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Income Taxes | 6 Months Ended
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Jul. 31, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Our tax provision or benefit from income taxes for interim periods is determined using an estimate of our annual effective tax rate as prescribed under Accounting Standards Codification (“ASC”) 740, “Income Taxes”, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, we update our estimate of the annual effective tax rate, and if our estimated tax rate changes, we make a cumulative adjustment, which results in a provision or benefit from income taxes in current or subsequent quarters. Our income tax (benefit) / provision was $(816.3) million) and $15.1 million for the three months ended July 31, 2024 and 2023, respectively. Our income tax (benefit) / provision was $(813.5) million and $20.2 million for the six months ended July 31, 2024 and 2023, respectively. We regularly assess the need for a valuation allowance on our deferred tax assets. In making this assessment, we consider both positive and negative evidence related to the likelihood of realization of the deferred tax assets to determine, based on the weight of available evidence, whether it is more likely than not that some or all the deferred tax assets will not be realized. As of July 31, 2024, based on all available positive and negative evidence, having demonstrated sustained U.S. profitability which is objective and verifiable, and taking into account anticipated future earnings, we have concluded it is more likely than not that our U.S. federal and states deferred tax assets will be realizable, with the exception of certain federal deferred tax assets subject to limitation on use and our California deferred tax assets. Our U.S. federal and state deferred tax assets largely consist of tax attribute carryforwards (including net operating losses and tax credits) and capitalized research expenditures, all of which are expected to be fully utilized in light of anticipated future earnings. We continue to maintain a valuation allowance against California deferred tax assets due to the uncertainty regarding realizability of these deferred tax assets as they have not met the “more likely than not” realization criterion. We expect future research and development tax credit generation in California to exceed our ability to use the existing tax credits. When a change in valuation allowance is recognized during an interim period, the change in valuation allowance resulting from current year income is included in the annual effective tax rate and the release of valuation allowance supported by projections of future taxable income is recorded as a discrete tax benefit in the interim period. We released $837.7 million of our valuation allowance as a discrete tax benefit during the three and six months ended July 31, 2024. We will continue to monitor the need for a valuation allowance against our deferred tax assets on a quarterly basis. As of July 31, 2024, our gross unrecognized tax benefits totaled $71.2 million, excluding related accrued interest and penalties, of which $58.8 million would impact the effective tax rate if recognized. Our policy is to account for interest and penalties related to uncertain tax positions as a component of income tax provision. We do not expect material changes to our gross unrecognized tax benefits within the next 12 months.

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