

	Fiscal year ended January 31,
	2019			2018			2017
Federal:
Current	$	(13.3	)	$	(0.8	)	$	1.6
Deferred	(6.7		)	(19.3		)	8.4
State:
Current	(1.8		)	(0.3		)	(1.9		)
Deferred	0.1			2.2			1.3
Foreign:
Current	65.3			50.9			93.9
Deferred	(5.5		)	(23.1		)	(45.0		)
	$	38.1		$	9.6		$	58.3



	Fiscal year ended January 31,
	2019			2018			2017
Income tax provision (benefit) at U.S. Federal statutory rate	$	(9.0	)	$	(188.4	)	$	(177.0	)
State income tax benefit, net of the U.S. Federal benefit	(11.4		)	(21.9		)	(17.3		)
Foreign income taxed at rates different from the U.S. statutory rate	117.8			(53.3		)	22.3
U.S. valuation allowance	18.8			(82.5		)	233.0
Transition tax	(16.0		)	408.4			—
Increase in attributes due to ASU 2016-9 adoption	—			—			(119.4		)
Change in valuation allowance from ASU 2016-9 adoption	—			—			119.4
Tax effect of non-deductible stock-based compensation	7.6			20.7			18.8
Stock compensation windfall / shortfall	(39.4		)	(67.7		)	(23.0		)
Research and development tax credit benefit	(23.5		)	(11.3		)	(10.3		)
Closure of income tax audits and changes in uncertain tax positions	(12.7		)	1.2			8.2
Tax effect of officer compensation in excess of $1.0 million	5.0			2.2			2.2
Non-deductible expenses	1.5			2.1			2.0
Other	(0.6		)	0.1			(0.6		)
	$	38.1		$	9.6		$	58.3



	January 31,
	2019			2018
Stock-based compensation	$	25.9		$	26.7
Research and development tax credit carryforwards	238.7			170.3
Foreign tax credit carryforwards	198.6			162.2
Accrued compensation and benefits	6.5			25.9
Other accruals not currently deductible for tax	19.0			22.9
Purchased technology and capitalized software	32.6			43.4
Fixed assets	15.0			16.5
Tax loss carryforwards	237.2			85.7
Deferred revenue	49.0			120.3
Other	28.4			32.4
Total deferred tax assets	850.9			706.3
Less: valuation allowance	(797.8		)	(634.2		)
Net deferred tax assets	53.1			72.1
Indefinite lived intangibles	(67.6		)	(57.0		)
Total deferred tax liabilities	(67.6		)	(57.0		)
Net deferred tax assets (liabilities)	$	(14.5	)	$	15.1

Autodesk’s tax expense is primarily driven by tax expense in foreign locations, withholding taxes on payments made to the U.S. from foreign sources, and tax amortization on indefinite-lived intangibles offset by a tax benefit resulting from release of uncertain tax positions upon finalization of IRS examination and release of valuation allowance from acquired deferred tax liabilities.

Autodesk regularly assesses the need for a valuation allowance against its deferred tax assets. In making that assessment, Autodesk considers both positive and negative evidence, whether it is more likely than not that some or all of the deferred tax assets will not be realized. In evaluating the need for a valuation allowance, Autodesk considered cumulative losses arising from the Company's business model transition as a significant piece of negative evidence. Consequently, Autodesk determined

that a valuation allowance was required on the accumulated U.S., Canada and Singapore tax attributes. In the current year, the U.S. created incremental deferred tax assets, primarily operating losses, foreign tax and R&D credits, Singapore generated operating losses and Canada generated R&D credits. These U.S. and Singapore deferred tax attributes have been offset by a full valuation allowance. The valuation allowance increased by $163.6 million in fiscal 2019 primarily due to the generation of deferred tax attributes. The valuation allowance decreased by $113.8 million, and increased $352.4 million in fiscal 2018, and 2017, respectively, primarily related to U.S. Tax Act reduction in rate in fiscal 2018 and U.S. and Canadian deferred tax attributes generated in fiscal 2017. As Autodesk continually strives to optimize the overall business model, tax planning strategies may become feasible and prudent allowing the Company to realize many of the deferred tax assets that are offset by a valuation allowance; therefore, Autodesk will continue to evaluate the ability to utilize the net deferred tax assets each quarter, both in the U.S. and in foreign jurisdictions, based on all available evidence, both positive and negative.

The Tax Act was signed into law on December 22, 2017 and provided broad and significant changes to the U.S. corporate income tax regime. In light of our fiscal year-end, the Tax Act reduced the statutory federal corporate rate from 35% to 33.81% for fiscal 2018 and to 21% for fiscal 2019 and forward. The Tax Act also, among many other provisions, imposed a one-time mandatory tax on accumulated earnings of foreign subsidiaries (commonly referred to as the "transition tax"), subjected the deemed intangible income of our foreign subsidiaries to current U.S. taxation (commonly referred to as "GILTI"), provided for a full dividends received deduction upon repatriation of untaxed earnings of our foreign subsidiaries, imposed a minimum taxation (without most tax credits) on modified taxable income, which is generally taxable income without deductions for payments to related foreign companies (commonly referred to as “BEAT”), modified the accelerated depreciation deduction rules, and made updates to the deductibility of certain expenses. We have completed our determination of the accounting implications of the Tax Act on our tax accruals.

As of January 31, 2018, we estimated taxable income associated with offshore earnings of $831.5 million, and as of January 31, 2019, we adjusted the taxable income to $819.6 million to reflect the impact of Treasury Regulations issued in the fourth quarter of fiscal 2019. Transition tax related to adjustments in the offshore earnings resulted in no impact to the effective tax rate as it is primarily offset by net operating losses that are subject to a full valuation allowance. As a result of the transition tax, we recorded a deferred tax asset of approximately $45.1 million for foreign tax credits, which are also subject to a full valuation allowance.

We anticipate that the U.S. Department of Treasury and other standard-setting bodies will continue to interpret or issue guidance on how provisions of the Tax Act will be applied or otherwise administered. As future guidance is issued, we may make adjustments to amounts that we have previously recorded that may materially impact our financial statements in the period in which the adjustments are made.

Realization of foreign non-current net deferred tax assets of $54.3 million is dependent upon the Company's ability to generate future taxable income in appropriate tax jurisdictions to obtain benefit from the reversal of temporary differences, net operating loss carryforwards and tax credits. The amount of deferred tax assets considered realizable is subject to adjustment in future periods if estimates of future taxable income are reduced and Autodesk then determines that it is not more likely than not to realize such deferred tax assets.

As of January 31, 2019, Autodesk had $531.4 million of cumulative federal tax loss carryforwards and $1,465.7 million of cumulative state tax loss carryforwards, which may be available to reduce future income tax liabilities in federal and state jurisdictions. In addition to U.S. federal and state tax loss carryforwards, Ireland, Netherlands, and Singapore jurisdictions incurred federal tax losses totaling $521.8 million, which may be available to reduce future income tax liabilities indefinitely. As discussed above, with the exception of our Irish losses, of $238.8 million, these cumulative assets have full valuation allowance against them on our balance sheet as the Company has determined it is more likely than not that these losses will not be utilized. The pre-fiscal 2019 federal tax loss carryforward will expire beginning fiscal 2021 through fiscal 2038. Federal losses generated in fiscal 2019 do not have an expiration pursuant to the Tax Act and are carried forward indefinitely. The state tax loss carryforward will expire beginning fiscal 2020 through fiscal 2040.

credit carryforwards, which may be available to reduce future income tax liabilities in the respective jurisdictions. The federal tax credit carryforwards will expire beginning fiscal 2021 through fiscal 2040, the state credit carryforwards may reduce future California income tax liabilities indefinitely, and the Canadian tax credit carryforwards will expire beginning fiscal 2027 through fiscal 2040. Autodesk also has $242.4 million of cumulative foreign tax credit carryforwards, which may be available to reduce future U. S. tax liabilities. The foreign tax credit will expire beginning fiscal 2020 through fiscal 2030. As discussed above, these cumulative assets have full valuation allowance against them on our balance sheet as the Company has determined it is more likely than not that these losses will not be utilized.

Utilization of net operating losses and tax credits may be subject to an annual limitation due to ownership change limitations provided in the Internal Revenue Code and similar state provisions. This annual limitation may result in the expiration of net operating losses and credits before utilization. No ownership change has occurred through the balance sheet date that would limit a material amount of U.S. federal and state tax attributes.



	Fiscal Year Ended January 31,
	2019			2018			2017
Gross unrecognized tax benefits at the beginning of the fiscal year	$	337.6		$	261.4		$	254.3
Increases for tax positions of prior years	7.9			22.8			11.9
Decreases for tax positions of prior years	(146.3		)	(22.5		)	(4.1		)
Increases for tax positions related to the current year	10.3			78.4			11.1
Decreases relating to settlements with taxing authorities	—			(0.8		)	(10.8		)
Reductions as a result of lapse of the statute of limitations	(0.5		)	(1.7		)	(1.0		)
Gross unrecognized tax benefits at the end of the fiscal year	$	209.0		$	337.6		$	261.4

It is the Company's continuing practice to recognize interest and/or penalties related to income tax matters in income tax expense. Autodesk had $3.1 million, $2.8 million, and $2.5 million, net of tax benefit, accrued for interest and penalties related to unrecognized tax benefits as of January 31, 2019, 2018, and 2017, respectively. There was $0.3 million, $0.3 million, and $1.5 million of net expense for interest and penalties related to tax matters recorded through the consolidated statements of operations for the years ended January 31, 2019, 2018, and 2017, respectively.

Autodesk's U.S. and state income tax returns for fiscal year 2003 through fiscal year 2019 remain open to examination due to either net operating loss or credit carryforward. The Internal Revenue Service has examined the Company's U.S. consolidated federal income tax returns for fiscal years 2014 and 2015. This audit was finalized on January 31, 2019 and impacts from the finalization of the audit were recorded in the January 31, 2019 financial statements. While it is possible that the Company's tax positions may be challenged, the Company believes its positions are consistent with the tax law, and the balance sheet reflects appropriate liabilities for uncertain federal tax positions for the years being examined.