Income Taxes (Notes)

12 Months Ended

Dec. 31, 2022

Income Tax Examination [Line Items]

Income Tax Disclosure [Text Block]

Income Taxes

The current income tax provision reflects the tax consequences of revenues and expenses currently taxable or deductible on various income tax returns for the year reported. The deferred income tax provision or benefit generally reflects the net change in deferred income tax assets and liabilities during the year, excluding any deferred income tax assets and liabilities of acquired businesses. The components of the provision for income taxes for the years ended December 31 are as follows:

(in millions)	2022		2021		2020
Current Provision:
Federal	$	4,842	$	3,451	$	4,098
State and local	855		481		392
Foreign	680		516		491
Total current provision	6,377		4,448		4,981
Deferred (benefit) provision	(673)		130		(8)
Total provision for income taxes	$	5,704	$	4,578	$	4,973

The reconciliation of the tax provision at the U.S. federal statutory rate to the provision for income taxes and the effective tax rate for the years ended December 31 is as follows:

(in millions, except percentages)	2022				2021				2020
Tax provision at the U.S. federal statutory rate	$	5,532	21.0	%	$	4,685	21.0	%	$	4,356	21.0	%
State income taxes, net of federal benefit	621		2.4		419		1.9		315		1.5
Share-based awards - excess tax benefit	(110)		(0.4)		(100)		(0.4)		(130)		(0.6)
Non-deductible compensation	150		0.6		144		0.6		134		0.7
Health insurance tax	—		—		—		—		626		3.0
Foreign rate differential	(265)		(1.0)		(246)		(1.1)		(164)		(0.8)
Other, net	(224)		(0.9)		(324)		(1.5)		(164)		(0.8)
Provision for income taxes	$	5,704	21.7	%	$	4,578	20.5	%	$	4,973	24.0	%

Deferred income tax assets and liabilities are recognized for the differences between the financial and income tax reporting bases of assets and liabilities based on enacted tax rates and laws. The components of deferred income tax assets and liabilities as of December 31 are as follows:

(in millions)	2022		2021
Deferred income tax assets:
Accrued expenses and allowances	$	707	$	723
U.S. federal and state net operating loss carryforwards	540		287
Share-based compensation	154		117
Nondeductible liabilities	341		296
Non-U.S. tax loss carryforwards	631		435
Lease liability	972		1,284
Net unrealized losses on investments	829		—
Other-domestic	291		228
Other-non-U.S.	423		376
Subtotal	4,888		3,746
Less: valuation allowances	(291)		(198)
Total deferred income tax assets	4,597		3,548
Deferred income tax liabilities:
U.S. federal and state intangible assets	(3,520)		(2,658)
Non-U.S. goodwill and intangible assets	(550)		(512)
Capitalized software	(548)		(833)
Depreciation and amortization	(520)		(349)
Prepaid expenses	(275)		(256)
Outside basis in partnerships	(653)		(565)
Lease right-of-use asset	(958)		(1,267)
Net unrealized gains on investments	—		(125)
Other-non-U.S.	(342)		(248)
Total deferred income tax liabilities	(7,366)		(6,813)
Net deferred income tax liabilities	$	(2,769)	$	(3,265)

Valuation allowances are provided when it is considered more likely than not deferred tax assets will not be realized. The valuation allowances primarily relate to future tax benefits on certain federal, state and non-U.S. net operating loss carryforwards. Gross federal net operating loss carryforwards of $490 million expire beginning in 2023 through 2037 and $611 million have an indefinite carryforward period; state net operating loss carryforwards expire beginning in 2023 through 2042, with some having an indefinite carryforward period. Substantially all of the non-U.S. tax loss carryforwards have indefinite carryforward periods.

As of December 31, 2022, the Company’s undistributed earnings from non-U.S. subsidiaries are intended to be indefinitely reinvested in non-U.S. operations, and therefore no U.S. deferred taxes have been recorded. Taxes payable on the remittance of such earnings would be minimal.

A reconciliation of the beginning and ending amount of unrecognized tax benefits as of December 31 is as follows:

(in millions)	2022		2021		2020
Gross unrecognized tax benefits, beginning of period	$	2,310	$	1,829	$	1,423
Gross increases:
Current year tax positions	586		538		416
Prior year tax positions	206		10		120
Gross decreases:
Prior year tax positions	(21)		(47)		(130)
Statute of limitations lapses	—		(20)		—
Gross unrecognized tax benefits, end of period	$	3,081	$	2,310	$	1,829

The Company believes it is reasonably possible its liability for unrecognized tax benefits will decrease in the next twelve months by $260 million as a result of audit settlements and the expiration of statutes of limitations.

The Company classifies net interest and penalties associated with uncertain income tax positions as income taxes within its Consolidated Statements of Operations. During the years ended December 31, 2022, 2021 and 2020, the Company recognized $64 million, $66 million and $52 million of net interest and penalties, respectively. The Company had $253 million and $194 million of accrued interest and penalties for uncertain tax positions as of December 31, 2022 and 2021, respectively. These amounts are not included in the reconciliation above. As of December 31, 2022, there were $1.7 billion of unrecognized tax benefits which, if recognized, would affect the effective tax rate.

The Company currently files income tax returns in the United States, various states and localities and non-U.S. jurisdictions. The U.S. Internal Revenue Service (IRS) has completed exams on the consolidated income tax returns for fiscal years 2016 and prior. The Company’s 2017 through 2020 tax years are under review by the IRS under its Compliance Assurance Program. With the exception of a few states, the Company is no longer subject to income tax examinations prior to the 2014 tax year. In general, the Company is subject to examination in non-U.S. jurisdictions for years 2015 and forward.