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Income Taxes | 12 Months Ended
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Jan. 31, 2023
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The provision for income taxes consists of the following:
| Fiscal year ended January 31,
2023 |  | 2022 |  | 2021
Federal: |  |  |  |  |
Current | $ | 219 |  |  | $ | (1) |  |  | $ | 10 |
Deferred | (222) |  |  | (5) |  |  | (740) |
State: |  |  |  |  |
Current | 28 |  |  | 2 |  |  | 19 |
Deferred | (19) |  |  | 1 |  |  | (58) |
Foreign: |  |  |  |  |
Current | 151 |  |  | 83 |  |  | 88 |
Deferred | (34) |  |  | (12) |  |  | 20 |
Income tax provision (benefit) | $ | 123 |  |  | $ | 68 |  |  | $ | (661) |
Foreign pretax income was $755 million in fiscal 2023, $560 million in fiscal 2022, and $528 million in fiscal 2021. The differences between the U.S. statutory rate and the aggregate income tax provision are as follows:
| Fiscal year ended January 31,
2023 |  | 2022 |  | 2021
Income tax provision at U.S. Federal statutory rate | $ | 199 |  |  | $ | 119 |  |  | $ | 115 |
State income tax benefit, net of the U.S. Federal benefit (1) | (3) |  |  | 2 |  |  | (43) |
Foreign income taxed at rates different from the U.S. statutory rate (1) | 22 |  |  | (25) |  |  | (11) |
Valuation allowance adjustment (1) | (38) |  |  | — |  |  | (637) |
Tax effect of non-deductible stock-based compensation (1) | 34 |  |  | 32 |  |  | 25 |
Stock compensation (windfall) / shortfall (1) | 10 |  |  | (43) |  |  | (35) |
Research and development tax credit benefit (1) | (12) |  |  | (19) |  |  | (16) |
Closure of income tax audits and changes in uncertain tax positions (1) | 11 |  |  | — |  |  | — |
Tax effect of officer compensation in excess of $1.0 million | 10 |  |  | 7 |  |  | 5 |
Non-deductible expenses | 1 |  |  | 5 |  |  | 2 |
Global intangible low-taxed income, foreign derived intangible income | (106) |  |  | 24 |  |  | (65) |
India withholding tax refund | — |  |  | (44) |  |  | — |
Acquisition-related integrations | (2) |  |  | 9 |  |  | — |
Other (1) | (3) |  |  | 1 |  |  | (1) |
Income tax provision (benefit) | $ | 123 |  |  | $ | 68 |  |  | $ | (661) |
_______________ (1) The above comparative for fiscal 2021 has reclassified to conform to the current period presentation. Autodesk’s fiscal 2023 tax expense is primarily driven by the U.S. and foreign tax expense, including withholding taxes on payments made to the United States or to Singapore from foreign sources, an increase in tax expense relating to stock-based compensation, final U.S. foreign tax credit regulations enacted in fiscal 2023, offset by the benefit from the Canada valuation allowance release and a U.S. foreign derived intangible income benefit driven by the capitalization of research and development expenditures starting in fiscal 2023 as required by the Tax Act. Significant components of Autodesk’s deferred tax assets and liabilities are as follows:
| January 31,
2023 |  | 2022
Stock-based compensation | $ | 54 |  |  | $ | 56 |
Research and development tax credit carryforwards | 103 |  |  | 235 |
Foreign tax credit carryforwards | — |  |  | 59 |
Accrued compensation and benefits | 7 |  |  | 6 |
Other accruals not currently deductible for tax | 26 |  |  | 23 |
Capitalized research and development (1) | 340 |  |  | 123 |
Fixed assets | 22 |  |  | 24 |
Lease liability | 92 |  |  | 106 |
Tax loss carryforwards | 38 |  |  | 68 |
Deferred revenue | 653 |  |  | 387 |
Other | 23 |  |  | 23 |
Total deferred tax assets | 1,358 |  |  | 1,110 |
Less: valuation allowance | (148) |  |  | (188) |
Net deferred tax assets | 1,210 |  |  | 922 |
Indefinite lived intangibles | (109) |  |  | (95) |
Purchased technology (1) | (26) |  |  | (34) |
Right-of-use assets | (58) |  |  | (74) |
Unremitted earnings of foreign subsidiaries | (2) |  |  | (6) |
Deferred taxes on foreign earnings | (33) |  |  | (1) |
Total deferred tax liabilities | (228) |  |  | (210) |
Net deferred tax assets | $ | 982 |  |  | $ | 712 |
_______________ (1) The above comparative for fiscal 2022 has reclassified to conform to the current period presentation. Autodesk regularly assesses the need for a valuation allowance against its deferred tax assets. In making that assessment, Autodesk evaluates whether it is more likely than not that some or all of the deferred tax assets will not be realized based on all available positive and negative evidence. In evaluating the need for a valuation allowance, prior to fiscal 2021 Autodesk considered global cumulative losses arising from the Company’s business model transition as a significant piece of negative evidence. During fiscal 2021 Autodesk recognized cumulative earnings on a global basis and was profitable in the U.S. and forecasted future cumulative earnings in U.S. jurisdiction for future periods. In the fourth quarter of fiscal 2021, Autodesk released the valuation allowance against the Company’s U.S. deferred tax assets, due to positive evidence indicating that these deferred tax assets are more likely than not to be realized. The Company has retained a valuation allowance against California and Michigan deferred