
	Fiscal year ended January 31,
	2021		2020		2019
Federal:
Current	$	9.8	$	(2.3)	$	(13.3)
Deferred	(741.0)		7.6		(6.7)
State:
Current	19.0		(0.4)		(1.8)
Deferred	(57.5)		2.1		0.1
Foreign:
Current	87.6		69.6		65.3
Deferred	20.6		3.7		(5.5)
Income tax provision (benefit)	$	(661.5)	$	80.3	$	38.1


	Fiscal year ended January 31,
	2021		2020		2019
Income tax provision (benefit) at U.S. Federal statutory rate	$	114.8	$	61.9	$	(9.0)
State income tax benefit, net of the U.S. Federal benefit	(7.9)		(5.3)		(11.4)
Foreign income taxed at rates different from the U.S. statutory rate	(15.7)		(41.2)		117.8
Valuation allowance adjustment	(661.7)		65.3		18.8
Transition tax and revisions due to subsequent regulations			9.6		(16.0)


Tax effect of non-deductible stock-based compensation	20.4		24.9		7.6
Stock compensation windfall / shortfall	(35.4)		(22.4)		(39.4)
Research and development tax credit benefit	(22.1)		(19.8)		(23.5)


Closure of income tax audits and changes in uncertain tax positions	—		(2.0)		(12.7)
Tax effect of officer compensation in excess of $1.0 million	4.6		3.4		5.0


Non-deductible expenses	2.3		5.4		1.5
Global intangible low-taxed income, foreign derived intangible income	(65.0)		—		—
Other	4.2		0.5		(0.6)
Income tax provision (benefit)	$	(661.5)	$	80.3	$	38.1

Autodesk’s fiscal 2021 tax benefit is primarily driven by the U.S. valuation allowance release, excess tax benefits from share-based compensation and a permanent tax benefit from foreign derived intangible income in the U.S., offset by tax expense in foreign locations, including withholding taxes on payments made to the United States or to Singapore from foreign sources.


	January 31,
	2021		2020
Stock-based compensation	$	39.0	$	32.8
Research and development tax credit carryforwards	220.4		263.4
Foreign tax credit carryforwards	69.9		253.9
Accrued compensation and benefits	3.4		3.4
Other accruals not currently deductible for tax	14.1		28.4
Purchased technology and capitalized software	48.2		37.7
Fixed assets	8.1		11.6
Lease liability	114.2		106.4
Tax loss carryforwards	65.5		241.2
Deferred revenue	501.5		29.2
Other	40.2		28.0
Total deferred tax assets	1,124.5		1,036.0
Less: valuation allowance	(186.5)		(883.4)
Net deferred tax assets	938.0		152.6
Indefinite lived intangibles	(83.1)		(76.5)
Right-of-use assets	(101.6)		(101.3)
Unremitted earnings of foreign subsidiaries	(1.6)		(0.9)
Total deferred tax liabilities	(186.3)		(178.7)
Net deferred tax assets (liabilities)	$	751.7	$	(26.1)

Autodesk regularly assesses the need for a valuation allowance against its deferred tax assets. In making that assessment, Autodesk evaluates whether it is more likely than not that some or all of the deferred tax assets will not be realized based on all available positive and negative evidence.

In evaluating the need for a valuation allowance, prior to fiscal 2021 Autodesk considered global cumulative losses arising from the Company’s business model transition as a significant piece of negative evidence. During fiscal 2021 Autodesk has recognized cumulative earnings on a global basis and is profitable in the U.S.. Autodesk forecasts cumulative earnings in U.S. jurisdiction in fiscal 2022. In the fourth quarter of fiscal 2021, Autodesk released the valuation allowance against the Company’s U.S. deferred tax assets, due to positive evidence indicating that these deferred tax assets are more likely than not to be realized. The Company has retained a valuation allowance against California deferred tax assets and deferred tax assets that will convert into a capital loss upon reversal as we do not have sufficient income of the appropriate character to benefit these deferred tax assets. The Company continues to retain a valuation allowance of $65 million against foreign deferred tax assets in the Netherlands and Canada as of January 31, 2021.

The valuation allowance decreased by $696.9 million in fiscal 2021 primarily due to the U.S. valuation allowance release of $679.0 million. The valuation allowance increased by $85.6 million and $163.6 million in fiscal 2020 and fiscal 2019, respectively, primarily related to the generation of deferred tax attributes, net of the fiscal 2020 valuation allowance release of $42.0 million in Singapore.

