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Income Taxes | 12 Months Ended
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Jan. 31, 2020
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The provision for income taxes consists of the following:
| Fiscal year ended January 31,
2020 |  | 2019 |  | 2018
Federal: |  |  |  |  |
Current | $ | (2.3 | ) |  | $ | (13.3 | ) |  | $ | (0.8 | )
Deferred | 7.6 |  |  | (6.7 | ) |  | (19.3 | )
State: |  |  |  |  |
Current | (0.4 | ) |  | (1.8 | ) |  | (0.3 | )
Deferred | 2.1 |  |  | 0.1 |  |  | 2.2 |
Foreign: |  |  |  |  |
Current | 69.6 |  |  | 65.3 |  |  | 50.9 |
Deferred | 3.7 |  |  | (5.5 | ) |  | (23.1 | )
| $ | 80.3 |  |  | $ | 38.1 |  |  | $ | 9.6 |
Foreign pretax (loss) income was $475.5 million in fiscal 2020, $181.4 million in fiscal 2019, and $(76.2) million in fiscal 2018. The differences between the U.S. statutory rate and the aggregate income tax provision are as follows:
| Fiscal year ended January 31,
2020 |  | 2019 |  | 2018
Income tax provision (benefit) at U.S. Federal statutory rate | $ | 61.9 |  |  | $ | (9.0 | ) |  | $ | (188.4 | )
State income tax benefit, net of the U.S. Federal benefit | (5.3 | ) |  | (11.4 | ) |  | (21.9 | )
Foreign income taxed at rates different from the U.S. statutory rate including GILTI | (41.2 | ) |  | 117.8 |  |  | (53.3 | )
Valuation allowance adjustment | 65.3 |  |  | 18.8 |  |  | (82.5 | )
Transition tax and revisions due to subsequent regulations | 9.6 |  |  | (16.0 | ) |  | 408.4 |
Tax effect of non-deductible stock-based compensation | 24.9 |  |  | 7.6 |  |  | 20.7 |
Stock compensation windfall / shortfall | (22.4 | ) |  | (39.4 | ) |  | (67.7 | )
Research and development tax credit benefit | (19.8 | ) |  | (23.5 | ) |  | (11.3 | )
Closure of income tax audits and changes in uncertain tax positions | (2.0 | ) |  | (12.7 | ) |  | 1.2 |
Tax effect of officer compensation in excess of $1.0 million | 3.4 |  |  | 5.0 |  |  | 2.2 |
Non-deductible expenses | 5.4 |  |  | 1.5 |  |  | 2.1 |
Other | 0.5 |  |  | (0.6 | ) |  | 0.1 |
| $ | 80.3 |  |  | $ | 38.1 |  |  | $ | 9.6 |
Significant components of Autodesk’s deferred tax assets and liabilities are as follows:
| January 31,
2020 |  | 2019
Stock-based compensation | $ | 32.8 |  |  | $ | 25.9 |
Research and development tax credit carryforwards | 263.4 |  |  | 238.7 |
Foreign tax credit carryforwards | 253.9 |  |  | 198.6 |
Accrued compensation and benefits | 3.4 |  |  | 6.5 |
Other accruals not currently deductible for tax | 28.4 |  |  | 19.0 |
Purchased technology and capitalized software | 37.7 |  |  | 32.6 |
Fixed assets | 11.6 |  |  | 15.0 |
Lease liability | 106.4 |  |  | — |
Tax loss carryforwards | 241.2 |  |  | 237.2 |
Deferred revenue | 29.2 |  |  | 49.0 |
Other | 28.0 |  |  | 28.4 |
Total deferred tax assets | 1,036.0 |  |  | 850.9 |
Less: valuation allowance | (883.4 | ) |  | (797.8 | )
Net deferred tax assets | 152.6 |  |  | 53.1 |
Indefinite lived intangibles | (76.5 | ) |  | (67.6 | )
Right-of-use assets | (101.3 | ) |  | — |
Unremitted earnings of foreign subsidiaries | (0.9 | ) |  | — |
Total deferred tax liabilities | (178.7 | ) |  | (67.6 | )
Net deferred tax assets (liabilities) | $ | (26.1 | ) |  | $ | (14.5 | )
Autodesk’s fiscal 2020 tax expense is primarily driven by tax expense in foreign locations, withholding taxes on payments made to the U.S. or to Singapore from foreign sources, and tax amortization on indefinite-lived intangibles offset by a tax benefit resulting from valuation allowance release in Singapore. 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, Autodesk determined that a valuation allowance was required on the accumulated U.S., Canada and Netherlands tax attributes as of January 31, 2020. In the current year, the U.S. created incremental deferred tax assets, primarily operating losses, foreign tax and R&D credits, Canada generated R&D credits and the Netherlands generated non-deductible interest expense. These U.S., Canada and Netherlands deferred tax attributes have been offset by a full valuation allowance. The valuation allowance increased by $85.6 million in fiscal 2020 primarily due to the generation of deferred tax attributes inclusive of the valuation allowance release of$42.0 million benefit in Singapore. The valuation allowance increased by $163.6 million, and decreased by $113.8 million in fiscal 2019 and 2018, respectively, primarily related to U.S. and Singapore tax attributes generated in fiscal year 2019 and the Tax Act reduction in rate in fiscal 2018. Given the increase in our global earnings in the current year and the expectation of continued increase in global earnings, the Company anticipates a significant increase in U.S. taxable income beginning fiscal 2021. Moreover, if we are subject to GILTI in fiscal 2021, the inclusion of foreign earnings in our U.S. tax basis will be positive evidence in our evaluation of our need for a valuation allowance on our U.S. deferred tax assets. 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 deferred tax assets each quarter, both in the U.S. and in foreign jurisdictions, based on all available evidence, both positive and negative. Realization of foreign net deferred tax assets of $56.4 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 determine that it is not more likely than not to realize such deferred tax assets. The Tax Act provided broad and significant changes to the U.S. corporate income tax regime. In light of our fiscal year-end, the Tax Act reduced the statutory federal corporate rate from 35% to 34% for fiscal 2018 and to 21% for fiscal 2019 and forward. The Tax Act also, among many other provisions, imposed a one-time mandatory tax on accumulated earnings of foreign subsidiaries (commonly referred to as the "transition tax") to which we were subject in our fiscal year 2018, subjects the deemed intangible income of our foreign subsidiaries to current U.S. taxation (commonly referred to as "GILTI"), provides for a full dividends received deduction upon repatriation of untaxed earnings of our foreign subsidiaries, imposes a minimum taxation (without most tax credits) on modified taxable income, which is generally taxable income without deductions for payments to related foreign companies (commonly referred to as “BEAT”), modifies the accelerated depreciation deduction rules, and made updates to the deductibility of certain expenses. We completed our determination of the accounting implications of the Tax Act on our tax accruals in our fiscal year January 31, 2019; any subsequent adjustments would be solely related to issuance of regulations related to provision of Tax Act or tax audits in U.S. or foreign jurisdictions.. We recorded a tax benefit of the Tax Act in our financial statements as of January 31, 2018 of approximately $32.3 million mainly driven by the corporate rate re-measurement (from 35% to 21%) of the indefinite-lived intangible deferred tax liability. As of January 31, 2018, we estimated taxable income associated with offshore earnings of $831.5 million, and as of January 31, 2019, we adjusted the taxable income to $819.6 million for transition tax. We had an incremental adjustment to our transition tax in our fiscal year 2020 of $45.5 million, as a result of additional Treasury Regulations published this year. Transition tax related to adjustments in the offshore earnings or correlated foreign tax credits resulted in no impact to the effective tax rate as it is primarily offset by net operating losses that are subject to a full valuation allowance. As a result of transition tax, we recorded a deferred tax asset of approximately $43.2 million for foreign tax credits, which are also subject to a full valuation allowance. We have not had a GILTI inclusion in fiscal 2019 and fiscal 2020 resulting in no impact to the effective tax rates. We anticipate that the U.S. Department of Treasury and other standard-setting bodies will continue to interpret or issue guidance on how provisions of the Tax Act will be applied or otherwise administered. As future guidance is issued, we may make adjustments to amounts that we have previously recorded that may materially impact our financial statements in the period in which the adjustments are made. As of January 31, 2020, Autodesk had $742.8 million of cumulative U.S. federal tax loss carryforwards and $1,486.2 million of cumulative U.S. state tax loss carryforwards, which may be available to reduce future income tax liabilities in federal and state jurisdictions. The pre-fiscal 2019 U.S. federal tax loss carryforward will expire beginning fiscal 2021 through fiscal 2037. U.S. federal losses generated beginning in fiscal 2019 do not