XML 54 R14.htm IDEA: XBRL DOCUMENT v3.24.4
Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes
Note 5: Income Taxes
Income (Loss) Before Income Taxes
Year ended December 31 (in millions)202420232022
Domestic$19,615 $22,164 $19,329 
Foreign (942)(1,686)(10,045)
$18,673 $20,478 $9,284 
Components of Income Tax Expense
Year ended December 31 (in millions)202420232022
Current Expense (Benefit):
Federal$2,194 $6,270 $4,025 
State1,115 1,591 961 
Foreign389 249 207 
3,698 8,110 5,193 
Deferred Expense (Benefit):
Federal(599)(2,126)(281)
State(49)(468)(483)
Foreign(253)(145)(70)
(902)(2,739)(834)
Income tax expense (benefit)$2,796 $5,371 $4,359 
Our income tax expense (benefit) differs from the federal statutory amount because of the effect of the items detailed in the table below. 
Year ended December 31 (in millions)202420232022
Federal tax at statutory rate$3,921 $4,300 $1,950 
State income taxes, net of federal benefit363 418 454 
Foreign income taxed at different rates(a)
363 455 586 
Adjustments to uncertain and effectively settled tax positions, net332 353 179 
Tax credits(a)
(328)(280)(171)
Excess tax benefits recognized on share-based compensation(4)4 (30)
Tax legislation(24)8 (287)
Internal corporate reorganization
(1,920)— — 
Goodwill impairment— — 1,666 
Other93 113 12 
Income tax expense (benefit)$2,796 $5,371 $4,359 
(a) We updated our presentation in 2024 to include all federal tax credits within the “tax credits” caption, which results in reclassification of prior period amounts. Federal tax credits for foreign income taxes previously presented within the “foreign income taxed at different rates” caption and federal research and development credits previously presented in a stand-alone caption are now presented within the “tax credits” caption.
We base our provision for income taxes on our current period income, changes in our deferred income tax assets and liabilities, income tax rates, changes in estimates of our uncertain tax positions, tax planning opportunities available in the jurisdictions in which we operate and excess tax benefits or deficiencies that arise when the tax consequences of share-based compensation differ from amounts previously recognized in the statements of income. We recognize deferred tax assets and liabilities when there are temporary differences between the financial reporting basis and tax basis of our assets and liabilities and for the expected benefits of using net operating loss carryforwards. When a change in the tax rate or tax law has an impact on deferred taxes, we apply the change based on the years in which the temporary differences are expected to reverse. We record the change in our consolidated financial statements in the period of enactment.
The determination of the income tax consequences of a business combination includes identifying the tax basis of assets and liabilities acquired and any contingencies associated with uncertain tax positions assumed or resulting from the business combination. Deferred tax assets and liabilities related to temporary differences of an acquired entity are recorded as of the date of the business combination and are based on our estimate of the ultimate tax basis that will be accepted by the various tax authorities. We record liabilities for contingencies associated with prior tax returns filed by the acquired entity based on criteria set forth in the appropriate accounting guidance. We adjust the deferred tax accounts and the liabilities periodically to reflect any revised estimated tax basis and any estimated settlements with the various tax authorities. The effects of these adjustments are recorded to income tax expense.
From time to time, we engage in transactions in which the tax consequences may be subject to uncertainty. In these cases, we evaluate our tax position using the recognition threshold and the measurement attribute in accordance with the accounting guidance related to uncertain tax positions. Examples of these transactions include business acquisitions and dispositions, including consideration paid or received in connection with these transactions, certain financing transactions, and the allocation of income among state and local tax jurisdictions. Significant judgment is required in assessing and estimating the tax consequences of these transactions. We determine whether it is more likely than not that a tax position will be sustained on examination, including the resolution of any related appeals or litigation processes, based on the technical merits of the position. A tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of benefit to be recognized in our consolidated financial statements. We classify interest and penalties, if any, associated with our uncertain tax positions as a component of income tax expense (benefit).
