XML 52 R24.htm IDEA: XBRL DOCUMENT
v3.24.0.1

INCOME TAXES | 12 Months Ended
--- | ---
Dec. 31, 2023
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES Income before income taxes consisted of the following (in millions):
Year Ended December 31, | 2023 |  | 2022 |  | 2021 |
United States | $ | 2,766 |  |  | $ | 3,452 |  |  | $ | 3,538 |  |
International | 10,186 |  |  | 8,234 |  |  | 8,887 |  |
Total | $ | 12,952 |  |  | $ | 11,686 |  |  | $ | 12,425 |  |
Income taxes consisted of the following (in millions):
| United States | State and Local | International |  | Total
2023 |  |  |  |  |
Current | $ | 83 |  | $ | 129 |  | $ | 2,039 |  |  | $ | 2,251 |
Deferred | (135) |  | (78) |  | 211 |  |  | (2) |
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 |
1 Includes net tax expense of $195 million related to changes in tax laws in certain foreign jurisdictions. We made income tax payments of $2,580 million, $2,403 million and $2,168 million in 2023, 2022 and 2021, respectively, which included $723 million, $385 million, and $385 million, respectively, of the one-time transition tax required by the Tax Reform Act. Our effective tax rate reflects the tax benefits of having significant operations outside the United States, which are generally taxed at rates lower than the statutory U.S. federal tax rate. As a result of employment actions and capital investments made by the Company, certain tax jurisdictions provide income tax incentive grants, including Brazil, Costa Rica, Singapore and Eswatini. The terms of these grants expire from 2025 to 2036. We anticipate that we will be able to extend or renew the grants in these locations. Tax incentive grants favorably impacted our income tax expense by $332 million, $406 million and $381 million for the years ended December 31, 2023, 2022 and 2021, respectively. In addition, our effective tax rate reflects the benefits of having significant earnings generated in investments accounted for under the equity method. A reconciliation of the statutory U.S. federal tax rate and our effective tax rate is as follows:
Year Ended December 31, | 2023 |  | 2022 | 2021 |  |  |
Statutory U.S. federal tax rate | 21.0 | % |  | 21.0 | % | 21.0 | % |  |  |
State and local income taxes — net of federal benefit | 1.1 |  |  | 1.4 |  | 1.1 |  |  |  |
Earnings in jurisdictions taxed at rates different from the statutory U.S. federal tax rate | (0.3) |  |  | (0.6) |  | 2.3 |  | 2 |  |
Equity income or loss | (2.1) |  |  | (2.7) |  | (2.0) |  |  |  |
Excess tax benefits on stock-based compensation | (0.3) |  |  | (0.7) |  | (0.5) |  |  |  |
Other — net | (2.0) |  | 1 | (0.3) |  | (0.8) |  | 3 |  |
Effective tax rate | 17.4 | % |  | 18.1 | % | 21.1 | % |  |  |
1 Includes net tax benefit of $118 million (or a 0.9% impact on our effective tax rate) related to domestic provision to return adjustments, as well as for various discrete tax items. Also includes a tax benefit of $88 million (or a 0.7% impact on our effective tax rate) associated with the change in the Company’s indefinite reinvestment assertion for our Philippines and Bangladesh bottling operations. 2 Includes net tax charges of $375 million (or a 3.0% 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. 3 Includes a tax benefit of $14 million (or a 1.5% 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. As of December 31, 2023, we have not recorded incremental income taxes for additional outside basis differences of $8.5 billion in our investments in foreign subsidiaries, as these amounts continue to be indefinitely reinvested in foreign operations. Determining the amount of unrecognized deferred tax liability related to any additional outside basis differences in these entities is not practicable. The Global Intangible Low-Taxed Income (“GILTI”) provisions of the Tax Reform Act require the Company to include in its U.S. income tax return each foreign subsidiary’s earnings in excess of an allowable return on the foreign subsidiary’s tangible assets. An accounting policy election is available to either account for the tax effects of GILTI in the period that is subject to such taxes or to provide deferred taxes for book and tax basis differences that upon reversal may be subject to such taxes. We have elected to account for the tax effects of these provisions in the period that is subject to such tax and the impact is reflected in our full year provision. The Company and its subsidiaries file income tax returns in all applicable jurisdictions, including the U.S. federal jurisdiction, U.S. state jurisdictions and foreign jurisdictions. U.S. tax authorities have completed their federal income tax examinations for all years prior to 2007. With respect to U.S. state jurisdictions and foreign jurisdictions, with limited exceptions, the Company and its subsidiaries are no longer subject to income tax audits for years prior to 2007. For U.S. federal and state tax purposes, the net operating losses and tax credit carryovers that were acquired in connection with our acquisition of Coca‑Cola Enterprises Inc.’s former North America business and that were generated from 1990 through 2010 are subject to adjustments until the year in which they are utilized is no longer subject to examination. Although the outcome of tax audits is always uncertain, the Company believes that adequate amounts of tax, including interest and penalties, have been provided for in accordance with the applicable accounting guidance. On November 18, 2020, the Tax Court issued the Opinion regarding the Company’s 2015 litigation with the IRS involving transfer pricing tax adjustments in which the court predominantly sided with the IRS. On November 8, 2023, the Tax Court issued a supplemental opinion, siding with the IRS in concluding both that the blocked-income regulations apply to the Company’s operations and that the Tax Court opinion in 3M Co. & Subs. v. Commissioner (February 9, 2023) controlled as to the validity of those regulations. The Company strongly disagrees with the Opinions and intends to vigorously defend its position. Refer to Note 12. As of December 31, 2023, the gross amount of unrecognized tax benefits was $929 million. If the Company were to prevail on all uncertain tax positions, the net effect would be a benefit of $632 million, exclusive of any benefits related to interest and penalties. The remaining $297 million primarily represents tax benefits that would be received in different tax jurisdictions in the event the Company did not prevail on all uncertain tax positions. A reconciliation of the changes in the gross amount of unrecognized tax benefits is as follows (in millions):
Year Ended December 31, | 2023 | 2022 | 2021
Balance of unrecognized tax benefits at beginning of year | $ | 926 |  | $ | 906 |  | $ | 915 |
Increase related to prior period tax positions | 2 |  | 6 |  | 9 |
Decrease related to prior period tax positions | (25) |  | — |  | (50) |
Increase related to current period tax positions | 32 |  | 38 |  | 37 |
Decrease related to settlements with taxing authorities | — |  | (2) |  | (4) |
Decrease due to lapse of the applicable statute of limitations | (2) |  | — |  | — |
Effect of foreign currency translation | (4) |  | (22) |  | (1) |
Balance of unrecognized tax benefits at end of year | $ | 929 |  | $ | 926 |  | $ | 906 |
The Company recognizes interest and penalties related to unrecognized tax benefits in the line item income taxes in our consolidated statement of income. The Company had $544 million, $496 million and $453 million in interest and penalties related to unrecognized tax benefits accrued as of December 31, 2023, 2022 and 2021, respectively. Of these amounts, expense of $48 million, $43 million and $62 million was recognized in 2023, 2022 and 2021, respectively. If the Company were to prevail on all uncertain tax positions, the reversal of this accrual would be a benefit to the Company’s effective tax rate. It is expected that the amount of unrecognized tax benefits will change in the next 12 months; however, we do not expect any changes will have a significant impact on our consolidated statement of income or consolidated balance sheet. These changes may be the result of settlements of ongoing audits, statute of limitations expiring or final settlements in transfer pricing matters that are the subject of litigation. Currently, an estimate of the range of the reasonably possible outcomes cannot be made. 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, | 2023 | 2022
Deferred tax assets: |  |
Property, plant and equipment | $ | 25 |  | $ | 40 |
Trademarks and other intangible assets | 1,414 |  | 1,617 |
Equity method investments (including net foreign currency translation adjustments) | 239 |  | 366 |
Derivative financial instruments | 156 |  | 207 |
Other liabilities | 1,709 |  | 1,503 |
Benefit plans | 554 |  | 522 |
Net operating loss carryforwards | 273 |  | 248 |
Other | 445 |  | 530 |
Gross deferred tax assets | 4,815 |  | 5,033 |
Valuation allowances | (396) |  | (424) |
Total deferred tax assets | $ | 4,419 |  | $ | 4,609 |
Deferred tax liabilities: |  |
Property, plant and equipment | $ | (748) |  | $ | (741) |
Trademarks and other intangible assets | (1,917) |  | (1,843) |
Equity method investments (including net foreign currency translation adjustments) | (1,633) |  | (1,632) |
Derivative financial instruments | (282) |  | (488) |
Other liabilities | (330) |  | (372) |
Benefit plans | (428) |  | (490) |
Other | (159) |  | (211) |
Total deferred tax liabilities | $ | (5,497) |  | $ | (5,777) |
Net deferred tax assets (liabilities) | $ | (1,078) |  | $ | (1,168) |
As of December 31, 2023 and 2022, we had net deferred tax assets of $273 million and $398 million, respectively, located in countries outside the United States. As of December 31, 2023, we had $1,705 million of loss carryforwards available to reduce future taxable income. Loss carryforwards of $383 million must be utilized within the next five years, and the remainder can be utilized over a period greater than five years. An analysis of our deferred tax asset valuation allowances is as follows (in millions):
Year Ended December 31, | 2023 | 2022 | 2021
Balance at beginning of year | $ | 424 |  | $ | 401 |  | $ | 406 |
Additions | 28 |  | 47 |  | 25 |
Deductions | (56) |  | (24) |  | (30) |
Balance at end of year | $ | 396 |  | $ | 424 |  | $ | 401 |
The Company’s deferred tax asset valuation allowances are primarily the result of uncertainties regarding the future realization of recorded tax benefits on tax loss carryforwards and foreign tax credit carryforwards from operations in various jurisdictions and basis differences in certain equity investments. Current evidence does not suggest that we will realize sufficient taxable income of the appropriate character within the carryforward period to allow us to realize these deferred tax benefits. If we were to identify and implement tax planning strategies to recover these deferred tax assets or generate sufficient income of the appropriate character in these jurisdictions in the future, it could lead to the reversal of these valuation allowances and a reduction of income tax expense. The Company believes that it will generate sufficient future taxable income to realize the tax benefits related to the remaining net deferred tax assets in our consolidated balance sheet. In 2023, the Company recognized a net decrease of $28 million in its valuation allowances, primarily due to net decreases in the deferred tax assets and related valuation allowances on a certain equity method investment, certain excess foreign tax credit carryforwards and the changes in net operating losses in the normal course of business. In 2022, the Company recognized a net increase of $23 million in its valuation allowances. The increase was primarily due to significant negative evidence on the utilization of excess foreign tax credits generated in the current year. The increase was also due to net increases in the deferred tax assets and related valuation allowances on certain equity method investments and the changes in net operating losses in the normal course of business. In 2021, the Company recognized a net decrease of $5 million in its valuation allowances. The decrease was primarily due to net decreases in the deferred tax assets and related valuation allowances on certain equity method investments and the changes in net operating losses in the normal course of business.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Publisher FASB -URI https://asc.fasb.org//1943274/2147480990/946-20-50-13 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//740/tableOfContent Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 14 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-14 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-21 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 270 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482526/740-270-50-1 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 17 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-17 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-2 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482603/740-30-50-2 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration