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Income taxes (Tables) | 12 Months Ended
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Dec. 31, 2023
Income Tax Disclosure [Abstract] |
Provision for Income Taxes | The provision for taxes on income consists of:
(Dollars in Millions) | 2023 |  | 2022 |  | 2021 |
Currently payable: |  |  |  |  |  |
U.S. taxes | $2,705 |  | 2,274 |  | 1,338 |
International taxes | 3,090 |  | 2,295 |  | 2,069 |
Total currently payable | 5,795 |  | 4,569 |  | 3,407 |
Deferred: |  |  |  |  |  |
U.S. taxes | (3,440) |  | (1,990) |  | 565 |
International taxes | (619) |  | 410 |  | (2,595) |
Total deferred | (4,059) |  | (1,580) |  | (2,030) |
Provision for taxes on income | $1,736 |  | 2,989 |  | 1,377 |
Comparison of Income Taxes at Statutory Rate and Company's Effective Tax Rate | A comparison of income tax expense at the U.S. statutory rate of 21% in fiscal years 2023, 2022 and 2021, to the Company’s effective tax rate is as follows:
(Dollars in Millions) | 2023 |  | 2022 |  | 2021
U.S. | $(2,033) |  | 4,606 |  | 4,275
International | 17,095 |  | 14,753 |  | 14,903
Earnings before taxes on income: | $15,062 |  | 19,359 |  | 19,178
Tax rates: |  |  |  |  |
U.S. statutory rate | 21.0 | % |  | 21.0 |  |  | 21.0 |
International operations(1) | (8.1) |  |  | (5.0) |  |  | (19.1) |
U.S. Tax Settlements | (3.0) |  |  | — |  |  | — |
U.S. taxes on international income(2) | (0.3) |  |  | (1.1) |  |  | 8.9 |
Tax benefits from loss on capital assets | — |  |  | — |  |  | (1.6) |
Tax benefits on share-based compensation | (0.8) |  |  | (1.4) |  |  | (1.2) |
All other | 2.7 |  |  | 1.9 |  |  | (0.8) |
Effective Rate | 11.5 | % |  | 15.4 |  |  | 7.2 |
(1)International operations reflect the impacts of operations in jurisdictions with statutory tax rates different than the U.S., particularly Ireland, Switzerland, Belgium and Puerto Rico, which is a favorable impact on the effective tax rate as compared with the U.S. statutory rate. (2)Includes the impact of the GILTI tax, the Foreign-Derived Intangible Income deduction and other foreign income that is taxable under the U.S. tax code. The 2023 and 2022 amount includes the impact of certain provisions of the 2017 TCJA that became effective in fiscal 2022. The 2023 amount includes the impact of certain foreign subsidiaries deferred tax remeasurements for legislative elections and the 2021 amounts include the reorganization of international subsidiaries further described below.
Temporary Differences and Carryforwards | Temporary differences and carryforwards at the end of fiscal years 2023 and 2022 were as follows:
|  | 2023 Deferred Tax |  | 2022 Deferred Tax |
(Dollars in Millions) |  | Asset |  | Liability |  | Asset |  | Liability |
Employee related obligations |  | $586 |  |  |  | 685 |  |  |
Stock based compensation |  | 686 |  |  |  | 632 |  |  |
Depreciation of property, plant and equipment |  |  |  | (902) |  |  |  | (845) |
Goodwill and intangibles |  |  |  | (1,252) |  |  |  | (1,737) |
R&D capitalized for tax |  | 3,595 |  |  |  | 2,611 |  |  |
Reserves & liabilities |  | 3,816 |  |  |  | 2,733 |  |  |
Income reported for tax purposes(1) |  | 359 |  |  |  | 2,026 |  |  |
Net realizable operating loss carryforwards(2) |  | 996 |  |  |  | 1,319 |  |  |
Undistributed foreign earnings |  | 1,801 |  | (1,695) |  | 1,517 |  | (1,604) |
Global intangible low-taxed income |  |  |  | (2,731) |  |  |  | (3,628) |
Miscellaneous international |  | 831 |  |  |  | 861 |  | (66) |
Miscellaneous U.S. |  |  |  | (4) |  | 452 |  |  |
Total deferred income taxes |  | $12,670 |  | (6,584) |  | 12,836 |  | (7,880) |
(1)In fiscal 2023, the Company changed the presentation of income taxes accrued on intercompany profits on inventory still owned by the Company as part of “Prepaid expenses and other” on the Consolidated Balance Sheet. (2)Net of valuation allowances of $1.1 billion and $0.8 billion in 2023 and 2022. The change in the valuation allowance from 2022 to 2023 was driven by approximately $0.1 billion from acquisition related activity and the remainder was due to normal operations during the fiscal year.
Summary of Activity Related to Unrecognized Tax Benefits | The following table summarizes the activity related to unrecognized tax benefits for continuing operations:
(Dollars in Millions) |  | 2023 |  | 2022 |  | 2021
Beginning of year |  | $3,716 |  | 3,210 |  | 3,260
Increases related to current year tax positions |  | 239 |  | 523 |  | 242
Increases related to prior period tax positions |  | 244 |  | 143 |  | 23
Decreases related to prior period tax positions |  | (781) |  | (148) |  | (128)
Settlements |  | (880) |  | (1) |  | (187)
Lapse of statute of limitations |  | (53) |  | (11) |  | —
End of year |  | $2,485 |  | 3,716 |  | 3,210

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- Definition Tabular disclosure of the components of net deferred tax asset or liability recognized in an entity's statement of financial position, including the following: the total of all deferred tax liabilities, the total of all deferred tax assets, the total valuation allowance recognized for deferred tax assets. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Paragraph 2 -Section 50 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-2 + Details
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- Definition Tabular disclosure for tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities and other income tax contingencies. Includes, but is not limited to, interest and penalties, reconciliation of unrecognized tax benefits, unrecognized tax benefits that would affect the effective tax rate, tax years that remain subject to examination by tax jurisdictions, and information about positions for which it is reasonably possible that amounts unrecognized will significantly change within 12 months. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 15 -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-15 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 15A -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-15A Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Name Accounting Standards Codification -Section 50 -Paragraph 19 -SubTopic 10 -Topic 740 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-19 + Details
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