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Income Taxes | 12 Months Ended
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Jan. 31, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The provision for income taxes consists of the following:
| Fiscal year ended January 31,
2018 |  | 2017 |  | 2016
Federal: |  |  |  |  |
Current | $ | (0.8 | ) |  | $ | 1.6 |  |  | $ | (4.7 | )
Deferred | (19.3 | ) |  | 8.4 |  |  | 220.9 |
State: |  |  |  |  |
Current | (0.3 | ) |  | (1.9 | ) |  | 0.5 |
Deferred | 2.2 |  |  | 1.3 |  |  | 20.9 |
Foreign: |  |  |  |  |
Current | 50.9 |  |  | 93.9 |  |  | 68.4 |
Deferred | (23.1 | ) |  | (45.0 | ) |  | 4.2 |
| $ | 9.6 |  |  | $ | 58.3 |  |  | $ | 310.2 |
Foreign pretax (loss) income was $(76.2) million in fiscal 2018, $(27.6) million in fiscal 2017, and $218.2 million in fiscal 2016. The differences between the U.S. statutory rate and the aggregate income tax provision are as follows:
| Fiscal year ended January 31,
2018 |  | 2017 |  | 2016
Income tax provision (benefit) at U.S. Federal statutory rate | $ | (188.4 | ) |  | $ | (177.0 | ) |  | $ | (7.1 | )
State income tax benefit, net of the U.S. Federal benefit | (21.9 | ) |  | (17.3 | ) |  | (7.6 | )
Foreign income taxed at rates different from the U.S. statutory rate | (53.3 | ) |  | 22.3 |  |  | (29.4 | )
U.S. valuation allowance | (82.5 | ) |  | 233.0 |  |  | 345.0 |
Transition tax | 408.4 |  |  | — |  |  | — |
Increase in attributes due to ASU 2016-9 adoption |  |  |  | (119.4 | ) |  | — |
Change in valuation allowance from ASU 2016-9 adoption | — |  |  | 119.4 |  |  | — |
Tax effect of non-deductible stock-based compensation | 20.7 |  |  | 18.8 |  |  | 19.3 |
Stock compensation windfall / shortfall | (67.7 | ) |  | (23.0 | ) |  | — |
Research and development tax credit benefit | (11.3 | ) |  | (10.3 | ) |  | (9.4 | )
Closure of income tax audits and changes in uncertain tax positions | 1.2 |  |  | 8.2 |  |  | (4.7 | )
Tax effect of officer compensation in excess of $1.0 million | 2.2 |  |  | 2.2 |  |  | 1.4 |
Non-deductible expenses | 2.1 |  |  | 2.0 |  |  | 2.6 |
Other | 0.1 |  |  | (0.6 | ) |  | 0.1 |
| $ | 9.6 |  |  | $ | 58.3 |  |  | $ | 310.2 |
Significant components of Autodesk’s deferred tax assets and liabilities are as follows:
| January 31,
2018 |  | 2017
Stock-based compensation | $ | 26.7 |  |  | $ | 37.6 |
Research and development tax credit carryforwards | 170.3 |  |  | 136.7 |
Foreign tax credit carryforwards | 162.2 |  |  | 127.3 |
Accrued compensation and benefits | 25.9 |  |  | 39.5 |
Other accruals not currently deductible for tax | 22.9 |  |  | 18.7 |
Purchased technology and capitalized software | 43.4 |  |  | 76.9 |
Fixed assets | 16.5 |  |  | 24.3 |
Tax loss carryforwards | 85.7 |  |  | 173.6 |
Deferred revenue | 120.3 |  |  | 128.3 |
Other | 32.4 |  |  | 27.6 |
Total deferred tax assets | 706.3 |  |  | 790.5 |
Less: valuation allowance | (634.2 | ) |  | (748.0 | )
Net deferred tax assets | 72.1 |  |  | 42.5 |
Indefinite lived intangibles | (57.0 | ) |  | (70.1 | )
Total deferred tax liabilities | (57.0 | ) |  | (70.1 | )
Net deferred tax assets | $ | 15.1 |  |  | $ | (27.6 | )
Autodesk’s tax expense is primarily driven by the reduction in the U.S. tax rate from 35% to 21% on the deferred tax liabilities related to indefinite lived intangibles offset by tax expense in foreign locations, withholding taxes paid on payments made to the U.S. from foreign sources, and tax amortization on indefinite-lived intangibles. Autodesk regularly assesses the need for a valuation allowance against its deferred tax assets. In making that assessment, Autodesk considers both positive and negative evidence, whether it is more likely than not that some or all of the deferred tax assets will not be realized. In evaluating the need for a valuation allowance, Autodesk considered cumulative losses arising from the Company's business model transition as a significant piece of negative evidence. Consequently, in the fiscal year 2016, Autodesk determined that a valuation allowance was required on the accumulated domestic tax attributes. In the current year, the U.S. created incremental deferred tax assets, primarily foreign tax and R&D credits, and those deferred tax attributes have also been offset by a full valuation allowance. As a result, Autodesk has no material federal income tax expense or benefit in the current fiscal year, other than the deferred tax liabilities related