an examination. Given the potential outcome of current examinations, it is reasonably possible that the balance of unrecognized tax benefits could significantly change within the next twelve months. However, an estimate of the range of reasonably possible adjustments cannot be made at this time.
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