Income Tax

6 Months Ended

Jul. 31, 2023

Income Tax Disclosure [Abstract]

Income Tax

Income Tax

 Autodesk had income tax expense of $36 million, relative to pre-tax income of $258 million for the three months ended July 31, 2023, and income tax expense of $46 million, relative to pre-tax income of $232 million for the three months ended July 31, 2022. Income tax expense for the three months ended July 31, 2023, reflects income tax benefit arising from the temporary relief provided by the Internal Revenue Service relating to U.S. foreign tax credit regulations and reduced U.S. foreign derived intangible income tax benefit, offset by increased withholding tax expense and increased tax expense relating to stock-based compensation, resulting in a net tax expense decrease year over year.

Autodesk had income tax expense of $96 million, relative to pre-tax income of $479 million for the six months ended July 31, 2023, and income tax expense of $95 million, relative to pre-tax income of $427 million for the six months ended July 31, 2022. Income tax expense for the six months ended July 31, 2023, reflects income tax benefit arising from the temporary relief provided by the Internal Revenue Service relating to U.S. foreign tax credit regulations and reduced U.S. foreign derived intangible income tax benefit, offset by increased withholding tax expense and increased tax expense relating to stock-based compensation.

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 related to the likelihood of realization of the deferred tax assets to determine, based on the weight of available evidence, whether it is more likely than not that some or all of the deferred tax assets will not be realized. We have maintained a valuation allowance on all or part of our Australia, New Zealand, California, Michigan deferred tax assets, as well as our U.S. capital loss deferred tax assets as it is more likely than not that some or all of the deferred tax assets will not be realized.

As of July 31, 2023, the Company had $220 million of gross unrecognized tax benefits, of which $181 million would impact the effective tax rate, if recognized. The remaining $38 million would reduce our valuation allowance, if recognized. The amount of unrecognized tax benefits will decrease in the next twelve months for statute lapse of approximately $2 million.

Signed into law on August 16, 2022, the Inflation Reduction Act contains many revisions to the Internal Revenue Code effective in taxable years beginning after December 31, 2022, including a 15% corporate minimum income tax. Autodesk continues to monitor the impact of the Inflation Reduction Act on its consolidated financial statements.