Income Taxes (Tables)

12 Months Ended

Jul. 31, 2023

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)	2023		2022		2021
Current:
Federal	$	970	$	253	$	399
State	208		93		121
Foreign	86		31		17
Total current	1,264		377		537
Deferred:
Federal	(559)		85		(33)
State	(99)		18		(11)
Foreign	(1)		(4)		1
Total deferred	(659)		99		(43)
Total provision for income taxes	$	605	$	476	$	494

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)	2023		2022		2021
United States	$	2,798	$	2,433	$	2,497
Foreign	191		109		59
Total	$	2,989	$	2,542	$	2,556

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)	2023		2022		2021
Income before income taxes	$	2,989	$	2,542	$	2,556



Statutory federal income tax	$	628	$	534	$	537
State income tax, net of federal benefit	86		87		87
Federal research and experimentation credits	(106)		(94)		(70)
Share-based compensation	58		45		32
Excess tax benefits related to share-based compensation	(26)		(112)		(105)
Effects of non-U.S. operations	(28)		4		4
Other, net	(7)		12		9
Total provision for income taxes	$	605	$	476	$	494

Components of deferred tax assets and liabilities

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


	July 31,
(In millions)	2023		2022
Deferred tax assets:
Accruals and reserves not currently deductible	$	31	$	84
Capitalized research and development (1)	667		—
Operating lease liabilities	153		168

Accrued and deferred compensation	90		84
Loss and tax credit carryforwards	256		224
Intangible assets	—		25
Share-based compensation	94		97
Other, net	27		23
Total gross deferred tax assets	1,318		705
Valuation allowance	(235)		(244)
Total deferred tax assets	1,083		461
Deferred tax liabilities:

Operating lease right-of-use assets	128		149
Intangibles	840		868
Property and equipment	8		9
Other, net	47		43
Total deferred tax liabilities	1,023		1,069
Net deferred tax assets (liabilities)	$	60	$	(608)

(1) As required by the 2017 Tax Cuts & Jobs Act, our research and development costs are capitalized and amortized for U.S. tax purposes for the twelve months ended July 31, 2023. The mandatory capitalization requirement significantly increased our deferred tax assets at July 31, 2023.

Components of net deferred tax assets, net of valuation allowances

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


	July 31,
(In millions)	2023		2022
Long-term deferred income tax assets	$	64	$	11
Long-term deferred income tax liabilities	(4)		(619)
Net deferred tax assets (liabilities)	$	60	$	(608)

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)	2023		2022		2021
Gross unrecognized tax benefits, beginning balance	$	216	$	190	$	101
Increases related to tax positions from prior fiscal years, including acquisitions	11		9		69
Decreases related to tax positions from prior fiscal years	(16)		(13)		—
Increases related to tax positions taken during current fiscal year	38		31		31
Settlements with tax authorities	(2)		—		—
Lapse of statute of limitations	(1)		(1)		(11)
Gross unrecognized tax benefits, ending balance	$	246	$	216	$	190