XML 53 R19.htm IDEA: XBRL DOCUMENT v3.22.0.1
Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes
Income before provision for income taxes, classified by source of income, was as follows:
In millions202120202019
U.S.$2,413.9 $1,390.4 $2,159.1 
Outside the U.S.6,714.0 4,750.3 5,859.0 
Income before provision for income taxes *$9,127.9 $6,140.7 $8,018.1 
* Income before provision for income taxes increased in 2021 due to stronger operating performance and recovery from the impact of COVID-19.

The provision for income taxes, classified by the timing and location of payment, was as follows:
In millions202120202019
U.S. federal$887.6 $554.1 $521.8 
U.S. state228.1 119.1 194.7 
Outside the U.S.895.3 730.6 1,126.5 
Current tax provision
2,011.0 1,403.8 1,843.0 
U.S. federal(177.4)870.3 38.5 
U.S. state(24.1)73.3 20.0 
Outside the U.S.(226.8)(937.2)91.2 
Deferred tax provision
(428.3)6.4 149.7 
Provision for income taxes$1,582.7 $1,410.2 $1,992.7 
Net deferred tax (assets) liabilities consisted of:
In millions
December 31, 2021
2020
Lease right-of-use asset$3,462.7 $3,427.3 
Property and equipment1,648.6 1,600.4 
Intangible assets696.0 1,046.2 
Other490.8 322.4 
Total deferred tax liabilities
6,298.1 6,396.3 
Lease liability(3,516.9)(3,462.0)
Intangible assets(2,524.6)(2,095.9)
Property and equipment(647.1)(593.8)
Deferred foreign tax credits(311.5)(289.3)
Employee benefit plans(153.6)(190.8)
Deferred revenue(121.4)(154.8)
Operating loss carryforwards(96.1)(86.8)
Other(284.4)(449.0)
Total deferred tax assets before valuation allowance
(7,655.6)(7,322.4)
Valuation allowance1,076.1 816.0 
Net deferred tax (assets) liabilities$(281.4)$(110.1)
Balance sheet presentation:
Deferred income taxes$2,075.6 $2,025.6 
Other assets-miscellaneous(2,357.0)(2,135.7)
Net deferred tax (assets) liabilities$(281.4)$(110.1)
At December 31, 2021, the Company had net operating loss carryforwards of $464.1 million, of which $263.9 million has an indefinite carryforward. The remainder will expire at various dates from 2022 to 2040.
The statutory U.S. federal income tax rate reconciles to the effective income tax rates as follows:
202120202019
Statutory U.S. federal income tax rate21.0 %21.0 %21.0 %
State income taxes, net of related federal income tax benefit1.8 1.8 1.8 
Foreign income taxed at different rates
0.9 0.4 1.6 
Tax impact of intercompany transactions0.1 2.1 — 
Global intangible low-tax income ("GILTI") 0.3 1.2 1.3 
Foreign-derived intangible income ("FDII")(2.6)(3.4)(1.3)
U.S./Foreign tax law changes(3.9)(1.8)— 
Foreign tax credit redetermination regulations
— — (1.0)
Other, net(0.3)1.7 1.5 
Effective income tax rates17.3 %23.0 %24.9 %

In 2021, U.S./Foreign tax law changes included a $364 million income tax benefit related to the remeasurement of deferred taxes as a result of a change in the U.K. statutory income tax rate.
As of December 31, 2021 and 2020, the Company’s gross unrecognized tax benefits totaled $1,504.9 million and $1,479.2 million, respectively. After considering the deferred tax accounting impact, it is expected that about $990 million of the total as of December 31, 2021 would favorably affect the effective tax rate if resolved in the Company’s favor.

