Income Taxes (Tables)

12 Months Ended

Jul. 31, 2020

Provision for income taxes from continuing operations

The provision for income taxes consisted of the following for the periods indicated:



	Twelve Months Ended July 31,
(In millions)	2020			2019			2018
Current:
Federal	$	372		$	271		$	197
State	79			67			38
Foreign	21			14			14
Total current	472			352			249
Deferred:
Federal	(47		)	(23		)	(14		)
State	(47		)	(4		)	2
Foreign	(6		)	(1		)	—
Total deferred	(100		)	(28		)	(12		)
Total provision for income taxes	$	372		$	324		$	237

Sources of income from continuing operations before the provision for income taxes

The sources of income before the provision for income taxes consisted of the following for the periods indicated:



	Twelve Months Ended July 31,
(In millions)	2020			2019		2018
United States	$	2,206		$	1,826	$	1,528
Foreign	(8		)	55		38
Total	$	2,198		$	1,881	$	1,566

Differences between income taxes calculated using the federal statutory income tax rate and the provision for income taxes from continuing operations

Differences between income taxes calculated using the federal statutory income tax rate and the provision for income taxes were as follows for the periods indicated:



	Twelve Months Ended July 31,
(In millions)	2020			2019			2018
Income before income taxes	$	2,198		$	1,881		$	1,566

U.S. federal statutory rate	21		%	21		%	26.9		%

Statutory federal income tax	$	462		$	395		$	420
State income tax, net of federal benefit	25			50			29
Federal research and experimentation credits	(54		)	(48		)	(38		)
Domestic production activities deduction	—			—			(28		)
Share-based compensation	22			15			11
Federal excess tax benefits related to share-based compensation	(79		)	(106		)	(94		)
2017 Tax Act - Deferred tax re-measurement	—			—			(29		)
Capital loss on subsidiary reorganization	—			—			(35		)
Effects of non-U.S. operations	13			13			1
Other, net	(17		)	5			—
Total provision for income taxes	$	372		$	324		$	237

Components of deferred tax assets and liabilities

Significant deferred tax assets and liabilities were as follows at the dates indicated:



	July 31,
(In millions)	2020			2019
Deferred tax assets:
Accruals and reserves not currently deductible	$	23		$	13
Operating lease liabilities	64			—
Accrued and deferred compensation	112			48
Loss and tax credit carryforwards	114			117
Intangible assets	26			—
Share-based compensation	44			47
Other, net	13			11
Total gross deferred tax assets	396			236
Valuation allowance	(132		)	(107		)
Total deferred tax assets	264			129
Deferred tax liabilities:
Deferred revenue	68			66
Operating lease right-of-use assets	55			—
Intangibles	45			71
Property and equipment	22			20
Other, net	11			8
Total deferred tax liabilities	201			165
Net deferred tax assets (liabilities)	$	63		$	(36	)

Components of net deferred tax assets, net of valuation allowances

The components of total net deferred tax liabilities, net of valuation allowances, as shown on our consolidated balance sheets were as follows at the dates indicated:



	July 31,
(In millions)	2020			2019
Long-term deferred income taxes	$	65		$	1
Long-term deferred income tax liabilities	(2		)	(37		)
Net deferred tax assets (liabilities)	$	63		$	(36	)

Aggregate changes in the balance of gross unrecognized tax benefits

The aggregate changes in the balance of our gross unrecognized tax benefits were as follows for the periods indicated:



	Twelve Months Ended July 31,
(In millions)	2020			2019			2018
Gross unrecognized tax benefits, beginning balance	$	120		$	90		$	61
Increases related to tax positions from prior fiscal years, including acquisitions	2			13			10
Decreases related to tax positions from prior fiscal years	(35		)	—			(3		)
Increases related to tax positions taken during current fiscal year	21			23			23
Settlements with tax authorities	(1		)	(1		)	(1		)
Lapse of statute of limitations	(6		)	(5		)	—
Gross unrecognized tax benefits, ending balance	$	101		$	120		$	90