tax assets and deferred tax assets that will convert into a capital loss upon reversal as we do not have sufficient income of the appropriate character to benefit these deferred tax assets. We released our Canada valuation allowance in fiscal 2023 due to positive evidence supporting the utilization of the R&D credits before they expire, resulting in a $38 million non-cash benefit to earnings. The Company continues to retain a valuation allowance of $23 million against foreign deferred tax assets in the Netherlands and Australia as of January 31, 2023. The valuation allowance decreased by $40 million in fiscal 2023, primarily due to the release of the Canada valuation allowance of $38 million. The valuation allowance increased by $2.0 million in fiscal 2022, primarily due to the generation of deferred tax attributes and the establishment of a valuation allowance in Australia. The valuation allowance decreased by $697 million in fiscal 2021, primarily due to the U.S. valuation allowance release of $679 million. The company has elected to recognize any potential GILTI obligations as an expense in the period it is incurred. As of January 31, 2023, Autodesk had $14 million of cumulative U.S. federal tax loss carryforwards and $355 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 2035 through fiscal 2039. 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 2025 through fiscal 2043. In addition to U.S. federal and state tax loss carryforwards, the Netherlands, Norway, and other foreign jurisdictions incurred tax losses totaling $100 million, which may be available to reduce future income tax liabilities. Our Norway losses, of $51 million, have an indefinite expiration period. The pre-fiscal 2023 Netherlands losses of $43 million will expire beginning in fiscal 2026 through fiscal 2028. Netherlands losses generated beginning in fiscal 2023 do not expire and are carried forward indefinitely. All Netherlands losses have a 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, 2023, Autodesk had $115 million of cumulative California state research tax credit carryforwards, and $46 million of cumulative Canadian federal research, which may be available to reduce future income tax liabilities in the respective jurisdictions. The state research tax credit carryforwards may reduce future California income tax liabilities indefinitely, and the Canadian research tax credit carryforwards will expire beginning fiscal 2031 through fiscal 2043. Autodesk also has $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 2027 through fiscal 2032. As discussed above, the California 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 and credits 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 result in permanent losses of the U.S. federal and state tax attributes. As of January 31, 2023, the Company had $223 million of gross unrecognized tax benefits, of which $38 million would reduce our valuation allowance, if recognized. The remaining $185 million would impact the effective tax rate. The amount of unrecognized tax benefits will decrease in the next twelve months for statute lapse of approximately $4 million. A reconciliation of the beginning and ending amount of the gross unrecognized tax benefits is as follows:
| Fiscal Year Ended January 31,
| 2023 |  | 2022 |  | 2021
Gross unrecognized tax benefits at the beginning of the fiscal year | $ | 207 |  |  | $ | 198 |  |  | $ | 221 |
Increases for tax positions of prior years | 8 |  |  | 9 |  |  | 13 |
Decreases for tax positions of prior years | (3) |  |  | (7) |  |  | (41) |
Increases for tax positions related to the current year | 17 |  |  | 7 |  |  | 6 |
Decreases relating to settlements with taxing authorities | (5) |  |  | — |  |  | — |
Reductions as a result of lapse of the statute of limitations | (1) |  |  | — |  |  | (1) |
Gross unrecognized tax benefits at the end of the fiscal year | $ | 223 |  |  | $ | 207 |  |  | $ | 198 |
It is the Company’s continuing practice to recognize interest and/or penalties related to income tax matters in income tax expense. Autodesk had $5 million, $7 million, and $5 million, net of tax benefit, accrued for interest and penalties related to unrecognized tax benefits as of January 31, 2023, 2022, and 2021, respectively. There was $(2) million, $2 million, and $2 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, 2023, 2022, and 2021, respectively. Autodesk’s U.S. and state income tax returns for fiscal 2002 through fiscal 2023 remain open to examination due to either net operating loss or credit carryforward. The Internal Revenue Service notified the Company of examination of the Company’s consolidated federal income tax returns for fiscal 2020 and 2021. This audit commenced in February 2022. Autodesk files tax returns in multiple foreign taxing jurisdictions with open tax years ranging from fiscal 2005 to 2023.

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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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI https://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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