XML 44 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 Our effective tax rate was 12.6%, 18.2% and 18.7% for 2021, 2020 and 2019. The effective income tax rate for 2021 reflects the continued lower effective income tax rates as a result of our European operations, certain discrete tax benefits, the tax effect related to the transfer of intellectual property between tax jurisdictions and the tax effect of future remittances of the undistributed earnings of foreign subsidiaries. The effective
income tax rate for 2020 and 2019 reflects the tax effect related to the transfer of intellectual properties between tax jurisdictions, the effective income tax rates as a result of our European operations and the tax effect of future remittances of the undistributed earnings of foreign subsidiaries.
Effective Income Tax Rate Reconciliation
202120202019
United States federal statutory rate21.0 %21.0 %21.0 %
United States state and local income taxes, less federal deduction2.7 0.1 1.7 
Foreign income tax at rates other than 21%(6.9)(3.3)(4.6)
Tax related to repatriation of foreign earnings1.4 3.0 (0.5)
Intellectual property transfer(2.3)(1.4)3.5 
Other(3.3)(1.2)(2.4)
Effective income tax rate12.6 %18.2 %18.7 %
Earnings Before Income Taxes 
202120202019
United States$433 $239 $366 
International1,848 1,715 2,196 
Total$2,281 $1,954 $2,562 
Components of Income Tax Expense (Benefit)
Current income tax expense:202120202019
United States federal$155 $80 $(17)
United States state and local97 20 46 
International272 207 324 
Total current income tax expense$524 $307 $353 
Deferred income tax (benefit) expense:
United States federal$(82)$1 $10 
United States state and local(23)(25)(1)
International(132)72 117 
Total deferred income tax (benefit) expense $(237)$48 $126 
Total income tax expense$287 $355 $479 
Interest and penalties included in other income (expense), net were expense of ($23), ($35) and ($9) in 2021, 2020 and 2019. The United States federal deferred income tax benefit (expense) includes the utilization of net operating loss carryforwards of $283, $41 and $50 in 2021, 2020 and 2019.
Deferred Income Tax Assets and Liabilities
Deferred income tax assets:20212020
Inventories$513 $434 
Product-related liabilities39 48 
Other accrued expenses501 512 
Depreciation and amortization1,194 1,269 
State income taxes128 108 
Share-based compensation63 56 
Net operating loss and other credit carryforwards232 470 
Other191 166 
Total deferred income tax assets$2,861 $3,063 
Less valuation allowances(164)(203)
Net deferred income tax assets$2,697 $2,860 
Deferred income tax liabilities:20212020
Depreciation and amortization$(891)$(1,286)
Undistributed earnings(114)(161)
Total deferred income tax liabilities$(1,005)$(1,447)
Net deferred income tax assets$1,692 $1,413 
Reported as:
Noncurrent deferred income tax assets$1,760 $1,530 
Noncurrent liabilities—Other liabilities(68)(117)
Total$1,692 $1,413 
Accrued interest and penalties were $150 and $133 on December 31, 2021 and 2020 which were reported in current and noncurrent accrued expenses and other liabilities.
Net operating loss carryforwards totaling $602 with $192 being subject to a full valuation allowance ($183 and $106 related to the Wright acquisition) on December 31, 2021 are available to reduce future taxable earnings of certain domestic and foreign
subsidiaries. United States loss carryforwards of $403 expire through 2045. International loss carryforwards of $198 begin to expire in 2022; however, some have no expiration. We also have tax credit carryforwards of $104 with $83 being subject to a full valuation allowance. The credits with a full valuation allowance begin to expire in 2022; however, some have no expiration. We do not anticipate generating income tax in excess of the non-expiring credits in the foreseeable future.
The Tax Cuts and Jobs Act ("the Act") was enacted in 2017 in the United States. We recorded a one-time transition tax on earnings of certain foreign subsidiaries that were previously deferred. The Act also subjects a United States shareholder to tax on Global Intangible Low-Taxed Income (GILTI) earned by certain foreign subsidiaries. We have elected to account for GILTI tax in the year the tax is incurred.
We recorded deferred income tax on undistributed earnings of foreign subsidiaries not determined to be indefinitely reinvested. Determination of the total amount of unrecognized deferred income tax on undistributed earnings of foreign subsidiaries is not practicable.
Uncertain Income Tax Positions
 20212020
Beginning uncertain tax positions$457 $472 
Increases related to current year income tax positions13 12 
Increases related to prior year income tax positions4 5 
Decreases related to prior year income tax positions:
Settlements and resolutions of income tax audits(18)(41)
Statute of limitations expirations and other— (7)
Foreign currency translation(12)16 
Ending uncertain tax positions$444 $457 
Reported as:
Noncurrent liabilities—Income taxes$444 $457 
Our income tax expense would have been reduced by $445 and $456 in 2021 and 2020 had these uncertain income tax positions been favorably resolved. It is reasonably possible that the amount of unrecognized tax benefits will significantly change due to one or more of the following events in the next 12 months: expiring statutes, audit activity, tax payments, competent authority proceedings related to transfer pricing or final decisions in matters that are the subject of controversy in various taxing jurisdictions in which we operate, including inventory transfer pricing, cost sharing, product royalty and foreign branch arrangements. We are not able to reasonably estimate the amount or the future periods in which changes in unrecognized tax benefits may be resolved. Interest and penalties incurred associated with uncertain tax positions are included in other income (expense), net.
In the normal course of business, income tax authorities in various income tax jurisdictions both within the United States and internationally conduct routine audits of our income tax returns filed in prior years. These audits are generally designed to determine if individual income tax authorities are in agreement with our interpretations of complex income tax regulations regarding the allocation of income to the various income tax jurisdictions. Income tax years are open from 2014 through the current year for the United States federal jurisdiction. Income tax years open for our other major jurisdictions range from 2006 through the current year.