to indefinite lived intangibles and the revaluation of these liabilities as a result of U.S. tax reform. The valuation allowance decreased by $113.8 million in fiscal 2018 primarily due to a change in tax rates used to value deferred tax attributes. The valuation allowance increased by $352.4 million, and $327.2 million in fiscal 2017, and 2016, respectively, primarily related to U.S. and Canadian deferred tax attributes. As Autodesk continually strives to optimize the overall business model, tax planning strategies may become feasible and prudent allowing the Company to realize many of the deferred tax assets that are offset by a valuation allowance; therefore, Autodesk will continue to evaluate the ability to utilize the net deferred tax assets each quarter, both in the U.S. and in foreign jurisdictions, based on all available evidence, both positive and negative. The Tax Act was signed into law on December 22, 2017 and provides broad and significant changes to the U.S. corporate income tax regime. The Tax Act reduces the statutory federal corporate rate from 35% to 21% effective fiscal 2019 year and forward and provides for a blended rate of 33.81% to fiscal 2018 year. The Tax Act also, among many other provisions, imposes a one-time mandatory tax on accumulated earnings of foreign subsidiaries (commonly referred to as a "transition tax"), introduces new tax regimes changing how foreign earnings are subject to U.S. tax, modifies the accelerated depreciation deduction rules, and makes updates to the deductibility of certain expenses. The SEC staff acknowledged the challenges companies face incorporating the effects of the Tax Act by the financial reporting deadlines. In response, on December 22, 2017, the SEC staff issued SAB 118 to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed in reasonable detail to complete accounting for certain income tax effects of the Tax Act. Autodesk has not completed the determination of the accounting implications of the Tax Act but was able to calculate a reasonable estimate and recorded a provisional tax benefit of the Tax Act in the financial statements of approximately $32.3 million mainly driven by the corporate rate remeasurement of the indefinite-lived intangible deferred tax liability. The provisional amounts recorded are based on the Company’s current interpretation and understanding of the Tax Act and may change as the Company receives additional clarification and implementation guidance and finalizes the analysis of all impacts and positions with regard to the Tax Act. The tax impact of the mandatory one-time tax on accumulated earnings of foreign subsidiaries is primarily offset by other current year operating losses and fully valued net operating loss carryforwards resulting in no impact to the effective tax rate. As additional regulatory guidance is issued, the Company will continue to collect and analyze necessary data and may adjust provisional amounts previously recorded in the period in which the adjustments are made. Pursuant to SAB 118, the Company will complete the accounting for the tax effects of all provisions of the Tax Act within the required measurement period not to extend beyond one year from the enactment date. Realization of foreign non-current net deferred tax assets of $68.0 million is dependent upon the Company's ability to generate future taxable income in appropriate tax jurisdictions to obtain benefit from the reversal of temporary differences, net operating loss carryforwards and tax credits. The amount of deferred tax assets considered realizable is subject to adjustment in future periods if estimates of future taxable income are reduced and Autodesk then determines that it is not more likely than not to realize such deferred tax assets. As of January 31, 2018, Autodesk had $179.4 million of cumulative federal tax loss carryforwards and $939.1 million of cumulative state tax loss carryforwards, which may be available to reduce future income tax liabilities in federal and state jurisdictions. As discussed above, these cumulative assets have full valuation allowance against them on our balance sheet as the Company has determined it is more likely that not that these losses will not be utilized. These federal and state tax loss carryforwards will expire beginning fiscal 2021 through fiscal 2038 and fiscal 2020 through fiscal 2039, respectively. As of January 31, 2018, Autodesk had $138.4 million