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Income Taxes | 12 Months Ended
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Nov. 30, 2018
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES Income before income taxes for fiscal 2018, 2017 and 2016 consisted of the following (in thousands):
|  | 2018 |  | 2017 |  | 2016
Domestic |  | $ | 542,948 |  |  | $ | 1,056,156 |  |  | $ | 805,749 |
Foreign |  | 2,250,928 |  |  | 1,081,485 |  |  | 629,389 |
Income before income taxes |  | $ | 2,793,876 |  |  | $ | 2,137,641 |  |  | $ | 1,435,138 |
The provision for income taxes for fiscal 2018, 2017 and 2016 consisted of the following (in thousands):
|  | 2018 |  | 2017 |  | 2016
Current: |  |  |  |  |  |
United States federal |  | $ | 501,272 |  |  | $ | 298,802 |  |  | $ | 94,396 |
Foreign |  | 140,308 |  |  | 60,962 |  |  | 59,749 |
State and local |  | 28,612 |  |  | 33,578 |  |  | 15,222 |
Total current |  | 670,192 |  |  | 393,342 |  |  | 169,367 |
Deferred: |  |  |  |  |  |  |  |  |
United States federal |  | (466,113 | ) |  | 48,905 |  |  | 33,924 |
Foreign |  | (9,734 | ) |  | (4,242 | ) |  | (2,751 | )
State and local |  | 8,757 |  |  | 5,682 |  |  | (9,287 | )
Total deferred |  | (467,090 | ) |  | 50,345 |  |  | 21,886 |
Tax expense attributable to employee stock plans |  | — |  |  | — |  |  | 75,103 |
Provision for income taxes |  | $ | 203,102 |  |  | $ | 443,687 |  |  | $ | 266,356 |
U.S. Tax Reform On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was enacted into law, which significantly changes existing U.S. tax law and includes many provisions applicable to us, such as reducing the U.S. federal statutory tax rate, imposing a one-time transition tax on deemed repatriation of deferred foreign income, and adopting a territorial tax system. The Tax Act reduced the U.S. federal statutory tax rate from 35% to 21% effective January 1, 2018. For fiscal 2018, our blended U.S. federal statutory tax rate is 22.2%. This is the result of using the tax rate of 35% for the first month of fiscal 2018 and the reduced tax rate of 21% for the remaining eleven months of fiscal 2018. The Tax Act also required us to incur a one-time transition tax on deferred foreign income not previously subject to U.S. income tax at a rate of 15.5% for foreign cash and certain other net current assets, and 8% on the remaining income, in each case reduced by certain foreign tax credits. The Tax Act also includes a provision to tax global intangible low-taxed income of foreign subsidiaries, a special tax deduction for foreign-derived intangible income, and a base erosion anti-abuse tax measure that may tax certain payments between a U.S. corporation and its subsidiaries. These additional provisions of the Tax Act will be effective for us beginning December 1, 2018. During fiscal 2018, we recorded tax charges for the impact of the Tax Act effects using the current available information and technical guidance on the interpretations of the Tax Act. As permitted by SEC Staff Accounting Bulletin 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act, we recorded provisional estimates and have subsequently finalized our accounting analysis based on the guidance, interpretations, and data available as of November 30, 2018. Adjustments made in the fourth quarter of fiscal 2018 upon finalization of our accounting analysis were not material to our Consolidated Financial Statements. As a result of the reduction in the federal corporate tax rate, we remeasured our deferred taxes and recorded a tax charge of $10 million based on the tax rate that is expected to apply when such deferred taxes are settled or realized in future periods. To calculate the remeasurement of deferred taxes, we estimated when the existing deferred taxes will be settled or realized. As part of the adoption of a new territorial tax system we recorded a transition tax expense of $176 million on deferred foreign earnings, long-term income taxes payable of $504 million, other tax liabilities of $19 million, and a reduction in our deferred tax liabilities of $347 million. We intend to elect to pay the federal transition tax over a period of eight years as permitted by the Tax Act. As a result, we reclassified $40 million from long-term income taxes payable to short-term income taxes payable for the first installment payment due in fiscal 2019. Certain international provisions introduced in the Tax Act will be effective for us in fiscal 2019. As part of these provisions, an accounting policy election is available to either account for the tax effects of certain taxes in the period that is subject to such taxes or to provide deferred taxes for book and tax basis differences that upon reversal may be subject to such taxes. We elect to account for the tax effects of these provisions in the period that it is subject to such tax. Accordingly, we have not recorded any tax with respect to these provisions during fiscal 2018. Reconciliation of Provision for Income Taxes Total income tax expense differs from the expected tax expense (computed by multiplying the U.S. federal statutory rate of 22.2% in 2018 and 35% in both 2017 and 2016 by income before income taxes) as a result of the following (in thousands):
|  | 2018 |  | 2017 |  | 2016
Computed “expected” tax expense |  | $ | 620,240 |  |  | $ | 748,174 |  |  | $ | 502,298 |
State tax expense, net of federal benefit |  | 25,214 |  |  | 25,131 |  |  | 10,636 |
Tax credits |  | (110,849 | ) |  | (38,000 | ) |  | (48,383 | )
Differences between statutory rate and foreign effective tax rate |  | (384,393 | ) |  | (215,490 | ) |  | (133,778 | )
Stock-based compensation, net of tax deduction |  | (95,372 | ) |  | (42,512 | ) |  | 15,101 |
Resolution of income tax examinations |  | (42,432 | ) |  | (31,358 | ) |  | (68,003 | )
Domestic manufacturing deduction benefit |  | (13,098 | ) |  | (32,200 | ) |  | (26,990 | )
Impacts of the U.S. Tax Act |  | 185,997 |  |  | — |  |  | — |
Tax charge for licensing acquired company technology to foreign subsidiaries |  | — |  |  | 24,771 |  |  | 5,346 |
Other |  | 17,795 |  |  | 5,171 |  |  | 10,129 |
Provision for income taxes |  | $ | 203,102 |  |  | $ | 443,687 |  |  | $ | 266,356 |
Deferred Tax Assets and Liabilities The tax effects of the temporary differences that gave rise to significant portions of the deferred tax assets and liabilities as of November 30, 2018 and December 1, 2017 are presented below (in thousands):
|  | 2018 |  | 2017
Deferred tax assets: |  |  |  |
Acquired technology |  | $ | 9,561 |  |  | $ | 4,846 |
Reserves and accruals |  | 59,100 |  |  | 48,761 |
Deferred revenue |  | 37,690 |  |  | 23,452 |
Stock-based compensation |  | 89,240 |  |  | 74,942 |
Net operating loss carryforwards of acquired companies |  | 209,445 |  |  | 44,465 |
Credit carryforwards |  | 173,748 |  |  | 124,205 |
Capitalized expenses |  | 19,074 |  |  | 13,428 |
Benefits relating to tax positions |  | 51,965 |  |  | 33,318 |
Other |  | 37,160 |  |  | 30,300 |
Total gross deferred tax assets |  | 686,983 |  |  | 397,717 |
Deferred tax asset valuation allowance |  | (174,496 | ) |  | (93,568 | )
Total deferred tax assets |  | 512,487 |  |  | 304,149 |
Deferred tax liabilities: |  |  |  |
Depreciation and amortization |  | 40,425 |  |  | 84,064 |
Undistributed earnings of foreign subsidiaries |  | 17,556 |  |  | 382,744 |
Acquired intangible assets |  | 501,208 |  |  | 117,282 |
Total deferred tax liabilities |  | 559,189 |  |  | 584,090 |
Net deferred tax liabilities: |  | $ | 46,702 |  |  | $ | 279,941 |
Deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating losses and tax credit carryforwards. Included in the deferred tax assets and liabilities for fiscal 2018 and 2017 are amounts related to various acquisitions. In assessing the realizability of deferred tax assets, management determined that it is not more likely than not that we will have sufficient taxable income in certain states and foreign jurisdictions to fully utilize available tax credits and other attributes. The deferred tax assets are offset by a valuation allowance to the extent it is more likely than not that they are not expected to be realized. We provide U.S. income taxes on the earnings of foreign subsidiaries unless the subsidiaries’ earnings are considered permanently reinvested outside the United States or are exempted from taxation as a result of the new territorial tax system. To the extent that the foreign earnings previously treated as permanently reinvested are repatriated, the related U.S. tax liability may be reduced by any foreign income taxes paid on these earnings. As of November 30, 2018, the cumulative amount of earnings upon which U.S. income taxes have not been provided is approximately $275 million. The unrecognized deferred tax liability for these earnings is approximately $57.8 million. As of November 30, 2018, we have net operating loss carryforwards of approximately $881.1 million for federal and $349.7 million for state. We also have federal, state and foreign tax credit carryforwards of approximately $8.8 million, $189.9 million and $14.9 million, respectively. The net operating loss carryforward assets and tax credits will expire in various years from fiscal 2019 through 2036. The state tax credit carryforwards and a portion of the federal net operating loss carryforwards can be carried forward indefinitely. The net operating loss carryforward assets and certain credits are reduced by the valuation allowance and are subject to an annual limitation under Internal Revenue Code Section 382, the carrying amount of which are expected to be fully realized. As of November 30, 2018, a valuation allowance of $174.5 million has been established for certain deferred tax assets related to certain state and foreign assets. For fiscal 2018, the total change in the valuation allowance was $80.9 million. Accounting for Uncertainty in Income Taxes During fiscal 2018 and 2017, our aggregate changes in our total gross amount of unrecognized tax benefits are summarized as follows (in thousands):
|  | 2018 |  | 2017
Beginning balance |  | $ | 172,945 |  |  | $ | 178,413 |
Gross increases in unrecognized tax benefits – prior year tax positions |  | 16,191 |  |  | 3,680 |
Gross decreases in unrecognized tax benefits – prior year tax positions |  | (4,000 | ) |  | (30,166 | )
Gross increases in unrecognized tax benefits – current year tax positions |  | 60,721 |  |  | 24,927 |
Settlements with taxing authorities |  | — |  |  | (3,876 | )
Lapse of statute of limitations |  | (45,922 | ) |  | (8,819 | )
Foreign exchange gains and losses |  | (3,783 | ) |  | 8,786 |
Ending balance |  | $ | 196,152 |  |  | $ | 172,945 |
The combined amount of accrued interest and penalties related to tax positions taken on our tax returns were approximately $24.6 million and $23.6 million for fiscal 2018 and 2017, respectively. These amounts were included in long-term income taxes payable in their respective years. We file income tax returns in the United States on a federal basis and in many U.S. state and foreign jurisdictions. We are subject to the continual examination of our income tax returns by the IRS and other domestic and foreign tax authorities. Our major tax jurisdictions are Ireland, California and the United States. For Ireland, California and the United States, the earliest fiscal years open for examination are 2008, 2014 and 2015, respectively. We regularly assess the likelihood of outcomes resulting from these examinations to determine the adequacy of our provision for income taxes and have reserved for potential adjustments that may result from these examinations. We believe such estimates to be reasonable; however, there can be no assurance that the final determination of any of these examinations will not have an adverse effect on our operating results and financial position. The timing of the resolution of income tax examinations is highly uncertain as are the amounts and timing of tax payments that are part of any audit settlement process. These events could cause large fluctuations in the balance of short-term and long-term assets, liabilities and income taxes payable. We believe that within the next 12 months, it is reasonably possible that either certain audits will conclude or statutes of limitations on certain income tax examination periods will expire, or both. Given the uncertainties described above, we can only determine a range of estimated potential effect in underlying unrecognized tax benefits ranging from $0 to approximately $45 million.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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