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Income Taxes | 12 Months Ended
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Dec. 31, 2023
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Net income before provision for (benefit from) income taxes consists of the following (in thousands):
|  | Year Ended December 31,
|  | 2023 |  | 2022 |  | 2021
Domestic |  | $ | 315,643 |  |  | $ | 268,097 |  |  | $ | 378,478 |
Foreign |  | 325,561 |  |  | 330,960 |  |  | 633,945 |
Net income before provision for (benefit from) income taxes |  | $ | 641,204 |  |  | $ | 599,057 |  |  | $ | 1,012,423 |
The provision for (benefit from) income taxes consists of the following (in thousands):
|  | Year Ended December 31,
|  | 2023 |  | 2022 |  | 2021
Federal |  |  |  |  |  |
Current |  | $ | 134,332 |  |  | $ | 188,050 |  |  | $ | 157,383 |
Deferred |  | (16,805) |  |  | (55,579) |  |  | (25,598) |
|  | 117,527 |  |  | 132,471 |  |  | 131,785 |
State |  |  |  |  |  |
Current |  | 28,535 |  |  | 34,621 |  |  | 28,365 |
Deferred |  | (3,157) |  |  | (12,265) |  |  | (5,860) |
|  | 25,378 |  |  | 22,356 |  |  | 22,505 |
Foreign |  |  |  |  |  |
Current |  | 51,306 |  |  | 56,537 |  |  | 42,681 |
Deferred |  | 1,940 |  |  | 26,120 |  |  | 43,432 |
|  | 53,246 |  |  | 82,657 |  |  | 86,113 |
Provision for (benefit from) income taxes |  | $ | 196,151 |  |  | $ | 237,484 |  |  | $ | 240,403 |
The differences between income taxes using the federal statutory income tax rate for the year ended December 31, 2023, 2022 and 2021 and our effective tax rates are as follows:
|  | Year Ended December 31,
|  | 2023 |  | 2022 |  | 2021
U.S. federal statutory income tax rate |  | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State income taxes, net of federal tax benefit |  | 2.9 |  |  | 3.7 |  |  | 2.2 |
U.S. tax on foreign earnings |  | 3.7 |  |  | 5.6 |  |  | 2.5 |
Impact of differences in foreign tax rates |  | 1.4 |  |  | 3.3 |  |  | (2.0) |
Stock-based compensation |  | 3.0 |  |  | 2.1 |  |  | (0.3) |
Settlement on audits |  | 0.1 |  |  | 1.9 |  |  | — |
Change in valuation allowance |  | (1.3) |  |  | 1.7 |  |  | 1.1 |
Other items not individually material |  | (0.2) |  |  | 0.3 |  |  | (0.8) |
Effective tax rate |  | 30.6 | % |  | 39.6 | % |  | 23.7 | %
We intend to reinvest our foreign subsidiary earnings indefinitely outside of the U.S. and do not expect to incur significant additional costs upon repatriation of these foreign earnings. As of December 31, 2023 and 2022, the significant components of our deferred tax assets and liabilities are (in thousands):
|  | December 31,
|  | 2023 |  | 2022
Deferred tax assets: |  |  |  |
Net operating loss and capital loss carryforwards |  | $ | 1,389 |  |  | $ | 15,380 |
Reserves and accruals |  | 62,891 |  |  | 32,759 |
Stock-based compensation |  | 25,054 |  |  | 19,469 |
Deferred revenue |  | 142,082 |  |  | 117,039 |
Capitalized research & development |  | 41,505 |  |  | 54,293 |
Amortizable tax basis in intangibles |  | 1,325,236 |  |  | 1,350,434 |
Other |  | 13,228 |  |  | 16,645 |
Deferred tax assets before valuation allowance |  | 1,611,385 |  |  | 1,606,019 |
Valuation allowance |  | (14,991) |  |  | (23,286) |
Total deferred tax assets |  | 1,596,394 |  |  | 1,582,733 |
Deferred tax liabilities: |  |  |  |
Depreciation and amortization |  | 7,814 |  |  | 11,407 |
Acquisition-related intangibles |  | 25,097 |  |  | 26,008 |
Other |  | 3,570 |  |  | 3,438 |
Total deferred tax liabilities |  | 36,481 |  |  | 40,853 |
Net deferred tax assets |  | 1,559,913 |  |  | 1,541,880 |
The available positive evidence at December 31, 2023 included historical operating profits and a projection of future income sufficient to realize most of our remaining deferred tax assets. As of December 31, 2023, it was considered more likely than not that our deferred tax assets would be realized with the exception of certain interest expense carryovers, capital loss carryovers and unrealized translation losses as we are unable to forecast sufficient future profits to realize these deferred tax assets. The total valuation allowance as of December 31, 2023 was $15.0 million. During the year ended December 31, 2023, the valuation allowance decreased by $8.3 million primarily due to the deferred tax assets on certain interest expense, net operating loss carryovers, and unrealized translation losses from our German subsidiaries. As of December 31, 2023, we have foreign net operating loss carryforwards of approximately $3.7 million, attributed mainly to losses in China, Russia, and Germany. The losses in Germany can be carried forward indefinitely. The operating loss carryforwards in China and Russia, if not utilized, will expire beginning 2028 and 2033, respectively. The changes in the balance of gross unrecognized tax benefits, which exclude interest and penalties, for the year ended December 31, 2023, 2022 and 2021, are as follows (in thousands):
|  | Year Ended December 31,
|  | 2023 |  | 2022 |  | 2021
Gross unrecognized tax benefits at January 1, |  | $ | 141,560 |  |  | $ | 63,295 |  |  | $ | 46,320 |
Increases related to tax positions taken during the current year |  | 8,616 |  |  | 84,249 |  |  | 27,710 |
Increases related to tax positions taken during a prior year |  | 5,647 |  |  | 15,411 |  |  | 5,471 |
Decreases related to tax positions taken during a prior year |  | (533) |  |  | (2,647) |  |  | (5,804) |
Decreases related to expiration of statute of limitations |  | (3,654) |  |  | (4,582) |  |  | (8,986) |
Decreases related to settlement with tax authorities |  | (2,464) |  |  | (14,166) |  |  | (1,416) |
Gross unrecognized tax benefits at December 31, |  | $ | 149,172 |  |  | $ | 141,560 |  |  | $ | 63,295 |
The total amount of gross unrecognized tax benefits as of December 31, 2023 was $149.2 million, of which $140.0 million would impact our effective tax rate if recognized. We file U.S. federal, U.S. state, and non-U.S. income tax returns. Our major tax jurisdictions include U.S. federal, the State of California and Switzerland. For U.S. federal and state tax returns, we are no longer subject to tax examinations for years before 2017 and 2019, respectively. With few exceptions, we are no longer subject to examination by other foreign tax authorities for years before 2016. We have elected to recognize interest and penalties related to unrecognized tax benefits as a component of income taxes. Interest and penalties included in tax expense for the year ended December 31, 2023, 2022 and 2021 as well as accrued as of December 31, 2023 and 2022 were not material. While we defend income tax audits in various jurisdictions and the results of such audits may differ materially from the amounts accrued for each year, we cannot currently ascertain the bases on which any given audit will be ultimately resolved. Accordingly, we are unable to estimate the range of possible adjustments to our balance of gross unrecognized tax benefits in the next 12 months.

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