expire and are carried forward indefinitely. The U.S. state tax loss carryforward will expire beginning fiscal 2021 through fiscal 2039. In addition to U.S. federal and state tax loss carryforwards, Ireland, Netherlands, and Singapore jurisdictions incurred federal tax losses totaling $277.7 million, which may be available to reduce future income tax liabilities. As discussed above, with the exception of our Irish and Singaporean losses, of $37.9million and $195.6 million, respectively, these cumulative assets have full valuation allowance against them on our balance sheet as the Company has determined it is more likely than not that these losses will not be utilized. As of January 31, 2020, Autodesk had $186.3 million of cumulative U.S. federal research tax credit carryforwards, $98.0 million of cumulative California state research tax credit carryforwards, and $58.4 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 2040, the state credit carryforwards may reduce future California income tax liabilities indefinitely, and the Canadian tax credit carryforwards will expire beginning fiscal 2028 through fiscal 2040. Autodesk also has $267.1 million of cumulative U.S. federal foreign tax credit carryforwards, which may be available to reduce future U.S. tax liabilities. These foreign tax credits will expire beginning fiscal 2021 through fiscal 2030. 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 than 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. There were no permanent losses of U.S. federal and state tax attributes as a result of any ownership changes occurring through the balance sheet date. As of January 31, 2020, the Company had $220.6 million of gross unrecognized tax benefits, of which $203.7 million would reduce our valuation allowance, if recognized. The remaining $16.9 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,
| 2020 |  | 2019 |  | 2018
Gross unrecognized tax benefits at the beginning of the fiscal year | $ | 209.0 |  |  | $ | 337.6 |  |  | $ | 261.4 |
Increases for tax positions of prior years | 2.8 |  |  | 7.9 |  |  | 22.8 |
Decreases for tax positions of prior years | (0.4 | ) |  | (146.3 | ) |  | (22.5 | )
Increases for tax positions related to the current year | 11.1 |  |  | 10.3 |  |  | 78.4 |
Decreases relating to settlements with taxing authorities | — |  |  | — |  |  | (0.8 | )
Reductions as a result of lapse of the statute of limitations | (1.9 | ) |  | (0.5 | ) |  | (1.7 | )
Gross unrecognized tax benefits at the end of the fiscal year | $ | 220.6 |  |  | $ | 209.0 |  |  | $ | 337.6 |
It is the Company's continuing practice to recognize interest and/or penalties related to income tax matters in income tax expense. Autodesk had $2.3 million, $3.1 million, and $2.8 million, net of tax benefit, accrued for interest and penalties related to unrecognized tax benefits as of January 31, 2020, 2019, and 2018, respectively. There was $(0.8) million, $0.3 million, and $0.3 million of net expense for interest and penalties related to tax matters recorded through the consolidated statements of operations for the years ended January 31, 2020, 2019, and 2018, respectively. Autodesk's U.S. and state income tax returns for fiscal year 2001 through fiscal year 2020 remain open to examination due to either net operating loss or credit carryforward. The Internal Revenue Service has examined the Company's U.S. consolidated federal income tax returns for fiscal years 2014 and 2015. This audit was finalized on January 31, 2019, and impacts from the finalization of the audit were recorded in the fiscal 2019 financial statements. Autodesk files tax returns in multiple foreign taxing jurisdictions with open tax years ranging from fiscal year 2006 to 2020. As a result of certain business and employment actions and capital investments undertaken by Autodesk, income earned in certain Europe and Asia Pacific countries was subject to reduced tax rates through fiscal 2019. Historically, the Company incurred $11.4 million net benefit ($0.05 basic net income per share) in fiscal 2019 from the tax status of these business arrangements, and $0.0 million ($0.00 basic net income per share) in fiscal 2018.

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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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