Components of Net Deferred Tax Liability
December 31 (in millions)20242023
Deferred Tax Assets:
Net operating loss and other loss carryforwards$4,415 $3,530 
Advance on sale of investment (see Note 7)
2,437 2,367 
Nondeductible accruals and other4,232 4,100 
Less: Valuation allowance4,498 3,679 
 6,586 6,318 
Deferred Tax Liabilities:
Property and equipment and intangible assets28,672 29,337 
Investments934 1,002 
Debt2,055 1,814 
Foreign subsidiaries and undistributed foreign earnings
43 59 
31,704 32,212 
Net deferred tax liability$25,118 $25,894 
Changes in our Valuation Allowance for Deferred Tax Assets
(in millions)202420232022
Beginning balance$3,679 $3,295 $2,907 
Additions charged to income tax expense and other accounts910 469 433 
Deductions from reserves(91)(84)(45)
Ending balance$4,498 $3,679 $3,295 
Changes in our net deferred tax liability in 2024 that were not recorded as deferred income tax expense (benefit) are primarily related to an increase of $124 million associated with items included in other comprehensive income (loss).
As of December 31, 2024, net operating loss and other carryforwards primarily reflects foreign net operating loss carryforwards of $11.8 billion, which primarily relate to our foreign operations in Europe and the majority of which can be carried forward indefinitely. The determination of the realization of the foreign net operating loss carryforwards is dependent on our subsidiaries’ taxable income or loss, redetermination from taxing authorities, and foreign laws that can change from year to year and impact the amount of such carryforwards. We recognize a valuation allowance if we determine it is more likely than not that some portion, or all, of a deferred tax asset will not be realized. As of December 31, 2024 and 2023, our valuation allowance was primarily related to our foreign net operating loss carryforwards.
During 2024, we completed an internal corporate reorganization related to certain foreign subsidiaries, which resulted in a federal net capital loss of $9.1 billion as of December 31, 2024. This capital loss can be carried back and applied against capital gains recognized on our prior federal income tax returns for 2021 through 2023, and as a result, we recognized an income tax benefit and a corresponding refund receivable of $1.9 billion. Deferred federal income tax has not been recognized on the excess of the financial reporting basis over the tax basis in foreign subsidiaries resulting from the reorganization where indefinite reversal criteria have been met. Any liabilities would be recognized upon a taxable disposition of such subsidiaries; however, the determination of the amount of any unrecognized deferred income tax liabilities is not practicable.
A net current federal tax receivable of $2.0 billion is included in other current assets within our consolidated balance sheet as of December 31, 2024. There were no net current federal tax receivables as of December 31, 2023.
Uncertain Tax Positions
Reconciliation of Unrecognized Tax Benefits
(in millions)
202420232022
Gross unrecognized tax benefits, January 1$2,593 $2,161 $2,042 
Additions based on tax positions related to the current year396 546 380 
Additions based on tax positions related to prior years201 1 56 
Reductions for tax positions of prior years(268)(43)(145)
Reductions due to expiration of statutes of limitations(29)(56)(148)
Settlements with tax authorities and other(28)(15)(24)
Gross unrecognized tax benefits, December 31$2,865 $2,593 $2,161 
Our gross unrecognized tax benefits include both amounts related to positions for which we have recorded liabilities for potential payment obligations and those for which tax has been assessed and paid. The amounts exclude the federal benefits on state tax positions that were recorded to deferred income taxes. If we were to recognize our gross unrecognized tax benefits in the future, $2.2 billion would impact our effective tax rate and the remaining amount would increase our deferred income tax liability. The amount and timing of the recognition of any such tax benefit is dependent on the completion of examinations of our tax filings by the various tax authorities and the expiration of statutes of limitations. It is reasonably possible that certain tax contests could be resolved within the next 12 months that may result in a decrease in our effective tax rate. Accrued interest and penalties associated with our liability for uncertain tax positions were not material in any period presented.
The IRS has completed its examination of our income tax returns for all years through 2022. Various states are examining our state tax returns and the tax years of those tax returns currently under examination vary by state, with most of the periods relating to tax years 2011 and forward. Various foreign jurisdictions are examining our tax returns and the tax years of those tax returns currently under examination vary by country, with most of the periods relating to tax years 2010 and forward.