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Income Taxes | 12 Months Ended
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Dec. 31, 2023
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Our income before (benefit from) provision for income taxes for the years ended December 31, 2023, 2022 and 2021 was as follows (in millions):
| Year Ended December 31,
| 2023 |  | 2022 |  | 2021
Domestic | $ | 3,196 |  |  | $ | 5,524 |  |  | $ | (130) |
Noncontrolling interest and redeemable noncontrolling interest | (23) |  |  | 31 |  |  | 125 |
Foreign | 6,800 |  |  | 8,164 |  |  | 6,348 |
Income before income taxes | $ | 9,973 |  |  | $ | 13,719 |  |  | $ | 6,343 |
A (benefit from) provision for income taxes of $(5.00) billion, $1.13 billion and $699 million has been recognized for the years ended December 31, 2023, 2022 and 2021, respectively. The components of the (benefit from) provision for income taxes for the years ended December 31, 2023, 2022 and 2021 consisted of the following (in millions):
| Year Ended December 31,
| 2023 |  | 2022 |  | 2021
Current: |  |  |  |  |
Federal | $ | 48 |  |  | $ | — |  |  | $ | — |
State | 57 |  |  | 62 |  |  | 9 |
Foreign | 1,243 |  |  | 1,266 |  |  | 839 |
Total current | 1,348 |  |  | 1,328 |  |  | 848 |
Deferred: |  |  |  |  |
Federal | (5,246) |  |  | 26 |  |  | — |
State | (653) |  |  | 1 |  |  | — |
Foreign | (450) |  |  | (223) |  |  | (149) |
Total deferred | (6,349) |  |  | (196) |  |  | (149) |
Total (Benefit from) provision for income taxes | $ | (5,001) |  |  | $ | 1,132 |  |  | $ | 699 |
The reconciliation of taxes at the federal statutory rate to our (benefit from) provision for income taxes for the years ended December 31, 2023, 2022 and 2021 was as follows (in millions):
| Year Ended December 31,
| 2023 |  | 2022 |  | 2021
Tax at statutory federal rate | $ | 2,094 |  |  | $ | 2,881 |  |  | $ | 1,332 |
State tax, net of federal benefit | (372) |  |  | 51 |  |  | 6 |
Nondeductible executive compensation | 23 |  |  | 14 |  |  | 201 |
Excess tax benefits related to stock-based compensation | (288) |  |  | (745) |  |  | (7,123) |
Nontaxable manufacturing credit | (101) |  |  | — |  |  | — |
Foreign income rate differential | (816) |  |  | (923) |  |  | (668) |
U.S. tax credits | (593) |  |  | (276) |  |  | (328) |
GILTI inclusion | 670 |  |  | 1,279 |  |  | 1,008 |
Unrecognized tax benefits | 183 |  |  | 252 |  |  | 28 |
Change in valuation allowance | (5,962) |  |  | (1,532) |  |  | 6,165 |
Other | 161 |  |  | 131 |  |  | 78 |
(Benefit from) provision for income taxes | $ | (5,001) |  |  | $ | 1,132 |  |  | $ | 699 |
We monitor the realizability of our deferred tax assets taking into account all relevant factors at each reporting period. As of December 31, 2023, based on the relevant weight of positive and negative evidence, including the amount of our taxable income in recent years which is objective and verifiable, and consideration of our expected future taxable earnings, we concluded that it is more likely than not that our U.S. federal and certain state deferred tax assets are realizable. As such, we released $6.54 billion of our valuation allowance associated with the U.S. federal and state deferred tax assets, with the exception of our California deferred tax assets. We continue to maintain a full valuation allowance against our California deferred tax assets as of December 31, 2023, because we concluded they are not more likely than not to be realized as we expect our California deferred tax assets generation in future years to exceed our ability to use these deferred tax assets. Deferred tax assets (liabilities) as of December 31, 2023 and 2022 consisted of the following (in millions):
| December 31, 2023 |  | December 31, 2022
Deferred tax assets: |  |  |
Net operating loss carry-forwards | $ | 2,826 |  |  | $ | 4,486 |
Research and development credits | 1,358 |  |  | 1,184 |
Other tax credits and attributes | 827 |  |  | 217 |
Deferred revenue | 1,035 |  |  | 751 |
Inventory and warranty reserves | 1,258 |  |  | 819 |
Stock-based compensation | 230 |  |  | 185 |
Operating lease right-of-use liabilities | 930 |  |  | 554 |
Capitalized research and development costs | 1,344 |  |  | 693 |
Deferred GILTI tax assets | 760 |  |  | 466 |
Accruals and others | 206 |  |  | 178 |
Total deferred tax assets | 10,774 |  |  | 9,533 |
Valuation allowance | (892) |  |  | (7,349) |
Deferred tax assets, net of valuation allowance | 9,882 |  |  | 2,184 |
Deferred tax liabilities: |  |  |
Depreciation and amortization | (2,122) |  |  | (1,178) |
Investment in certain financing funds | (133) |  |  | (238) |
Operating lease right-of-use assets | (859) |  |  | (506) |
Other | (116) |  |  | (15) |
Total deferred tax liabilities | (3,230) |  |  | (1,937) |
Deferred tax assets (liabilities), net of valuation allowance | $ | 6,652 |  |  | $ | 247 |
