Income Taxes (Tables)

12 Months Ended

Dec. 31, 2023

Schedule of Components of Income Tax Expense

Following is the composition of income tax expense:


	2023		2022		2021
Current:
Federal(1)	$	3,017.9	$	2,153.6	$	938.5
Foreign	613.0		547.7		466.0
State	24.3		45.5		(28.4)
Total current tax expense	3,655.2		2,746.8		1,376.1
Deferred:
Federal	(2,369.0)		(1,992.4)		(977.5)
Foreign	34.2		(78.2)		174.6
State	(6.2)		(114.6)		0.6
Total deferred tax benefit	(2,341.0)		(2,185.2)		(802.3)
Income taxes	$	1,314.2	$	561.6	$	573.8

(1) The 2023, 2022, and 2021 current tax expense includes $69.3 million, $189.5 million, and $64.7 million of tax benefit, respectively, from utilization of net operating loss and other tax carryforwards.

Schedule of Deferred Tax Assets and Liabilities

Significant components of our deferred tax assets and liabilities as of December 31 were as follows:


	2023		2022
Deferred tax assets:
Capitalized research and development	$	2,997.5	$	1,615.4
Purchases of intangible assets	1,981.9		2,071.3
Sales rebates and discounts	1,632.5		1,312.9
Correlative tax adjustments	1,031.3		752.5
Tax credit carryforwards	577.0		477.6
Tax loss and other tax carryforwards	527.2		626.0
Compensation and benefits	521.4		427.9
Foreign tax redeterminations	323.7		267.8
Operating lease liabilities	253.3		147.5
Other	463.4		361.0
Total gross deferred tax assets	10,309.2		8,059.9
Valuation allowances	(913.5)		(775.1)
Total deferred tax assets	9,395.7		7,284.8
Deferred tax liabilities:
Intangibles	(1,338.2)		(1,387.9)
Earnings of foreign subsidiaries	(796.6)		(1,226.0)
Inventories	(619.5)		(639.5)
Property and equipment	(495.2)		(433.5)
Prepaid employee benefits	(460.6)		(546.5)
Operating lease assets	(237.1)		(130.7)
Financial instruments	(75.1)		(215.0)
Total deferred tax liabilities	(4,022.3)		(4,579.1)
Deferred tax assets - net	$	5,373.4	$	2,705.7

Schedule of Cash Payments Relating to Income Taxes and Tax Act Toll Tax

Cash payments of U.S. federal, state, and foreign income taxes, net of refunds, were as follows:


	2023		2022		2021
Cash payments of income taxes	$	5,558.8	$	2,672.9	$	1,598.8

Having made this election, our future cash payments relating to the Toll Tax as of December 31, 2023 are as follows:


	Total		2024		2025
2017 Tax Act Toll Tax	$	1,427.0	$	634.2	$	792.8

Schedule of Effective Income Tax Rate Reconciliation

Following is a reconciliation of the consolidated income tax expense applying the U.S. federal statutory rate to income before income taxes to reported consolidated income tax expense:


	2023		2022		2021
Income tax at the U.S. federal statutory tax rate	$	1,376.5	$	1,429.3	$	1,292.6
Add (deduct):
Non-deductible acquired IPR&D(1)	677.2		68.3		10.5
General business credits	(258.0)		(155.0)		(100.5)
Foreign-derived intangible income deduction	(236.7)		(287.5)		(86.7)
International operations, including Puerto Rico(2)	(187.1)		(299.5)		(447.5)
Stock-based compensation(3)	(79.9)		(48.9)		(55.7)

Valuation allowance release	(4.2)		(116.4)		(19.0)
Other	26.4		(28.7)		(19.9)
Income taxes	$	1,314.2	$	561.6	$	573.8

(1) Non-deductible acquired IPR&D was primarily related to the acquisitions of DICE, Versanis, and Emergence in 2023. See Note 3 for additional information related to acquisitions.

(2) Includes the impact of GILTI tax, Puerto Rico Excise Tax (for 2022 and 2021), and other U.S. taxation of foreign income.

(3) Includes excess tax benefits from stock-based compensation and non-deductible stock-based compensation.

Summary of Income Tax Contingencies

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows:


	2023		2022		2021
Beginning balance at January 1	$	2,987.0	$	2,798.3	$	2,551.9
Additions based on tax positions related to the current year	364.3		274.2		310.3
Additions for tax positions of prior years	78.2		34.6		98.6
Reductions for tax positions of prior years	(39.0)		(10.9)		(8.1)
Settlements	(4.7)		(44.8)		(38.5)
Lapses of statutes of limitation	(21.5)		(11.8)		(49.7)
Changes related to the impact of foreign currency translation	30.7		(52.6)		(66.2)
Ending balance at December 31	$	3,395.0	$	2,987.0	$	2,798.3