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INCOME TAXES
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
The provision/(benefit) for income taxes consisted of:
Year Ended December 31,
Dollars in millions202420232022
Current:
U.S.$1,279 $2,745 $3,017 
Non-U.S.1,364 943 1,089 
Total current2,643 3,688 4,106 
Deferred:
U.S.(2,185)(2,339)(2,889)
Non-U.S.96 (949)151 
Total deferred(2,089)(3,288)(2,738)
 Income tax provision
$554 $400 $1,368 
Effective Tax Rate

The reconciliation of the effective tax rate to the U.S. statutory Federal income tax rate was as follows:
% of Earnings Before Income Taxes
Dollars in millions202420232022
(Loss)/Earnings before income taxes:
U.S.$(14,893)$2,624 $(140)
Non-U.S.6,514 5,816 7,853 
Total(8,379)8,440 7,713 
U.S. statutory rate(1,759)21.0 %1,772 21.0 %1,620 21.0 %
Nondeductible R&D charges
2,538 (30.3)%— — %— — %
GILTI, net of foreign derived intangible income deduction 501 (6.0)%223 2.6 %634 8.2 %
Foreign tax effect of certain operations in Ireland, Puerto Rico and Switzerland(302)3.6 %(850)(10.1)%(416)(5.4)%
Non-U.S. tax ruling
— — %(656)(7.8)%— — %
Internal transfers of intangible and other assets— — %— — %(93)(1.2)%
U.S. Federal valuation allowance
46 (0.5)%(171)(2.0)%58 0.8 %
U.S. Federal, state and foreign contingent tax matters(459)5.5 %143 1.7 %(297)(3.9)%
U.S. Federal research-based credits(291)3.5 %(243)(2.9)%(142)(1.8)%
Charitable contributions of inventory(36)0.4 %(75)(0.9)%(94)(1.2)%
Puerto Rico excise tax credit— — %— — %(144)(1.9)%
State and local taxes (net of valuation allowance)(25)0.3 %92 1.1 %103 1.3 %
Foreign and other341 (4.1)%165 2.0 %139 1.8 %
Income tax provision
$554 (6.6)%$400 4.7 %$1,368 17.7 %

Nondeductible R&D charges of $2.5 billion primarily relates to the impact of a $12.1 billion one-time, non-tax deductible charge for the acquisition of Karuna.

GILTI, net of foreign derived intangible income deduction in 2023 includes a benefit of approximately $325 million due to the revised 2023 guidance regarding the deductibility of certain research and development expenses.

Foreign tax effect of certain operations in Ireland, Puerto Rico and Switzerland includes the impact of earnings mix and a benefit from the impact of foreign currency on net operating loss and other carryforwards of $123 million in 2023.

The Non-U.S. tax ruling includes a $656 million deferred income tax benefit regarding the deductibility of a statutory impairment of subsidiary investments in 2023.

Internal transfers of intangible and other assets to streamline our legal entity structure subsequent to the Celgene acquisition resulted in a tax benefit in 2022.

U.S. Federal valuation allowance includes a $193 million reversal related to unrealized equity investment losses in 2023.

U.S. Federal, state and foreign contingent tax matters include tax benefits related to lapse of statute and effectively settled contingent tax matters of $644 million in 2024 related to the resolution of Celgene's 2017-2019 IRS audit, $89 million in 2023 and $522 million in 2022.

U.S. Federal research-based credits includes credits both on research and development as well as orphan drug. The credits in 2024 include revised estimates upon finalization of prior year tax returns.

