NVIDIA 2016 Annual Report Download - page 231

NVIDIA CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
85
The income tax expense differs from the amount computed by applying the federal statutory income tax rate of 35%
to income before income taxes as follows:
Year Ended
January 31,
2016
January 25,
2015
January 26,
2014
(In millions)
Tax expense computed at federal statutory rate.................................... $ 260 $ 264 $ 178
State income taxes, net of federal tax effect ......................................... 112
Foreign tax rate differential .................................................................. (95)(120)(94)
U.S. federal R&D tax credit ................................................................. (38)(34)(30)
Stock-based compensation.................................................................... 1349
Tax expense related to intercompany transaction................................. 10 10 10
Restructuring and expiration of statute of limitations .......................... (21)— —
Other ..................................................................................................... (1)(1)(5)
Income tax expense................................................................... $ 129 $ 124 $ 70
The tax effect of temporary differences that gives rise to significant portions of the deferred tax assets and liabilities
are presented below:
January 31,
2016
January 25,
2015
(In millions)
Deferred tax assets:
Net operating loss carryforwards ..................................................................................... $57$72
Accruals and reserves, not currently deductible for tax purposes.................................... 58 109
Property, equipment and intangible assets ....................................................................... 50 46
Research and other tax credit carryforwards.................................................................... 404 351
Stock-based compensation ............................................................................................... 29 30
Convertible debt ............................................................................................................... 912
Gross deferred tax assets ...................................................................................... 607 620
Less valuation allowance ................................................................................................. (272)(261)
Total deferred tax assets ....................................................................................... 335 359
Deferred tax liabilities:
Acquired intangibles ........................................................................................................ (17)(25)
Unremitted earnings of foreign subsidiaries .................................................................... (615)(500)
Gross deferred tax liabilities ................................................................................ (632)(525)
Net deferred tax liability.................................................................................... $(297)$ (166)
We recognized income tax expense of $129 million, $124 million and $70 million during fiscal years 2016, 2015, and
2014, respectively. Our annual effective tax rate, was 17.3% in fiscal year 2016, 16.5% in fiscal year 2015 and 13.8% in
fiscal year 2014. The difference in the effective tax rates amongst the three years was primarily due to an increase in the
amount of earnings subject to United States tax in fiscal years 2016 and 2015, partially offset by a net income tax benefit
related to the Icera modem restructuring in fiscal year 2016, and a higher percentage of research tax credit benefit in fiscal
year 2014.