Income Taxes (Tables)

12 Months Ended

May 31, 2022

Income Tax Disclosure [Abstract]

Schedule of Income before Income Tax, Domestic and Foreign

Income before income taxes is as follows:

	YEAR ENDED MAY 31,
(Dollars in millions)	2022		2021		2020
Income before income taxes:
United States	$	6,020	$	5,723	$	2,954
Foreign	631		938		(67)
TOTAL INCOME BEFORE INCOME TAXES	$	6,651	$	6,661	$	2,887

Schedule of Components of Income Tax Expense (Benefit)

The provision for income taxes is as follows:

	YEAR ENDED MAY 31,
(Dollars in millions)	2022		2021		2020
Current:
United States
Federal	$	231	$	328	$	(109)
State	98		134		81
Foreign	926		857		756
Total Current	1,255		1,319		728
Deferred:
United States
Federal	(522)		(371)		(231)
State	(16)		(34)		(47)
Foreign	(112)		20		(102)
Total Deferred	(650)		(385)		(380)
TOTAL INCOME TAX EXPENSE	$	605	$	934	$	348

Schedule of Effective Income Tax Rate Reconciliation

A reconciliation from the U.S. statutory federal income tax rate to the effective income tax rate is as follows:

	YEAR ENDED MAY 31,
	2022		2021		2020
Federal income tax rate	21.0	%	21.0	%	21.0	%
State taxes, net of federal benefit	1.4	%	1.3	%	0.8	%
Foreign earnings	-1.8	%	0.2	%	5.9	%
Subpart F deferred tax benefit	-4.7	%	0.0	%	0.0	%
Foreign-derived intangible income benefit	-4.1	%	-3.7	%	-8.1	%
Excess tax benefits from share-based compensation	-4.9	%	-4.5	%	-7.2	%
Income tax audits and contingency reserves	1.5	%	1.5	%	-1.4	%
U.S. research and development tax credit	-1.0	%	-0.9	%	-1.8	%
Other, net	1.7	%	-0.9	%	2.9	%
EFFECTIVE INCOME TAX RATE	9.1	%	14.0	%	12.1	%

Schedule of Deferred Tax Assets and Liabilities

Deferred tax assets and liabilities comprise the following as of: 

	MAY 31,
(Dollars in millions)	2022		2021
Deferred tax assets:
Inventories(1)	$	136	$	78
Sales return reserves(1)	109		100
Deferred compensation(1)	313		350
Stock-based compensation	195		175
Reserves and accrued liabilities(1)	145		96
Operating lease liabilities	508		499
Intangibles	275		187
Capitalized research and development expenditures	353		349
Net operating loss carry-forwards	8		15
Subpart F deferred tax	313		—
Foreign tax credit carry-forward	103		—
Other(1)	148		178
Total deferred tax assets	2,606		2,027
Valuation allowance	(19)		(12)
Total deferred tax assets after valuation allowance	2,587		2,015
Deferred tax liabilities:
Foreign withholding tax on undistributed earnings of foreign subsidiaries	(146)		(182)
Property, plant and equipment(1)	(247)		(255)
Right-of-use assets	(437)		(431)
Other(1)	(92)		(14)
Total deferred tax liabilities	(922)		(882)
NET DEFERRED TAX ASSET	$	1,665	$	1,133

(1)The above amounts exclude deferred taxes held-for-sale as of May 31, 2022 and 2021. See Note 20 — Acquisitions and Divestitures for additional information.

Unrecognized Tax Benefits Reconciliation

The following is a reconciliation of the changes in the gross balance of unrecognized tax benefits as of:

	MAY 31,
(Dollars in millions)	2022		2021		2020
Unrecognized tax benefits, beginning of the period	$	896	$	771	$	808
Gross increases related to prior period tax positions	71		77		181
Gross decreases related to prior period tax positions	(145)		(22)		(171)
Gross increases related to current period tax positions	62		59		50
Settlements	(17)		(5)		(58)
Lapse of statute of limitations	(10)		(6)		(28)
Changes due to currency translation	(9)		22		(11)
UNRECOGNIZED TAX BENEFITS, END OF THE PERIOD	$	848	$	896	$	771

Summary of Operating Loss Carryforwards

The Company has available domestic and foreign loss carry-forwards of $44 million as of May 31, 2022. If not utilized, such losses will expire as follows:

	YEAR ENDING MAY 31,
(Dollars in millions)	2023		2024		2025		2026		2027-2042		INDEFINITE		TOTAL
Net operating losses	$	—	$	—	$	—	$	—	$	7	$	37	$	44