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Income Taxes | 12 Months Ended
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Dec. 31, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The components of income before income taxes by U.S. and foreign jurisdictions were as follows (in millions):
| Year Ended December 31,
| 2021 |  | 2020 |  | 2019
United States | $ | 152 |  |  | $ | 13 |  |  | $ | (49) |
Foreign | 97 |  |  | 137 |  |  | 116 |
Total | $ | 249 |  |  | $ | 150 |  |  | $ | 67 |
The provision for (benefit from) income taxes consist of the following (in millions):
| Year Ended December 31,
| 2021 |  | 2020 |  | 2019
Current provision: |  |  |  |  |
Federal | $ | — |  |  | $ | — |  |  | $ | — |
State | 1 |  |  | — |  |  | — |
Foreign | 52 |  |  | 53 |  |  | 16 |
| 53 |  |  | 53 |  |  | 16 |
Deferred provision: |  |  |  |  |
Federal | (3) |  |  | (5) |  |  | (3) |
State | (3) |  |  | (1) |  |  | (1) |
Foreign | (28) |  |  | (16) |  |  | (572) |
| (34) |  |  | (22) |  |  | (576) |
Provision for (benefit from) income taxes | $ | 19 |  |  | $ | 31 |  |  | $ | (560) |
The effective income tax rate differs from the federal statutory income tax rate applied to the income before income taxes due to the following (in millions):
| Year Ended December 31,
| 2021 |  | 2020 |  | 2019
Tax computed at U.S. federal statutory rate | $ | 53 |  |  | $ | 31 |  |  | $ | 14 |
Tax rate differential for international subsidiaries | 5 |  |  | 1 |  |  | (5) |
Stock-based compensation | (160) |  |  | (157) |  |  | (108) |
Tax credits | (76) |  |  | (64) |  |  | (51) |
Foreign restructuring and amortization | 1 |  |  | 7 |  |  | — |
Executive compensation | 23 |  |  | 25 |  |  | 19 |
Valuation allowance | 169 |  |  | 184 |  |  | (432) |
Other | 4 |  |  | 4 |  |  | 3 |
Provision for (benefit from) income taxes | $ | 19 |  |  | $ | 31 |  |  | $ | (560) |
Significant components of our deferred tax assets are shown below (in millions). A valuation allowance has been recognized to offset our deferred tax assets, as necessary, by the amount of any tax benefits that, based on evidence, are not expected to be realized.
| December 31,
| 2021 |  | 2020
Deferred tax assets: |  |  |
Net operating loss carryforwards | $ | 1,061 |  |  | $ | 882 |
Credit carryforwards | 318 |  |  | 235 |
Lease liability | 152 |  |  | 115 |
Depreciation and amortization | 587 |  |  | 636 |
Other | 126 |  |  | 103 |
Total deferred tax assets | 2,244 |  |  | 1,971 |
Less valuation allowance | (1,326) |  |  | (1,129) |
| 918 |  |  | 842 |
Deferred tax liabilities: |  |  |
Right of use asset | (141) |  |  | (106) |
Other | (94) |  |  | (70) |
Net deferred tax assets | $ | 683 |  |  | $ | 666 |
The unremitted earnings of our foreign subsidiaries are not considered indefinitely reinvested, except in certain designated jurisdictions in which the resident entity is a service provider that is not expected to generate substantial amounts of cash in excess of what may be reinvested by the local entity. We have not provided for state income or withholding taxes on the undistributed earnings of foreign subsidiaries which are considered indefinitely invested outside of the U.S. The amount of unrecognized deferred tax liability on these undistributed earnings is not material as of December 31, 2021. As of December 31, 2021, we had U.S. federal net operating loss and federal tax credit carryforwards of approximately $4.0 billion and $250 million, respectively. The federal tax credits and a portion of the federal net operating loss carryforwards will begin to expire in 2024 if not utilized. In addition, as of December 31, 2021, we had state net operating loss and state tax credit carryforwards of approximately $2.3 billion and $184 million, respectively. The state net operating loss will begin to expire in 2022 if not utilized, however the tax effected amount due to expire in 2022 is immaterial. State tax credits and a portion of the federal net operating loss carryforwards can be carried forward indefinitely. Utilization of our net operating loss and credit carryforwards may be subject to annual limitation due to the ownership change limitations provided by the Internal Revenue Code and similar state provisions. Such an annual limitation could result in the expiration of the net operating loss and tax credit carryforwards before utilization. We maintain a full valuation allowance against our U.S. deferred tax assets as of December 31, 2021. We regularly assess the need for a valuation allowance against