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Income Taxes | 9 Months Ended
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Sep. 30, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The effective income tax rates were 15.6% and 15.0% for the three months ended September 30, 2024 and 2023, respectively. The higher effective income tax rate for the three months ended September 30, 2024, versus the comparable period in 2023, was primarily due to the Company’s ability to claim more U.S. foreign tax credits generated in 2022 and 2023 resulting from Notice 2023-55 (the “Notice”), released by the U.S. Department of Treasury (“Treasury”) in 2023. The higher effective income tax rate was partially offset by a $115 million discrete tax expense in 2023 to establish a valuation allowance on the deferred tax asset related to U.S. foreign tax credits generated prior to 2022, as well as a change in the Company’s geographic mix of earnings in the current period. The effective income tax rates were 16.1% and 18.6% for the nine months ended September 30, 2024 and 2023, respectively. The lower effective income tax rate for the nine months ended September 30, 2024, versus the comparable period in 2023, was primarily due to a discrete tax expense in 2023 related to changes in the valuation allowance associated with the U.S. foreign tax credits deferred tax asset. In 2023, the treatment of foreign taxes paid under the U.S. tax regulations published in 2022 changed due to the foreign tax legislation enacted in Brazil and the Notice released by Treasury. Therefore, the Company recognized a total $327 million discrete tax expense in 2023 to establish the valuation allowance. This discrete tax expense was partially offset by the Company’s ability to claim more U.S. foreign tax credits generated in 2022 and 2023 due to the Notice. Additionally, a change in the Company’s geographic mix of earnings in 2024 contributed to the lower effective income tax rate compared to the prior year. The Company is subject to tax in the United States, Belgium, Singapore, the United Kingdom and various other foreign jurisdictions, as well as state and local jurisdictions. Uncertain tax positions are reviewed on an ongoing basis and are adjusted after considering facts and circumstances, including progress of tax audits, developments in case law and closing of statutes of limitation. Within the next twelve months, the Company believes that the resolution of certain federal, foreign and state and local examinations is reasonably possible and that a change in estimate, reducing unrecognized tax benefits, may occur. While such a change may be significant, it is not possible to provide a range of the potential change until the examinations progress further or the related statutes of limitation expire. The Company has effectively settled its U.S. federal income tax obligations through 2014. With limited exception, the Company is no longer subject to state and local or foreign examinations by tax authorities for years before 2014. As of September 30, 2024 and December 31, 2023, the amount of the unrecognized tax benefit was $296 million and $431 million, respectively. The decrease was primarily due to the withdrawal of a prior year refund claim, which had no impact on the consolidated results of operations or financial condition.

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