The following table presents a reconciliation of the beginning and ending amounts of unrecognized tax benefits:
In millions20212020
Balance at January 1
$1,479.2 $1,439.1 
Decreases for positions taken in prior years
(31.9)(71.4)
Increases for positions taken in prior years
26.1 38.5 
Increases for positions related to the current year
60.7 89.6 
Settlements with taxing authorities
(16.8)(3.9)
Lapsing of statutes of limitations
(12.4)(12.7)
Balance at December 31(1)
$1,504.9 $1,479.2 
(1)Of this amount, $1,157.5 million and $1,137.8 million are included in Long-term income taxes for 2021 and 2020, respectively, and $332.0 million and $325.0 million are included in Prepaid expenses and other current assets for 2021 and 2020, respectively, on the Consolidated Balance Sheet. The remainder is included in Deferred income taxes on the Consolidated Balance Sheet.

In 2015, the U.S. Internal Revenue Service (the "IRS") issued a Revenue Agent Report (“RAR”) that included certain disagreed transfer pricing adjustments related to the Company’s U.S. Federal income tax returns for 2009 and 2010. Also in 2015, the Company filed a protest with the IRS related to these disagreed transfer pricing matters. During 2017, the Company received a response to its protest. In December 2018, the Company met with the IRS Appeals team and, during 2020 and 2021, the Company and the IRS Appeals team continued to have a dialogue regarding these disagreed transfer pricing matters. As of December 31, 2021, the Company does not yet have a signed agreement with the IRS related to the settlement of these issues.
In 2017, the IRS completed its examination of the Company’s U.S. Federal income tax returns for 2011 and 2012. In 2018, the IRS issued a RAR for these years. As expected, the RAR included the same disagreed transfer pricing matters as the 2009 and 2010 RAR. Also in 2018, the Company filed a protest with the IRS related to these disagreed transfer pricing matters. The transfer pricing matters for 2011 and 2012 are being addressed along with the 2009 and 2010 transfer pricing matters as part of the 2009-2010 appeals process.
The Company is also under audit in multiple foreign tax jurisdictions for matters primarily related to transfer pricing, and the Company is under audit in multiple state tax jurisdictions. While the Company cannot estimate the impact to the effective tax rate, it is reasonably possible that the total amount of unrecognized tax benefits could decrease up to $1,030 million within the next 12 months. This would be due to the possible settlement of the IRS transfer pricing matters, completion of the aforementioned foreign and state tax audits and the expiration of the statute of limitations in multiple tax jurisdictions.
In conjunction with the tax audits in certain foreign jurisdictions, regulatory actions could lead to related non-tax fines in addition to any potential audit settlement amounts. The outcome of such matters, none of which are estimable as of December 31, 2021, is inherently unpredictable and subject to significant uncertainties. It is reasonably possible that, as a result of audit progression in both the U.S. and foreign tax audits within the next 12 months, there may be new information that causes the Company to reassess the total amount of unrecognized tax benefits recorded. While the Company cannot estimate the impact that new information may have on the unrecognized tax benefit balance, it believes that the liabilities recorded are appropriate and adequate.
The Company operates within multiple tax jurisdictions and is subject to audit in these jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations for years before 2009.
The Company had $183.6 million and $177.4 million accrued for interest and penalties related to tax matters at December 31, 2021 and 2020, respectively. The Company recognized interest and penalties related to tax matters of $24.4 million in 2021, $32.4 million in 2020, and $39.9 million in 2019, which are included in the provision for income taxes.
As of December 31, 2021, the Company has accumulated undistributed earnings generated by its foreign subsidiaries, which were predominantly taxed in the U.S. as a result of the transition tax provisions enacted under the Tax Cuts and Jobs Act of 2017. Management does not assert that these previously-taxed unremitted earnings are indefinitely reinvested in operations outside the U.S. Accordingly, the Company has provided deferred taxes for the tax effects incremental to the transition tax. The Company has not provided for deferred taxes on outside basis differences in its investments in its foreign subsidiaries that are unrelated to these accumulated undistributed earnings, as these outside basis differences are indefinitely reinvested.  A determination of the unrecognized deferred taxes related to these other components of the outside basis differences is not practicable.