our deferred tax assets. In making that assessment, we consider 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. Due to cumulative losses including tax deductible stock compensation and based on all available evidence, we have determined that it is more likely than not that our U.S. deferred tax assets will not be realized as of December 31, 2021. The $197 million increase in the 2021 valuation allowance was primarily attributable to an increase in deferred tax assets related to net operating losses and R&D credits partially offset by a valuation allowance release related to Lightstep, Inc. acquired deferred tax liabilities.. The $210 million increase in the 2020 valuation allowance was primarily attributable to an increase in deferred tax assets related to net operating losses. The $424 million decrease in the 2019 valuation allowance was primarily attributable to the release of the valuation allowance on the Irish deferred tax assets. The Company has recently improved its profitability in the US and to the extent sufficient positive evidence becomes available, we may release a portion, or all, of our valuation allowance in one or more future periods. A release of the valuation allowance, if any, would result in the recognition of certain deferred tax assets and a material income tax benefit for the period in which such release is recorded. A reconciliation of the beginning and ending balance of total unrecognized tax benefits is as follows (in millions):
| Year Ended December 31,
| 2021 |  | 2020 |  | 2019
Balance, beginning period | $ | 81 |  |  | $ | 37 |  |  | $ | 28 |
Tax positions taken in prior period: |  |  |  |  |
Gross increases | 5 |  |  | 6 |  |  | 1 |
Gross decreases | — |  |  | (1) |  |  | — |
Tax positions taken in current period: |  |  |  |  |
Gross increases | 38 |  |  | 39 |  |  | 8 |
Lapse of statute of limitations | — |  |  | — |  |  | — |
Settlements | — |  |  | — |  |  | — |
Balance, end of period | $ | 124 |  |  | $ | 81 |  |  | $ | 37 |
As of December 31, 2021, we had gross unrecognized tax benefits of approximately $124 million of which $28 million would impact the effective tax rate, if recognized. We recognize accrued interest and penalties related to unrecognized tax benefits as income tax expense. Accrued interest and penalties included in our liability related to unrecognized tax benefits were $4 million and $2 million at December 31, 2021 and 2020, respectively. The amount of unrecognized tax benefits could be reduced upon expiration of the applicable statutes of limitations. The potential reduction in unrecognized tax benefits during the next 12 months is not expected to be material. Interest and penalties accrued on these uncertain tax positions are recognized as income tax expense and will be released upon the expiration of the statutes of limitations. These amounts are also not material for any periods presented. We are subject to taxation in the United States and foreign jurisdictions. As of December 31, 2021, our tax years 2004 to 2020 remain subject to examination in most jurisdictions. Governments in certain countries where we do business have enacted legislation in response to the COVID-19 pandemic, including the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) enacted by the United States on March 27, 2020. We are continuing to analyze these legislative developments which are not material for the year ended December 31, 2021. There are differing interpretations of tax laws and regulations, and as a result, disputes may arise with tax authorities involving issues of the timing and amount of deductions and allocations of income among various tax jurisdictions. We periodically evaluate our exposures associated with our tax filing positions. We believe that adequate amounts have been reserved for any adjustments that may ultimately result from these examinations, and we do not anticipate a significant impact to our gross unrecognized tax benefits within the next 12 months related to these years. Although the timing of the resolution, settlement, and closure of any audit is highly uncertain, it is reasonably possible that the balance of gross unrecognized tax benefits could significantly change in the next 12 months. However, given the number of years that remain subject to examination, we are unable to estimate the full range of possible adjustments to the balance of gross unrecognized tax benefits.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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