The U.S. Tax Cuts and Jobs Act (“TCJA”) provided broad and significant changes to the U.S. corporate income tax regime and reduced the statutory federal corporate rate from 35% to 21% for fiscal 2018 and forward. TCJA subjects the deemed intangible income of our foreign subsidiaries to current U.S. taxation (commonly referred to as “GILTI”), provides for a full dividends received deduction upon repatriation of untaxed earnings of our foreign subsidiaries, imposes 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”), modifies the accelerated depreciation deduction rules, and revises the deductibility of certain expenses.

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 TCJA 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.

As of January 31, 2021, Autodesk had $8.8 million of cumulative U.S. federal tax loss carryforwards and $560.4 million of cumulative U.S. state tax loss carryforwards, which may be available to reduce future income tax liabilities in federal and state jurisdictions. The pre-fiscal 2019 U.S. federal tax loss carryforward will expire beginning fiscal 2035 through fiscal 2039. U.S. federal losses generated beginning in fiscal 2019 do not expire and are carried forward indefinitely. The U.S. state tax loss carryforward will expire beginning fiscal 2025 through fiscal 2041.

In addition to U.S. federal and state tax loss carryforwards, the Netherlands, Norway, Singapore, and other foreign jurisdictions incurred federal tax losses totaling $222.0 million, which may be available to reduce future income tax liabilities. Our Norway and Singaporean losses, of $22.5 million and $156.4 million, respectively, have an indefinite expiration period. The Netherlands losses of $40.0 million will expire beginning in fiscal 2025 through fiscal 2027, and have a 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.

As of January 31, 2021, Autodesk had $166.8 million of cumulative U.S. federal research tax credit carryforwards, $97.3 million of cumulative California state research tax credit carryforwards, and $56.8 million and $1.6 million of cumulative Canadian federal research and Ontario minimum tax credit carryforwards, respectively, which may be available to reduce future income tax liabilities in the respective jurisdictions. The federal research tax credit carryforwards will expire beginning fiscal 2026 through fiscal 2041, the state research tax credit carryforwards may reduce future California income tax liabilities indefinitely, and the Canadian research tax credit carryforwards will expire beginning fiscal 2028 through fiscal 2041. Autodesk also has $112.2 million of cumulative U.S. federal foreign tax credit carryforwards, which may be available to reduce future U.S. tax liabilities. These foreign tax credits will expire beginning fiscal 2025 through fiscal 2030. As discussed above, the California and Canada 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 and credits 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 result in permanent losses of the U.S. federal and state tax attributes.

As of January 31, 2021, the Company had $198.0 million of gross unrecognized tax benefits, of which $31.7 million would reduce our valuation allowance, if recognized. The remaining $166.3 million would impact the effective tax rate. It is possible that the amount of unrecognized tax benefits will decrease in the next 12 months for an audit settlement of approximately $8.2 million.


	Fiscal Year Ended January 31,
	2021		2020		2019
Gross unrecognized tax benefits at the beginning of the fiscal year	$	220.6	$	209.0	$	337.6
Increases for tax positions of prior years	12.7		2.8		7.9
Decreases for tax positions of prior years	(41.1)		(0.4)		(146.3)
Increases for tax positions related to the current year	6.4		11.1		10.3
Decreases relating to settlements with taxing authorities	—		—		—
Reductions as a result of lapse of the statute of limitations	(0.6)		(1.9)		(0.5)
Gross unrecognized tax benefits at the end of the fiscal year	$	198.0	$	220.6	$	209.0

It is the Company’s continuing practice to recognize interest and/or penalties related to income tax matters in income tax expense. Autodesk had $4.5 million, $2.3 million, and $3.1 million, net of tax benefit, accrued for interest and penalties related to unrecognized tax benefits as of January 31, 2021, 2020, and 2019, respectively. There was $2.2 million, $(0.8) million, and $0.3 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, 2021, 2020, and 2019, respectively.

Autodesk’s U.S. and state income tax returns for fiscal 2002 through fiscal 2021 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 2014 and 2015. This audit was finalized on January 31, 2019, and impacts from the finalization of the audit were recorded in the fiscal 2019 financial statements.

As a result of certain business and employment actions and capital investments undertaken by Autodesk, income earned in certain European and Asia Pacific countries was subject to reduced tax rates through fiscal 2019. Historically, the Company incurred $0.0 million net benefit ($0.00 basic net income per share) in fiscal 2021 and fiscal 2020 from the tax status of these business arrangements, and $11.4 million ($0.05 basic net income per share) in fiscal 2019.