of cumulative federal research tax credit carryforwards, $72.6 million of cumulative California state research tax credit carryforwards, and $58.1 million of cumulative Canadian federal tax credit carryforwards, which may be available to reduce future income tax liabilities in the respective jurisdictions. The federal tax credit carryforwards will expire beginning fiscal 2021 through fiscal 2039, the state credit carryforwards may reduce future California income tax liabilities indefinitely, and the Canadian tax credit carryforwards will expire beginning fiscal 2027 through fiscal 2039. Autodesk also has $336.9 million of cumulative foreign tax credit carryforwards, which may be available to reduce future U. S. tax liabilities. The foreign tax credit will expire beginning fiscal 2019 through fiscal 2029. As discussed above, these cumulative assets have full valuation allowance against them on our balance sheet as the Company has determined it is more likely that not that these losses will not be utilized. Utilization of net operating losses and tax credits may be subject to an annual limitation due to ownership change limitations provided in the Internal Revenue Code and similar state provisions. This annual limitation may result in the expiration of net operating losses and credits before utilization. No ownership change has occurred through the balance sheet date that would limit a material amount of U.S. federal and state tax attributes. As of January 31, 2018, the Company had $337.6 million of gross unrecognized tax benefits, of which $304.8 million would reduce our valuation allowance, if recognized. The remaining $32.8 million would impact the effective tax rate. It is possible that the amount of unrecognized tax benefits will change in the next twelve months; however, an estimate of the range of the possible change cannot be made at this time. A reconciliation of the beginning and ending amount of the gross unrecognized tax benefits is as follows:
| Fiscal Year Ended January 31,
| 2018 |  | 2017 |  | 2016
Gross unrecognized tax benefits at the beginning of the fiscal year | $ | 261.4 |  |  | $ | 254.3 |  |  | $ | 245.8 |
Increases for tax positions of prior years | 22.8 |  |  | 11.9 |  |  | 1.4 |
Decreases for tax positions of prior years | (22.5 | ) |  | (4.1 | ) |  | (7.0 | )
Increases for tax positions related to the current year | 78.4 |  |  | 11.1 |  |  | 15.8 |
Decreases relating to settlements with taxing authorities | (0.8 | ) |  | (10.8 | ) |  | (0.5 | )
Reductions as a result of lapse of the statute of limitations | (1.7 | ) |  | (1.0 | ) |  | (1.2 | )
Gross unrecognized tax benefits at the end of the fiscal year | $ | 337.6 |  |  | $ | 261.4 |  |  | $ | 254.3 |
It is the Company's continuing practice to recognize interest and/or penalties related to income tax matters in income tax expense. Autodesk had $2.8 million, $2.5 million, and $3.3 million, net of tax benefit, accrued for interest and penalties related to unrecognized tax benefits as of January 31, 2018, 2017, and 2016, respectively. There was $0.3 million, $1.5 million, and $1.3 million of net expense for interest and penalties related to tax matters recorded through the consolidated statement of operations for the years ended January 31, 2018, 2017, and 2016 respectively. Autodesk's U.S. and state income tax returns for fiscal year 2003 through fiscal year 2018 remain open to examination. The Internal Revenue Service has started an examination of the Company's U.S. consolidated federal income tax returns for fiscal years 2014 and 2015. While it is possible that the Company's tax positions may be challenged, the Company believes its positions are consistent with the tax law, and the balance sheet reflects appropriate liabilities for uncertain federal tax positions for the years being examined. Autodesk files tax returns in multiple foreign taxing jurisdictions with open tax years ranging from fiscal year 2005 to 2018. As a result of certain business and employment actions and capital investments undertaken by Autodesk, income earned in certain Europe and Asia Pacific countries is subject to reduced tax rates through fiscal 2019. In fiscal 2018, the Company incurred no net benefit from the tax status of these business arrangements, compared to $27.1 million benefit ($0.12 basic net income per share) in fiscal 2017, and none in fiscal 2016.

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