INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2022

Schedule of composition of pre-tax income (loss)

The composition of pre-tax income (loss) for the years ended December 31, 2022, 2021, and 2020 is as follows (in millions):


	Year Ended December 31,
	2022		2021		2020
International	$	4,717	$	1,937	$	2,575
U.S.	(794)		(472)		(2,008)
Total	$	3,923	$	1,465	$	567

Income tax expense (benefit)

The composition of income tax expense for the years ended December 31, 2022, 2021, and 2020 is as follows (in millions):


	Year Ended December 31,
	2022		2021		2020
Current income tax expense (benefit):
International	$	1,145	$	665	$	320
U.S. Federal	(8)		68		(9)
U.S. State	(15)		12		(16)
Current income tax expense (benefit):	1,122		745		295
Deferred income tax (benefit) expense:
International	(61)		(103)		(62)
U.S. Federal	(172)		(323)		296
U.S. State	(24)		(19)		(21)
Deferred income tax (benefit) expense	(257)		(445)		213
Income tax expense	$	865	$	300	$	508

Tax effects of temporary differences that give rise to significant portions of deterred tax assets and liabilities

The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities at December 31, 2022 and 2021 are as follows (in millions):


	December 31,
	2022		2021
Deferred tax assets:
Net operating loss carryforward — U.S.	$	95	$	88
Net operating loss carryforward — International	176		137
Accrued expenses	74		50
Stock-based compensation and other stock based payments	36		50
Foreign currency translation adjustment	83		48
Tax credits	35		19

Operating lease liabilities	29		38
Property and equipment	126		95
Other	7		11
Total deferred tax assets	661		536
Valuation allowance on deferred tax assets	(120)		(37)
Deferred tax assets, net	541		499
Deferred tax liabilities:
Discount on convertible notes	—		(20)
Intangible assets and other	(174)		(192)
Euro-denominated debt	(84)		(20)

State income tax on accumulated unremitted international earnings	(8)		(8)
Unrealized gains on investments	(202)		(417)
Operating lease assets	(26)		(37)
Installment sale liability	(119)		(156)

Deferred tax liabilities	(613)		(850)
Net deferred tax liabilities (1)	$	(72)	$	(351)

(1) Includes deferred tax assets of $613 million and $554 million at December 31, 2022 and 2021, respectively, included in "Other assets, net" in the Consolidated Balance Sheets.

Schedule of effective income tax rate reconciliation

The effective income tax rate of the Company is different from the amount computed using the expected U.S. statutory federal rate of 21% for the years ended December 31, 2022, 2021, and 2020 as a result of the following items (in millions):


	Year Ended December 31,
	2022		2021		2020
Income tax expense at U.S. federal statutory rate	$	824	$	308	$	119
Adjustment due to:
Foreign rate differential	264		137		55
Innovation Box Tax benefit	(452)		(230)		(79)
Goodwill impairment	—		—		228
Stock-based compensation	42		37		32
Federal GILTI	10		17		73
State income tax benefit	(31)		(6)		(31)
Valuation allowance	87		(19)		36
Uncertain tax positions	72		39		64

Tax Act - U.S. transition tax benefit and other transition impacts	—		—		(8)
Other	49		17		19
Income tax expense	$	865	$	300	$	508

Reconciliation of unrecognized tax benefits

The following is a reconciliation of the total beginning and ending amount of unrecognized tax benefits (in millions):


	Year Ended December 31,
	2022		2021		2020
Unrecognized tax benefit — January 1	$	120	$	84	$	56
Gross increases — tax positions in current period	3		14		2
Gross increases — tax positions in prior periods	94		44		48
Gross decreases — tax positions in prior periods	(33)		(19)		(11)

Reduction due to settlements during the current period	—		(3)		(11)
Unrecognized tax benefit — December 31	$	184	$	120	$	84