As of December 31, 2023, we maintained valuation allowances of $892 million for deferred tax assets that are not more likely than not to be realized, which primarily included deferred tax assets in the state of California and certain foreign operating losses. The valuation allowance on our net deferred tax assets decreased by $6.46 billion and $1.73 billion during the years ended December 31, 2023 and 2022, respectively, and increased by $6.14 billion during the year ended December 31, 2021. The valuation allowance decrease during the year ended December 31, 2023 was primarily due to the release of our valuation allowance with respect to our U.S. federal and certain state deferred tax assets. The changes in valuation allowances during the years ended December 31, 2022 and 2021 were primarily due to changes in our U.S. deferred tax assets and liabilities in the respective year. Among our deferred tax assets in foreign jurisdictions, we recorded a valuation allowance on certain foreign net operating losses that are not more likely than not to be realized. The remainder of our foreign deferred tax assets are more likely than not to be realized given the expectation of future earnings in these jurisdictions. As of December 31, 2023, we had $10.31 billion of federal and $10.36 billion of state net operating loss carry-forwards available to offset future taxable income, some of which, if not utilized, will begin to expire in 2024 for federal and state purposes. Federal and state laws can impose substantial restrictions on the utilization of net operating loss and tax credit carry-forwards in the event of an “ownership change,” as defined in Section 382 of the Internal Revenue Code. We have determined that no significant limitation would be placed on the utilization of our net operating loss and tax credit carry-forwards due to prior ownership changes or expirations. As of December 31, 2023, we had federal research and development tax credits of $1.10 billion, federal renewable energy tax credits of $605 million, and state research and development tax credits of $923 million. Most of our state research and development tax credits were in the state of California. If not utilized, some of the federal tax credits may expire in various amounts beginning in 2036. However, California research and development tax credits can be carried forward indefinitely. The local government of Shanghai granted a beneficial corporate income tax rate of 15% to certain eligible enterprises, compared to the 25% statutory corporate income tax rate in China. Our Gigafactory Shanghai subsidiary was granted this beneficial income tax rate of 15% for 2019 through 2023. Starting in 2024, Gigafactory Shanghai is subject to 25% statutory corporate income tax rate in China. As of December 31, 2023, we intend to indefinitely reinvest our foreign earnings and cash unless such repatriation results in no or minimal tax costs. We have recorded the taxes associated with the foreign earnings we intend to repatriate in the future. For the earnings we intend to indefinitely reinvest, no deferred tax liabilities for foreign withholding or other taxes have been recorded. The estimated amount of such unrecognized withholding tax liability associated with the indefinitely reinvested earnings is approximately $245 million. Uncertain Tax Positions The changes to our gross unrecognized tax benefits were as follows (in millions):
December 31, 2020 | $ | 380 |
Increases in balances related to prior year tax positions | 117 |
Decreases in balances related to prior year tax positions | (90) |
Increases in balances related to current year tax positions | 124 |
December 31, 2021 | 531 |
Increases in balances related to prior year tax positions | 136 |
Decreases in balances related to prior year tax positions | (12) |
Increases in balances related to current year tax positions | 222 |
Decreases in balances related to expiration of the statute of limitations | (7) |
December 31, 2022 | 870 |
Increases in balances related to prior year tax positions | 59 |
Decreases related to settlement with tax authorities | (6) |
Increases in balances related to current year tax positions | 255 |
Decreases in balances related to expiration of the statute of limitations | (4) |
December 31, 2023 | $ | 1,174 |
We include interest and penalties related to unrecognized tax benefits in income tax expense. We recognized net interest and penalties related to unrecognized tax benefits in provision for income taxes line of our consolidated statements of operations of $17 million, $27 million and $4 million for the years ended December 31, 2023, 2022 and 2021, respectively. As of December 31, 2023, and 2022, we have accrued $47 million and $31 million, respectively, related to interest and penalties on our unrecognized tax benefits. Unrecognized tax benefits of $901 million, if recognized, would affect our effective tax rate. We file income tax returns in the U.S. and various state and foreign jurisdictions. We are currently under examination by the Internal Revenue Service (“IRS”) for the years 2015 to 2018. Additional tax years within the periods 2004 to 2014 and 2019 to 2022 remain subject to examination for federal income tax purposes. All net operating losses and tax credits generated to date are subject to adjustment for U.S. federal and state income tax purposes. Our returns for 2004 and subsequent tax years remain subject to examination in U.S. state and foreign jurisdictions. Given the uncertainty in timing and outcome of our tax examinations, an estimate of the range of the reasonably possible change in gross unrecognized tax benefits within twelve months cannot be made at this time.

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