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Income Taxes | 12 Months Ended
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Dec. 31, 2023
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES Our effective tax rate was 13.8%, 12.1% and 12.6% for 2023, 2022 and 2021. The effective income tax rate for 2023 increased from 2022 due to the 2022 effective settlement of the United States federal income tax audit for years 2014 through 2018 and the 2022 reversal of deferred income tax on undistributed earnings of foreign subsidiaries partially offset by the 2023 tax effect related to transfers of intellectual property between tax jurisdictions. The effective income tax rate for 2022 decreased from 2021 due to the 2022 effective settlement of the United States federal income tax audit for years 2014 through 2018 and the 2022 reversal of deferred income tax on undistributed earnings of foreign subsidiaries. The effective income tax rates for 2023, 2022 and 2021 reflect the continued lower effective income tax rates as a result of our European operations, the tax effect related to the transfers of intellectual property between tax jurisdictions, the tax effect of future remittances of the undistributed earnings of foreign subsidiaries and certain discrete tax items.
Effective Income Tax Rate Reconciliation
| 2023 |  | 2022 |  | 2021
United States federal statutory rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
United States state and local income taxes, less federal deduction | 1.1 |  |  | 2.0 |  |  | 2.7 |
Foreign income tax at rates other than 21% | (6.8) |  |  | (4.1) |  |  | (6.9) |
Tax related to repatriation of foreign earnings | 1.2 |  |  | (2.4) |  |  | 1.4 |
Intellectual property transfers | (3.3) |  |  | 0.1 |  |  | (2.3) |
United States federal audit settlement | — |  |  | (6.1) |  |  | — |
Goodwill impairment | — |  |  | 1.7 |  |  | — |
Other | 0.6 |  |  | (0.1) |  |  | (3.3) |
Effective income tax rate | 13.8 | % |  | 12.1 | % |  | 12.6 | %
Earnings Before Income Taxes
| 2023 |  | 2022 |  | 2021
United States | $ | 701 |  |  | $ | 407 |  |  | $ | 433 |
International | 2,972 |  |  | 2,276 |  |  | 1,848 |
Total | $ | 3,673 |  |  | $ | 2,683 |  |  | $ | 2,281 |
Components of Income Tax Expense (Benefit)
Current income tax expense (benefit): | 2023 |  | 2022 |  | 2021
United States federal | $ | 236 |  |  | $ | (76) |  |  | $ | 155 |
United States state and local | 48 |  |  | 64 |  |  | 97 |
International | 430 |  |  | 279 |  |  | 272 |
Total current income tax expense | $ | 714 |  |  | $ | 267 |  |  | $ | 524 |
Deferred income tax expense (benefit): |  |  |  |  |
United States federal | $ | (212) |  |  | $ | (179) |  |  | $ | (82) |
United States state and local | (20) |  |  | (30) |  |  | (23) |
International | 26 |  |  | 267 |  |  | (132) |
Total deferred income tax expense (benefit) | $ | (206) |  |  | $ | 58 |  |  | $ | (237) |
Total income tax expense | $ | 508 |  |  | $ | 325 |  |  | $ | 287 |
Interest and penalties included in other income (expense), net were expense of $1 in 2023, income of $71 in 2022 and expense of $23 in 2021. The United States federal deferred income tax expense (benefit) includes the utilization of net operating loss carryforwards of $189, $56 and $283 in 2023, 2022 and 2021.
Deferred Income Tax Assets and Liabilities
Deferred income tax assets: | 2023 |  | 2022
Inventories | $ | 521 |  |  | $ | 516 |
Other accrued expenses | 253 |  |  | 155 |
Depreciation and amortization | 918 |  |  | 1,038 |
State income taxes | 150 |  |  | 153 |
Share-based compensation | 86 |  |  | 73 |
Research and development capitalization | 295 |  |  | 204 |
International interest expense carryforwards | 46 |  |  | 135 |
Net operating loss and credit carryforwards | 385 |  |  | 247 |
Other | 235 |  |  | 191 |
Total deferred income tax assets | $ | 2,889 |  |  | $ | 2,712 |
Less valuation allowances | (223) |  |  | (285) |
Net deferred income tax assets | $ | 2,666 |  |  | $ | 2,427 |
Deferred income tax liabilities: |  |  |
Depreciation and amortization | $ | (1,012) |  |  | $ | (1,037) |
Undistributed earnings | (47) |  |  | (47) |
Total deferred income tax liabilities | $ | (1,059) |  |  | $ | (1,084) |
Net deferred income tax assets | $ | 1,607 |  |  | $ | 1,343 |
Reported as: |  |  |
Noncurrent deferred income tax assets | $ | 1,670 |  |  | $ | 1,410 |
Noncurrent liabilities—Other liabilities | (63) |  |  | (67) |
Total | $ | 1,607 |  |  | $ | 1,343 |
Accrued interest and penalties were $67 and $66 on December 31, 2023 and 2022 which were reported in accrued expenses and other liabilities and other noncurrent liabilities. United States federal loss carryforwards of $254, with $53 of associated deferred tax asset and with $2 being subject to a valuation allowance, begin to expire in 2024. United States state loss carryforwards of $3,006, with $74 associated deferred tax asset and with $47 being subject to a valuation allowance, begin to expire in 2024. International loss carryforwards of $259, with $66 of associated deferred tax asset and with $63 being subject to a valuation allowance, begin to expire in 2026; however, some have no expiration. We also have tax credit carryforwards of $208 with $79 being subject to a full valuation allowance. The credits with a full valuation allowance begin to expire in 2024. 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. In 2022 it was determined that, based on our revised capital plan, certain cash outside the United States would no longer need to be repatriated during the period previously contemplated. As a result deferred taxes of $71 that were recorded on the associated earnings were reversed. The amount of undistributed earnings of foreign subsidiaries determined to be indefinitely reinvested at December 31, 2023 was approximately $11 billion. Determination of the total amount of unrecognized deferred income tax on undistributed earnings of foreign subsidiaries is not practicable.
Uncertain Income Tax Positions
| 2023 |  | 2022
Beginning uncertain tax positions | $ | 286 |  |  | $ | 444 |
Increases related to current year income tax positions | 102 |  |  | 17 |
Increases related to prior year income tax positions | 10 |  |  | 34 |
Decreases related to prior year income tax positions | (33) |  |  | (178) |
Settlements of income tax audits | (1) |  |  | (13) |
Statute of limitations expirations and other | — |  |  | (6) |
Foreign currency translation | 7 |  |  | (12) |
Ending uncertain tax positions | $ | 371 |  |  | $ | 286 |
Reported as: |  |  |
Noncurrent liabilities—Income taxes | $ | 371 |  |  | $ | 286 |
Our income tax expense would have been reduced by $248 and $289 in 2023 and 2022 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 expense in 2022 decreased $162 due to the effective settlement of the United States federal income tax audit for years 2014 through 2018. In addition 2022 other income (expense), net includes a benefit of $50 related to the release of accrued interest associated with this settlement. Income tax years are open from 2019 through the current year for the United States federal jurisdiction. Income tax years open for our other major jurisdictions range from 2007 through the current year.

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