Advanced Micro Devices, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Income Taxes (Tables)

Income Taxes (Tables)

12 Months Ended

Dec. 30, 2023

Income before income taxes consists of the following:


	Year Ended
	December 30, 2023		December 31, 2022		December 25, 2021
	(In millions)
U.S.	$	454	$	2,093	$	3,528
Non-U.S.	54		(895)		147
Total pre-tax income including equity income in investee	$	508	$	1,198	$	3,675

Provision (Benefit) for Income Taxes

The income tax provision (benefit) consists of:


	Year Ended
	December 30, 2023		December 31, 2022		December 25, 2021
	(In millions)
Current:
U.S. federal	$	496	$	1,191	$	112
U.S. state and local	27		31		11
Non-U.S.	150		161		82
Total	673		1,383		205
Deferred:
U.S. federal	(860)		(1,365)		320
U.S. state and local	(29)		(26)		(7)
Non-U.S.	(130)		(114)		(5)
Total	(1,019)		(1,505)		308
Income tax provision (benefit)	$	(346)	$	(122)	$	513

Schedule of Effective Income Tax Rate Reconciliation

The table below displays the reconciliation between statutory federal income taxes and the total income tax provision (benefit).


	Year Ended
	December 30, 2023		December 31, 2022		December 25, 2021
	(In millions)
Statutory federal income tax expense at 21%	$	107	$	252	$	772
GILTI and other foreign inclusion	(138)		(96)		—
Foreign-Derived Intangible Income (FDII) deduction	(185)		(261)		(147)
Research credits	(169)		(241)		(78)
Interest and penalty	53		33		35
Foreign rate detriment (benefit)	(11)		195		71


Stock-based and non-deductible compensation	1		10		(125)

Other	(4)		(14)		(15)
Income tax provision (benefit)	$	(346)	$	(122)	$	513

Schedule of Deferred Tax Assets and Liabilities

Deferred income taxes reflect the net tax effects of tax carryovers and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the balances for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities as of December 30, 2023 and December 31, 2022 were as follows:


	December 30, 2023		December 31, 2022
	(In millions)
Deferred tax assets:
Net operating loss carryovers	$	992	$	1,031
Accruals and reserves not currently deductible	574		835
Employee benefits not currently deductible	302		214
Federal and state tax credit carryovers	660		631
Foreign R&D and investment tax credits	597		578
Foreign tax credits	71		46
Lease liability	181		161
Capitalized R&D	1,753		943
Other	96		104
Total deferred tax assets	5,226		4,543
Less: valuation allowance	(2,124)		(2,078)
Total deferred tax assets, net of valuation allowance	3,102		2,465
Deferred tax liabilities:
Acquired intangibles	(3,104)		(3,430)
Right-of-use assets	(175)		(151)
GILTI	(524)		(633)
Other	(135)		(127)
Total deferred tax liabilities	(3,938)		(4,341)
Net deferred tax assets (liabilities)	$	(836)	$	(1,876)

As a result of the R&D capitalization tax law that became effective in 2022, the capitalization of R&D expense amounts resulted in increased taxable income in 2023 and 2022. The capitalized R&D will be amortized and become deductible in future periods. Therefore, the Company has recorded a deferred tax asset for the capitalized R&D expenditures.

As a result of the acquisition of Xilinx in 2022, the Company recorded $4.3 billion of net deferred tax liabilities primarily on the excess of book basis over the tax basis of the acquired intangible assets, including $857 million of GILTI net deferred tax liability.

The movement in the deferred tax valuation allowance was as follows:


	December 30, 2023		December 31, 2022		December 25, 2021
	(In millions)
Balance at beginning of year	$	2,078	$	1,735	$	1,576
Charges to income tax expense and other accounts	41		112		3
Acquisition-related	5		231		—
Net recoveries+	—		—		156
Balance at end of year	$	2,124	$	2,078	$	1,735


+			The net recoveries in 2021 were primarily related to net originating deferred tax assets and newly generated tax credits.

Schedule of Unrecognized Tax Benefits Roll Forward

reconciliation of the Company's gross unrecognized tax benefits was as follows:


	December 30, 2023		December 31, 2022		December 25, 2021
	(In millions)
Balance at beginning of year	$	1,361	$	275	$	119
Increases for tax positions taken in the current year	53		748		156
Increases for tax positions taken in prior years	57		104		14
Decreases for tax positions taken in prior years	(8)		(12)		(9)
Increases to tax positions taken in prior years through acquisitions	—		252		—
Decreases for settlements with taxing authorities and statute of limitation lapses	—		(6)		(5)
Balance at end of year	$	1,463	$	1,361	$	275