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Taxes on Income | 12 Months Ended
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Dec. 31, 2022
Income Tax Disclosure [Abstract] |
Taxes on Income | Taxes on Income Income before taxes on income resulting from domestic and foreign operations is as follows:
(in millions) | Year Ended December 31,
| 2022 |  | 2021 |  | 2020
Domestic operations | $ | 3,426 |  |  | $ | 2,874 |  |  | $ | 2,226 |
Foreign operations | 1,276 |  |  | 1,290 |  |  | 1,002 |
Total income before taxes | $ | 4,702 |  |  | $ | 4,164 |  |  | $ | 3,228 |
The provision for taxes on income consists of the following:
(in millions) | Year Ended December 31,
| 2022 |  | 2021 |  | 2020
Federal: |  |  |  |  |
Current | $ | 928 |  |  | $ | 438 |  |  | $ | 349 |
Deferred | (185) |  |  | (9) |  |  | 1 |
Total federal | 743 |  |  | 429 |  |  | 350 |
Foreign: |  |  |  |  |
Current | 322 |  |  | 295 |  |  | 246 |
Deferred | (98) |  |  | 23 |  |  | (9) |
Total foreign | 224 |  |  | 318 |  |  | 237 |
State and local: |  |  |  |  |
Current | 265 |  |  | 153 |  |  | 111 |
Deferred | (52) |  |  | 1 |  |  | (4) |
Total state and local | 213 |  |  | 154 |  |  | 107 |
Total provision for taxes | $ | 1,180 |  |  | $ | 901 |  |  | $ | 694 |
A reconciliation of the U.S. federal statutory income tax rate to our effective income tax rate for financial reporting purposes is as follows:
| Year Ended December 31,
| 2022 |  | 2021 |  | 2020
U.S. federal statutory income tax rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State and local income taxes | 3.9 |  |  | 3.3 |  |  | 3.0 |
Divestitures | 2.9 |  |  | — |  |  | — |
Foreign operations | (2.8) |  |  | (0.2) |  |  | (0.3) |
Stock-based compensation | — |  |  | (0.8) |  |  | (0.7) |
S&P Dow Jones Indices LLC joint venture | (1.1) |  |  | (1.1) |  |  | (1.2) |
Tax credits and incentives | (1.3) |  |  | (2.3) |  |  | (2.2) |
Other, net | 2.5 |  |  | 1.7 |  |  | 1.9 |
Effective income tax rate | 25.1 | % |  | 21.6 | % |  | 21.5 | %
T he increase in the e ffective income tax rate in 2022 was primarily due to the tax charge on merger related divestitures. The increase in the effective income tax rate in 2021 was primarily due to a change in the mix of income by jurisdiction. We have elected to recognize the tax on Global Intangible Low Taxed Income (“GILTI”) as a period expense in the year the tax is incurred. GILTI expense is included in Other, net above. The principal temporary differences between the accounting for income and expenses for financial reporting and income tax purposes are as follows:
(in millions) | December 31,
| 2022 |  | 2021
Deferred tax assets: |  |  |
Employee compensation | $ | 100 |  |  | $ | 57 |
Accrued expenses | 179 |  |  | 54 |
Postretirement benefits | 27 |  |  | 28 |
Unearned revenue | 67 |  |  | 74 |
Forward exchange contracts | — |  |  | 71 |
Fixed Assets | 49 |  |  | — |
Loss carryforwards | 537 |  |  | 204 |
Lease liabilities | 170 |  |  | 142 |
Other | 126 |  |  | 32 |
Total deferred tax assets | 1,255 |  |  | 662 |
Deferred tax liabilities: |  |  |
Goodwill and intangible assets | (4,791) |  |  | (394) |
Right of use asset | (100) |  |  | (101) |
Postretirement benefits | (33) |  |  | (46) |
Forward exchange contracts | (41) |  |  | — |
Fixed assets | — |  |  | (6) |
Total deferred tax liabilities | (4,965) |  |  | (547) |
Net deferred income tax asset before valuation allowance | (3,710) |  |  | 115 |
Valuation allowance | (274) |  |  | (206) |
Net deferred income tax liability | $ | (3,984) |  |  | $ | (91) |
Reported as: |  |  |
Non-current deferred tax assets | $ | 81 |  |  | $ | 56 |
Non-current deferred tax liabilities | (4,065) |  |  | (147) |
Net deferred income tax liability | $ | (3,984) |  |  | $ | (91) |
We record valuation allowances against deferred income tax assets when we determine that it is more likely than not that such deferred income tax assets will not be realized based upon all the available evidence. The valuation allowance is primarily related to operating losses. As of December 31, 2022, we have approximately $10.1 billion of undistributed earnings of our foreign subsidiaries, of which $4.1 billion is reinvested indefinitely in our foreign operations. We have not recorded deferred income taxes applicable to undistributed earnings of foreign subsidiaries that are indefinitely reinvested in foreign operations. Quantification of the deferred tax liability, if any, associated with indefinitely reinvested earnings is not practicable. We made net income tax payments tot aling $1,555 million in 2022, $883 million in 2021, and $683 million in 2020. As of December 31, 2022, we had net operating loss carryforwards of $1,301 million, of which a significant portion has an unlimited carryover period under current law. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
(in millions) | Year ended December 31,
| 2022 |  | 2021 |  | 2020
Balance at beginning of year | $ | 147 |  |  | $ | 121 |  |  | $ | 124 |
Additions based on tax positions related to the current year | 28 |  |  | 35 |  |  | 24 |
Additions for tax positions of prior years | 62 |  |  | 9 |  |  | 1 |
Reduction for tax positions of prior years | — |  |  | — |  |  | (13) |
Reduction for settlements | — |  |  | (8) |  |  | (4) |
Expiration of applicable statutes of limitations | (14) |  |  | (10) |  |  | (11) |
Balance at end of year | $ | 223 |  |  | $ | 147 |  |  | $ | 121 |
The total amount of federal, state and local, and foreign unrecognized tax benefits as of December 31, 2022, 2021 and 2020 was $223 million, $147 million and $121 million, respectively, exclusive of interest and penalties. During the year ended December 31, 2022, the change in unrecognized tax benefits resulted in a net increase of tax expense of $52 million. We recognize accrued interest and penalties related to unrecognized tax benefits in interest expense and operating-related expense, respectively. Based on the current status of income tax audits, we believe that the total amount of unrecognized tax benefits on the balance sheet may be reduced by up to approximately $20 million in the next twelve months as a result of the resolution of local tax examinations and expiration of applicable statutes of limitations. In addition to the unrecognized tax benefits, we had accrued interest and penalties associated with unrecognized tax benefits of $38 million and $24 million as of December 31, 2022 and 2021, respectively. The U.S. federal income tax audits for 2018 through 2022 are in process. During 2022, we completed state and foreign tax audits and, with few exceptions, we are no longer subject to federal, state, or foreign income tax examinations by tax authorities for the years before 2014. Th e impact to tax expense in 2022, 2021 and 2020 was not material. We file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions, and we are routinely under audit by many different tax authorities. We believe that our accrual for tax liabilities is adequate for all open audit years based on an assessment of many factors including past experience and interpretations of tax law. This assessment relies on estimates and assumptions and may involve a series of complex judgments about future events. It is possible that tax examinations will be settled prior to December 31, 2023. If any of these tax audit settlements do occur within that period, we would make any necessary adjustments to the accrual for unrecognized tax benefits.

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- 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 -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI https://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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