XML 33 R16.htm IDEA: XBRL DOCUMENT
v3.23.1

Income Taxes | 12 Months Ended
--- | ---
Mar. 31, 2023
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES The components of our income before provision for income taxes for the fiscal years ended March 31, 2023, 2022 and 2021 are as follows (in millions):
| Year Ended March 31,
| 2023 |  | 2022 |  | 2021
Domestic | $ | 315 |  |  | $ | 204 |  |  | $ | 299 |
Foreign | 1,011 |  |  | 877 |  |  | 718 |
Income before provision for income taxes | $ | 1,326 |  |  | $ | 1,081 |  |  | $ | 1,017 |
Provision for income taxes for the fiscal years ended March 31, 2023, 2022 and 2021 consisted of (in millions):
| Current |  | Deferred |  | Total
Year Ended March 31, 2023 |  |  |  |  |
Federal | $ | 570 |  |  | $ | (339) |  |  | $ | 231 |
State | 92 |  |  | (76) |  |  | 16 |
Foreign | 75 |  |  | 202 |  |  | 277 |
| $ | 737 |  |  | $ | (213) |  |  | $ | 524 |
Year Ended March 31, 2022 |  |  |  |  |
Federal | $ | 203 |  |  | $ | (190) |  |  | $ | 13 |
State | 36 |  |  | (26) |  |  | 10 |
Foreign | 381 |  |  | (112) |  |  | 269 |
| $ | 620 |  |  | $ | (328) |  |  | $ | 292 |
Year Ended March 31, 2021 |  |  |  |  |
Federal | $ | 251 |  |  | $ | (26) |  |  | $ | 225 |
State | 24 |  |  | (2) |  |  | 22 |
Foreign | 47 |  |  | (114) |  |  | (67) |
| $ | 322 |  |  | $ | (142) |  |  | $ | 180 |
The differences between the statutory tax rate and our effective tax rate, expressed as a percentage of income before provision for income taxes, for the fiscal years ended March 31, 2023, 2022 and 2021 were as follows:
| Year Ended March 31,
| 2023 |  | 2022 |  | 2021
Statutory federal tax expense rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State taxes, net of federal benefit | 1.1 | % |  | 1.9 | % |  | 1.7 | %
Differences between statutory rate and foreign effective tax rate | 7.6 | % |  | 6.8 | % |  | 7.0 | %
Excess tax benefit from equity compensation | (0.3) | % |  | (1.2) | % |  | (2.7) | %
Research and development credits | (3.0) | % |  | (2.8) | % |  | (2.4) | %
Swiss valuation allowance | 8.9 | % |  | 2.7 | % |  | (10.1) | %
Acquired IP intra-entity sales | — | % |  | (5.9) | % |  | — | %
Non-deductible stock-based compensation | 3.2 | % |  | 3.8 | % |  | 3.3 | %
Other | 1.0 | % |  | 0.7 | % |  | (0.1) | %
Effective tax rate | 39.5 | % |  | 27.0 | % |  | 17.7 | %
During the fiscal year ended March 31, 2023, we recognized a $118 million tax charge to increase the valuation allowance on Swiss deferred tax assets, primarily as a result of an increase in Swiss interest rates. During the fiscal year ended March 31, 2022, we completed intra-entity sales of intellectual property rights related to acquisitions to our U.S. and Swiss intellectual property owners (the “Acquired IP intra-entity sales”). The transactions resulted in overall taxable gains. Under U.S. GAAP, any profit resulting from the Acquired IP intra-entity sales was eliminated upon consolidation. However, the transactions resulted in a step-up of the U.S. and Swiss tax-deductible basis in the transferred intellectual property rights and, accordingly, created a temporary difference between the book basis and the tax basis of such intellectual property rights. As a result, we recognized a $64 million net tax benefit for the current and deferred tax impacts of the sales. In addition, during the fiscal year ended March 31, 2022, we recognized a $29 million tax charge to increase the valuation allowance on Swiss deferred tax assets that are not more likely than not to be realized. Our effective tax rate and resulting provision for income taxes for the fiscal year ended March 31, 2021 included a $141 million tax benefit for changes in uncertain tax positions and the valuation allowance related to our Swiss deferred tax assets. Our foreign subsidiaries are generally subject to U.S. tax, and to the extent earnings from these subsidiaries can be repatriated without a material tax cost, such earnings will not be indefinitely reinvested. As of March 31, 2023, approximately $925 million of our cash and cash equivalents were domiciled in foreign tax jurisdictions. All of our foreign cash is available for repatriation without a material tax cost. The components of net deferred tax assets, as of March 31, 2023 and 2022 consisted of (in millions):
| As of March 31,
| 2023 |  | 2022
Deferred tax assets: |  |  |
Accruals, reserves and other expenses | $ | 197 |  |  | $ | 185 |
Tax credit carryforwards | 218 |  |  | 198 |
Research and development capitalization | 461 |  |  | 66 |
Stock-based compensation | 39 |  |  | 43 |
Net operating loss and capital loss carryforwards | 371 |  |  | 349 |
Swiss intra-entity tax asset | 1,665 |  |  | 1,782 |
Total | 2,951 |  |  | 2,623 |
Valuation allowance | (446) |  |  | (296) |
Deferred tax assets, net of valuation allowance | 2,505 |  |  | 2,327 |
Deferred tax liabilities: |  |  |
Amortization and depreciation | (41) |  |  | (79) |
Other | (3) |  |  | (7) |
Total | (44) |  |  | (86) |
Deferred tax assets, net of valuation allowance and deferred tax liabilities | $ | 2,461 |  |  | $ | 2,241 |
