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INCOME TAXES (Tables) | 12 Months Ended
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Dec. 31, 2022
Income Tax Disclosure [Abstract] |
Schedule of income before income taxes | Income before income taxes consisted of the following (in millions):
Year Ended December 31, | 2022 | 2021 | 2020 |
United States | $ | 3,452 |  | $ | 3,538 |  | $ | 3,149 |  |
International | 8,234 |  | 8,887 |  | 6,600 |  |
Total | $ | 11,686 |  | $ | 12,425 |  | $ | 9,749 |  |
Schedule of income tax expense (benefit) | Income taxes consisted of the following (in millions):
| United States | State and Local | International |  | Total
2022 |  |  |  |  |
Current | $ | 468 |  | $ | 118 |  | $ | 1,651 |  |  | $ | 2,237 |
Deferred | (121) |  | (4) |  | 3 |  |  | (122) |
2021 |  |  |  |  |
Current | $ | 243 |  | $ | 106 |  | $ | 1,378 |  |  | $ | 1,727 |
Deferred | 229 |  | (10) |  | 675 |  | 1 | 894 |
2020 |  |  |  |  |
Current | $ | 296 |  | $ | 396 |  | $ | 1,307 |  |  | $ | 1,999 |
Deferred | (220) |  | 21 |  | 181 |  |  | (18) |
1 Includes net tax expense of $195 million related to changes in tax laws in certain foreign jurisdictions.
Reconciliation of the statutory U.S. federal tax rate and effective tax rates | A reconciliation of the statutory U.S. federal tax rate and our effective tax rate is as follows:
Year Ended December 31, | 2022 | 2021 |  | 2020 |  |  |
Statutory U.S. federal tax rate | 21.0 | % | 21.0 | % |  | 21.0 | % |  |  |
State and local income taxes — net of federal benefit | 1.4 |  | 1.1 |  |  | 1.1 |  |  |  |
Earnings in jurisdictions taxed at rates different from the statutory U.S. federal tax rate | (0.6) |  | 2.3 |  | 1 | 0.9 |  | 3 |  |
Equity income or loss | (2.7) |  | (2.0) |  |  | (1.4) |  |  |  |
Excess tax benefits on stock-based compensation | (0.7) |  | (0.5) |  |  | (0.8) |  |  |  |
Other — net | (0.3) |  | (0.8) |  | 2 | (0.5) |  | 4,5 |  |
Effective tax rate | 18.1 | % | 21.1 | % |  | 20.3 | % |  |  |
1 Includes net tax charges of $375 million (or a 3.0 percent impact on our effective tax rate) related to changes in tax laws in certain foreign jurisdictions, amounts required to be recorded for changes to our uncertain tax positions, including interest and penalties, in various international jurisdictions, as well as other discrete items. 2 Includes a tax benefit of $14 million (or a 1.5 percent impact on our effective tax rate) associated with the $834 million gain recorded upon the acquisition of the remaining ownership interest in BodyArmor. Refer to Note 2. 3 Includes net tax charges of $110 million (or a 1.1 percent impact on our effective tax rate) related to amounts required to be recorded for changes to our uncertain tax positions, including interest and penalties, in various international jurisdictions, as well as other agreed-upon audit issues. 4 Includes net tax expense of $431 million (or a 4.4 percent impact on our effective tax rate) primarily related to changes in judgment on specific tax positions due to the Opinion and amounts required to be recorded for changes to other uncertain tax positions, including interest and penalties. Also includes a tax benefit of $107 million (or a 1.1 percent impact on our effective tax rate) related to changes in our assessment of certain valuation allowances and a net tax benefit of $135 million (or a 1.4 percent impact on our effective tax rate) related to domestic return to provision adjustments and other tax items. 5 Includes a tax benefit of $40 million (or a 2.4 percent impact on our effective tax rate) associated with the $902 million gain recorded upon the acquisition of the remaining ownership interest in fairlife. Refer to Note 2.
Schedule of Unrecognized Tax Benefits Roll Forward | A reconciliation of the changes in the gross amount of unrecognized tax benefits is as follows (in millions):
Year Ended December 31, | 2022 | 2021 | 2020 |
Balance of unrecognized tax benefits at beginning of year | $ | 906 |  | $ | 915 |  | $ | 392 |  |
Increase related to prior period tax positions | 6 |  | 9 |  | 528 |  | 1
Decrease related to prior period tax positions | — |  | (50) |  | (1) |  |
Increase related to current period tax positions | 38 |  | 37 |  | 26 |  |
Decrease related to settlements with taxing authorities | (2) |  | (4) |  | (19) |  |
Effect of foreign currency translation | (22) |  | (1) |  | (11) |  |
Balance of unrecognized tax benefits at end of year | $ | 926 |  | $ | 906 |  | $ | 915 |  |
1 The increase was primarily related to a change in judgment on certain tax positions due to the Opinion. Refer to Note 11.
Deferred tax assets and liabilities | The tax effects of temporary differences and carryforwards that give rise to deferred tax assets and liabilities consisted of the following (in millions):
December 31, | 2022 | 2021
Deferred tax assets: |  |
Property, plant and equipment | $ | 40 |  | $ | 36 |
Trademarks and other intangible assets | 1,617 |  | 1,910 |
Equity method investments (including net foreign currency translation adjustments) | 366 |  | 595 |
Derivative financial instruments | 207 |  | 215 |
Other liabilities | 1,503 |  | 1,255 |
Benefit plans | 522 |  | 670 |
Net operating loss carryforwards | 248 |  | 280 |
Other | 530 |  | 377 |
Gross deferred tax assets | 5,033 |  | 5,338 |
Valuation allowances | (424) |  | (401) |
Total deferred tax assets | $ | 4,609 |  | $ | 4,937 |
Deferred tax liabilities: |  |
Property, plant and equipment | $ | (741) |  | $ | (721) |
Trademarks and other intangible assets | (1,843) |  | (1,783) |
Equity method investments (including net foreign currency translation adjustments) | (1,632) |  | (1,619) |
Derivative financial instruments | (488) |  | (500) |
Other liabilities | (372) |  | (315) |
Benefit plans | (490) |  | (527) |
Other | (211) |  | (164) |
Total deferred tax liabilities | $ | (5,777) |  | $ | (5,629) |
Net deferred tax assets (liabilities) | $ | (1,168) |  | $ | (692) |
Summary of Valuation Allowance | An analysis of our deferred tax asset valuation allowances is as follows (in millions):
Year Ended December 31, | 2022 | 2021 | 2020
Balance at beginning of year | $ | 401 |  | $ | 406 |  | $ | 303 |
Additions | 47 |  | 25 |  | 240 |
Deductions | (24) |  | (30) |  | (137) |
Balance at end of year | $ | 424 |  | $ | 401 |  | $ | 406 |

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