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INCOME TAXES | 3 Months Ended
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Mar. 28, 2025
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES The Company recorded income taxes of $722 million (17.8% effective tax rate) and $687 million (17.7% effective tax rate) during the three months ended March 28, 2025 and March 29, 2024, respectively. The Company’s effective tax rates for the three months ended March 28, 2025 and March 29, 2024 vary from the statutory U.S. federal tax rate of 21.0%, primarily due to the tax impact of significant operating and nonoperating items, as described in Note 12, along with the tax benefits of having significant earnings generated outside of the United States and significant earnings generated in investments accounted for under the equity method, both of which are generally taxed at rates lower than the statutory U.S. federal tax rate. The Company’s effective tax rate for the three months ended March 28, 2025 included $143 million of net tax benefits related to various discrete tax items, including net interest income of $53 million related to the IRS Tax Litigation Deposit recorded in the line item income taxes in our consolidated statement of income, in accordance with our accounting policy, and a tax benefit of $85 million related to a change in the Company’s indefinite reinvestment assertion for certain foreign entities. During the three months ended March 28, 2025, the Company invested $30 million in limited partnerships that receive tax credits and other tax benefits by constructing, owning and operating alternative energy generation facilities. During the three months ended March 28, 2025, the Company received tax credits and other income tax benefits of $9 million and recognized amortization expense of $7 million related to all of our investments of this nature. The amount of non-income tax-related activity and other returns related to these investments was not material during the three months ended March 28, 2025. As of March 28, 2025, the carrying value of these investments was $65 million. The Company recorded $123 million of unfunded commitments related to these investments in the line item accounts payable and accrued expenses in our consolidated balance sheet as of March 28, 2025 and December 31, 2024. The Company expects to fulfill these unfunded commitments in 2025. 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 it 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. On August 2, 2024, the Tax Court entered a decision reflecting additional federal income tax of $2.7 billion for the 2007 through 2009 tax years. With applicable interest, the total liability for the 2007 through 2009 tax years resulting from the Tax Court’s decision is $6.0 billion. On October 22, 2024, the Company appealed the Tax Court’s decision to the U.S. Court of Appeals for the Eleventh Circuit. The Company filed its principal appellate brief with the U.S. Court of Appeals for the Eleventh Circuit on March 12, 2025. The Company strongly disagrees with the Opinions and intends to vigorously defend its positions. Refer to Note 9.

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