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Income Taxes | 12 Months Ended
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Nov. 29, 2024
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES Income before income taxes for fiscal 2024, 2023 and 2022 consisted of the following:
(in millions) |  | 2024 |  | 2023 |  | 2022
Domestic |  | $ | 4,160 |  |  | $ | 3,465 |  |  | $ | 1,958 |
Foreign |  | 2,771 |  |  | 3,334 |  |  | 4,050 |
Income before income taxes |  | $ | 6,931 |  |  | $ | 6,799 |  |  | $ | 6,008 |
The provision for income taxes for fiscal 2024, 2023 and 2022 consisted of the following:
(in millions) |  | 2024 |  | 2023 |  | 2022
Current: |  |  |  |  |  |
United States federal |  | $ | 1,292 |  |  | $ | 1,198 |  |  | $ | 465 |
Foreign |  | 315 |  |  | 335 |  |  | 329 |
State and local |  | 232 |  |  | 260 |  |  | 132 |
Total current |  | 1,839 |  |  | 1,793 |  |  | 926 |
Deferred: |  |  |  |  |  |
United States federal |  | (580) |  |  | (556) |  |  | (45) |
Foreign |  | 179 |  |  | 227 |  |  | 360 |
State and local |  | (67) |  |  | (93) |  |  | 11 |
Total deferred |  | (468) |  |  | (422) |  |  | 326 |
Provision for income taxes |  | $ | 1,371 |  |  | $ | 1,371 |  |  | $ | 1,252 |
Reconciliation of Provision for Income Taxes Total income tax expense differed from the income tax expense computed at the U.S. federal statutory rate of 21% as a result of the following:
(in millions) |  | 2024 |  | 2023 |  | 2022
Tax expense computed at U.S. federal statutory rate |  | $ | 1,456 |  |  | $ | 1,428 |  |  | $ | 1,262 |
Effects of non-U.S. operations |  | (198) |  |  | (116) |  |  | (7) |
Tax credits |  | (150) |  |  | (130) |  |  | (116) |
Tax settlements |  | (85) |  |  | (14) |  |  | (14) |
Stock-based compensation |  | (23) |  |  | 29 |  |  | — |
Acquisition termination fee |  | 210 |  |  | — |  |  | — |
State tax expense, net of federal benefit |  | 139 |  |  | 132 |  |  | 113 |
Other |  | 22 |  |  | 42 |  |  | 14 |
Provision for income taxes |  | $ | 1,371 |  |  | $ | 1,371 |  |  | $ | 1,252 |
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 29, 2024 and December 1, 2023 were as follows:
(in millions) |  | 2024 |  | 2023
Deferred tax assets: |  |  |  |
Capitalized expenses |  | $ | 1,625 |  |  | $ | 984 |
Credit carryforwards |  | 343 |  |  | 366 |
Net operating loss and capital loss carryforwards |  | 308 |  |  | 44 |
Intangible assets |  | 117 |  |  | 320 |
Reserves and accruals |  | 129 |  |  | 125 |
Operating lease liabilities |  | 79 |  |  | 97 |
Stock-based compensation |  | 66 |  |  | 65 |
Benefits relating to tax positions |  | 64 |  |  | 68 |
Other |  | 34 |  |  | 48 |
Total gross deferred tax assets |  | 2,765 |  |  | 2,117 |
Valuation allowance |  | (725) |  |  | (405) |
Total deferred tax assets |  | 2,040 |  |  | 1,712 |
Deferred tax liabilities: |  |  |  |
Acquired intangible assets |  | 180 |  |  | 263 |
Prepaid expenses |  | 112 |  |  | 107 |
Depreciation and amortization |  | 70 |  |  | 77 |
Operating lease right-of-use assets |  | 52 |  |  | 89 |
Total deferred tax liabilities |  | 414 |  |  | 536 |
Net deferred tax assets |  | $ | 1,626 |  |  | $ | 1,176 |
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 tax loss and credit carryforwards. As of November 29, 2024, we had federal and state tax credit carryforwards of approximately $93 million and $308 million, respectively, as well as state net operating loss carryforwards of approximately $408 million. We also had federal and state capital loss carryforwards of $1.15 billion mainly from the Figma acquisition termination fee which was not deductible for financial statement purposes. The majority of the state tax credits can be carried forward indefinitely, and the remaining federal and state tax loss and credit carryforwards will expire in various years from fiscal 2025 through 2040. Certain tax loss and credit carryforwards are subject to an annual limitation and/or are reduced by a valuation allowance. The net carrying amount of such assets is expected to be fully realized. In assessing the realizability of deferred tax assets, management determined that it is more likely than not that we will not fully realize certain available tax assets in domestic and foreign jurisdictions. 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. As of November 29, 2024, we continue to maintain a valuation allowance of $725 million primarily related to certain state credits and federal capital loss carryforwards. For fiscal 2024, the increase in the valuation allowance was $321 million, mainly related to the capital loss generated from the Figma acquisition termination fee. As we repatriate foreign earnings for use in the United States, the distributions will generally be exempt from federal income taxes. As of November 29, 2024, the cumulative amount of foreign earnings considered permanently reinvested upon which taxes have not been provided, and the corresponding unrecognized deferred tax liability, was not material. Accounting for Uncertainty in Income Taxes During fiscal 2024 and 2023, the aggregate changes in our total gross amount of unrecognized tax benefits were as follows:
(in millions) |  | 2024 |  | 2023
Beginning balance |  | $ | 501 |  |  | $ | 321 |
Gross increases in unrecognized tax benefits – prior year tax positions |  | 6 |  |  | 103 |
Gross decreases in unrecognized tax benefits – prior year tax positions |  | (10) |  |  | (9) |
Gross increases in unrecognized tax benefits – current year tax positions |  | 269 |  |  | 108 |
Lapse of statute of limitations |  | (63) |  |  | (14) |
Tax settlements |  | (20) |  |  | (13) |
Foreign exchange gains and losses |  | — |  |  | 5 |
Ending balance |  | $ | 683 |  |  | $ | 501 |
Our policy is to record interest and penalties related to uncertain tax positions within the provision for income taxes. As of November 29, 2024 and December 1, 2023, the combined amounts of accrued interest and penalties included in long-term income taxes payable related to tax positions taken on our tax returns were not material. While we file federal, state and local income tax returns globally, our major tax jurisdictions are Ireland, California and the United States. We are subject to the examination of our income tax returns by various domestic and foreign tax authorities with 2020 being the earliest fiscal year open for examination in all of our major tax jurisdictions. We regularly assess the likelihood of outcomes resulting from examinations to determine the adequacy of our provision for income taxes and have reserved for potential adjustments that may result. While we believe our tax estimates are reasonable, we cannot provide assurance that the final determination of any of these examinations will not have an adverse effect on our financial position and results of operations. 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 sheet classification of our tax assets and liabilities. 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. Although the timing of resolution, settlement and closing of audits is not certain, it is reasonably possible that the underlying unrecognized tax benefits may decrease by up to $50 million over the next 12 months.

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