As of March 31, 2023, we have net operating loss carry forwards of approximately $2.6 billion of which approximately $213 million is attributable to various acquired companies. The net operating loss carry forwards include $2.3 billion related to Switzerland, $99 million related to U.S. federal, and $133 million related to California. Substantially all of these carryforwards, if not fully realized, will begin to expire in fiscal year 2027. Switzerland has a seven-year carryforward period and does not permit the carry back of losses. We also have U.S. federal credit carryforwards of $12 million and California credit carryforwards of $194 million. The California tax credit carryforwards can be carried forward indefinitely. As of March 31, 2023, we maintained a total valuation allowance of $446 million related to certain U.S. state deferred tax assets, Swiss deferred tax assets, and foreign capital loss carryovers, due to uncertainty about the future realization of these assets. The total unrecognized tax benefits as of March 31, 2023, 2022 and 2021 were $867 million, $636 million and $584 million, respectively. A reconciliation of the beginning and ending balance of unrecognized tax benefits is summarized as follows (in millions):
Balance as of March 31, 2020 | $ | 983 |
Increases in unrecognized tax benefits related to prior year tax positions | 12 |
Decreases in unrecognized tax benefits related to prior year tax positions | (444) |
Increases in unrecognized tax benefits related to current year tax positions | 55 |
Decreases in unrecognized tax benefits related to settlements with taxing authorities | (2) |
Reductions in unrecognized tax benefits due to lapse of applicable statute of limitations | (27) |
Changes in unrecognized tax benefits due to foreign currency translation | 7 |
Balance as of March 31, 2021 | 584 |
Increases in unrecognized tax benefits related to prior year tax positions | 5 |
Decreases in unrecognized tax benefits related to prior year tax positions | (21) |
Increases in unrecognized tax benefits related to current year tax positions | 139 |
Decreases in unrecognized tax benefits related to settlements with taxing authorities | (50) |
Reductions in unrecognized tax benefits due to lapse of applicable statute of limitations | (18) |
Changes in unrecognized tax benefits due to foreign currency translation | (3) |
Balance as of March 31, 2022 | 636 |
Increases in unrecognized tax benefits related to current year tax positions | 245 |
Decreases in unrecognized tax benefits related to settlements with taxing authorities | (2) |
Reductions in unrecognized tax benefits due to lapse of applicable statute of limitations | (6) |
Changes in unrecognized tax benefits due to foreign currency translation | (6) |
Balance as of March 31, 2023 | $ | 867 |
As of March 31, 2023, approximately $395 million of the unrecognized tax benefits would affect our effective tax rate, a portion of which would be impacted by a valuation allowance. Interest and penalties related to estimated obligations for tax positions taken in our tax returns are recognized in income tax expense in our Consolidated Statements of Operations. The combined amount of accrued interest and penalties related to tax positions taken on our tax returns and included in non-current other liabilities was approximately $54 million as of March 31, 2023 and $36 million as of March 31, 2022. We file income tax returns in the United States, including various state and local jurisdictions. As of March 31, 2023, our subsidiaries file tax returns in various foreign jurisdictions, including Switzerland, Canada, Sweden, Italy, France, Germany, and the United Kingdom. We remain subject to income tax examination by the IRS for fiscal years after 2017. In addition, as of the period ended March 31, 2023, we remain subject to income tax examination for several other jurisdictions including in Switzerland for fiscal years after 2013, Canada for fiscal years after 2015, Sweden for fiscal years after 2017, Italy for fiscal years after 2019, France for fiscal years after 2019, Germany for fiscal years after 2016, and the United Kingdom for fiscal years after 2021. We are also currently under income tax examination in the United States for fiscal years 2018 through 2020 and Germany for fiscal years 2017 through 2019. The timing and potential resolution of income tax examinations is highly uncertain. While we continue to measure our uncertain tax positions, the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ materially from the amounts accrued. In fiscal year 2021, the Supreme Court of the United States denied Altera’s appeal of the decision of the Ninth Circuit Court of Appeals in Altera Corp. v. Commissioner (“the Altera Opinion”), resulting in a partial decrease of our unrecognized tax benefits. A complete resolution and settlement of the matters underlying the Altera Opinion is reasonably possible within the next 12 months, which would result in an additional reduction of our gross unrecognized tax benefits. However, it is uncertain whether a complete resolution and settlement of such matters would also result in resolution of all related and unrelated U.S. positions for all applicable years. Therefore, it is not possible to provide a range of potential outcomes associated with a reversal of our gross unrecognized tax benefits for Altera-related uncertain tax positions. It is also reasonably possible that an additional immaterial reduction of unrecognized tax benefits may occur within the next 12 months, unrelated to the Altera Opinion, a portion of which would impact our effective tax rate. The actual amount could vary significantly depending on the ultimate timing and nature of any settlements and tax interpretations.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration