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INCOME TAXES (Tables) | 12 Months Ended
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May 31, 2024
Income Tax Disclosure [Abstract] |
Schedule of Income before Income Tax, Domestic and Foreign | Income before income taxes is as follows:
| YEAR ENDED MAY 31,
(Dollars in millions) | 2024 | 2023 | 2022
Income before income taxes: |  |  |
United States | $ | 5,588 |  | $ | 4,663 |  | $ | 6,020 |
Foreign | 1,112 |  | 1,538 |  | 631 |
TOTAL INCOME BEFORE INCOME TAXES | $ | 6,700 |  | $ | 6,201 |  | $ | 6,651 |
Schedule of Components of Income Tax Expense | The provision for income taxes is as follows:
| YEAR ENDED MAY 31,
(Dollars in millions) | 2024 | 2023 | 2022
Current: |  |  |
United States |  |  |
Federal | $ | 782 |  | $ | 430 |  | $ | 231 |
State | 201 |  | 184 |  | 98 |
Foreign | 514 |  | 634 |  | 926 |
Total Current | 1,497 |  | 1,248 |  | 1,255 |
Deferred: |  |  |
United States |  |  |
Federal | (422) |  | (162) |  | (522) |
State | (61) |  | (25) |  | (16) |
Foreign | (14) |  | 70 |  | (112) |
Total Deferred | (497) |  | (117) |  | (650) |
TOTAL INCOME TAX EXPENSE | $ | 1,000 |  | $ | 1,131 |  | $ | 605 |
Schedule of Effective Income Tax Rate Reconciliation | A reconciliation from the U.S. statutory federal income tax rate to the effective income tax rate is as follows:
| YEAR ENDED MAY 31,
| 2024 | 2023 | 2022
Federal income tax rate | 21.0 | % | 21.0 | % | 21.0 | %
State taxes, net of federal benefit | 1.4 | % | 1.5 | % | 1.4 | %
Foreign earnings | -2.5 | % | 1.7 | % | -1.8 | %
Subpart F deferred tax benefit | 0.0 | % | 0.0 | % | -4.7 | %
Foreign-derived intangible income benefit | -4.8 | % | -6.1 | % | -4.1 | %
Excess tax benefits from stock-based compensation | -0.5 | % | -1.1 | % | -4.9 | %
Income tax audits and contingency reserves | 1.8 | % | 1.0 | % | 1.5 | %
U.S. research and development tax credit | -2.1 | % | -1.2 | % | -1.0 | %
Other, net | 0.6 | % | 1.4 | % | 1.7 | %
EFFECTIVE INCOME TAX RATE | 14.9 | % | 18.2 | % | 9.1 | %
Schedule of Deferred Income Tax Assets and Liabilities | Deferred income tax assets and liabilities comprise the following as of:
| MAY 31,
(Dollars in millions) | 2024 | 2023
Deferred tax assets: |  |
Inventories | $ | 69 |  | $ | 79 |
Sales return reserves | 125 |  | 89 |
Deferred compensation | 347 |  | 321 |
Stock-based compensation | 290 |  | 261 |
Reserves and accrued liabilities | 113 |  | 144 |
Operating lease liabilities | 474 |  | 511 |
Intangibles | 236 |  | 255 |
Capitalized research and development expenditures | 878 |  | 548 |
Net operating loss carry-forwards | 21 |  | 15 |
Subpart F deferred tax | 409 |  | 374 |
Other | 214 |  | 183 |
Total deferred tax assets | 3,176 |  | 2,780 |
Valuation allowance | (29) |  | (22) |
Total deferred tax assets after valuation allowance | 3,147 |  | 2,758 |
Deferred tax liabilities: |  |
Foreign withholding tax on undistributed earnings of foreign subsidiaries | (131) |  | (186) |
Property, plant and equipment | (290) |  | (276) |
Right-of-use assets | (397) |  | (441) |
Other | (9) |  | (56) |
Total deferred tax liabilities | (827) |  | (959) |
NET DEFERRED TAX ASSET (1) | $ | 2,320 |  | $ | 1,799 |
(1)Of the total $2,320 million net deferred tax asset for the period ended May 31, 2024, $2,465 million was included within Deferred income taxes and other assets and $(145) million was included within Deferred income taxes and other liabilities on the Consolidated Balance Sheets. Of the total $1,799 million net deferred tax asset for the period ended May 31, 2023, $2,026 million was included within Deferred income taxes and other assets and $(227) million was included within Deferred income taxes and other liabilities on the Consolidated Balance Sheets.
Unrecognized Tax Benefits Reconciliation | The following is a reconciliation of the changes in the gross balance of unrecognized tax benefits as of:
| MAY 31,
(Dollars in millions) | 2024 | 2023 | 2022
Unrecognized tax benefits, beginning of the period | $ | 936 |  | $ | 848 |  | $ | 896 |
Gross increases related to prior period tax positions | 35 |  | 95 |  | 71 |
Gross decreases related to prior period tax positions | (13) |  | (17) |  | (145) |
Gross increases related to current period tax positions | 77 |  | 50 |  | 62 |
Settlements | (22) |  | (18) |  | (17) |
Lapse of statute of limitations | (24) |  | (7) |  | (10) |
Changes due to currency translation | 1 |  | (15) |  | (9) |
UNRECOGNIZED TAX BENEFITS, END OF THE PERIOD | $ | 990 |  | $ | 936 |  | $ | 848 |

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