Puerto Rico imposed an excise tax on the gross company purchase price of goods sold from BMS’s manufacturer in Puerto Rico. The excise tax was recognized in Cost of products sold when the intra-entity sale occurred. For U.S. income tax purposes, the excise tax was not deductible but resulted in foreign tax credits that were generally recognized in BMS’s provision for income taxes when the excise tax was incurred. As of December 31, 2022, BMS amended its existing Puerto Rico decree, eliminating the excise tax and increasing its Puerto Rico tax rate to 10.5% effective for the tax year beginning January 1, 2023, and extending BMS’s tax grants an additional 15 years to 2038.
Deferred Taxes and Valuation Allowance

The components of deferred income tax assets/(liabilities) were as follows:
 December 31,
Dollars in millions20242023
Deferred tax assets
Foreign net operating loss and other carryforwards$1,521 $2,017 
State net operating loss and credit carryforwards529 349 
U.S. Federal capital loss, net operating loss and tax credit
695 249 
Milestone payments and license fees999 918 
Capitalized research expenditures3,886 2,682 
Other1,738 1,883 
Total deferred tax assets9,368 8,098 
Valuation allowance(929)(764)
Deferred tax assets net of valuation allowance$8,439 $7,334 
Deferred tax liabilities
Acquired intangible assets$(3,781)$(4,052)
Goodwill and other(791)(852)
Total deferred tax liabilities$(4,572)$(4,904)
Deferred tax assets/(liabilities), net
$3,867 $2,430 
Recognized as:
Deferred income taxes assets – non-current$4,236 $2,768 
Deferred income taxes liabilities – non-current(369)(338)
Total$3,867 $2,430 

BMS is not indefinitely reinvested with respect to its undistributed earnings from foreign subsidiaries and has provided a deferred tax liability for foreign and state income and withholding tax that would apply. BMS remains indefinitely reinvested with respect to its financial statement basis in excess of tax basis of its foreign subsidiaries. A determination of the deferred tax liability with respect to this basis difference is not practicable.

The U.S. Federal net operating loss carryforwards were $2.0 billion at December 31, 2024. These carryforwards were acquired as a result of certain acquisitions and are subject to limitations under Section 382 of the Internal Revenue Code. The net operating loss carryforwards expire in varying amounts beginning in 2024. The foreign and state net operating loss carryforwards expire in varying amounts beginning in 2024 (certain amounts have unlimited lives).

At December 31, 2024, a valuation allowance of $929 million exists for the following items: $294 million primarily for foreign net operating loss and tax credit carryforwards, $453 million for state deferred tax assets including net operating loss and tax credit carryforwards and $182 million for U.S. Federal deferred tax assets including equity investment fair value adjustments and U.S. Federal net operating loss carryforwards.

Changes in the valuation allowance were as follows:
 Year Ended December 31,
Dollars in millions202420232022
Beginning balance
$764 $873 $1,056 
Provision242 (39)213 
Utilization(182)(54)(68)
Foreign currency translation(9)(19)(59)
Acquisitions/(dispositions)/(liquidations), net113 — (271)
Non-U.S. tax rate change
1 3 2 
Ending balance
$929 $764 $873 

In 2024, the valuation allowance increased as a result of the stock acquisitions of Mirati, Karuna and RayzeBio. In 2022 certain foreign net operating losses and related valuation allowances were utilized or eliminated as a result of internal legal entity restructurings.
Income tax payments were $3.9 billion in 2024, $4.3 billion in 2023 and $5.4 billion in 2022, including $799 million, $567 million and $339 million, respectively, for the transition tax following the TCJA enactment. The remaining amounts payable for the transition tax are $991 million in 2025 and $244 million in 2026.

Business is conducted in various countries throughout the world and is subject to tax in numerous jurisdictions. A significant number of tax returns that are filed are subject to examination by various federal, state and local tax authorities. Tax examinations are often complex, as tax authorities may disagree with the treatment of items reported requiring several years to resolve. Liabilities are established for possible assessments by tax authorities resulting from known tax exposures including, but not limited to, transfer pricing matters, tax credit deductibility of certain expenses, and deemed repatriation transition tax. Such liabilities represent a reasonable provision for taxes ultimately expected to be paid and may need to be adjusted over time as more information becomes known. The effect of changes in estimates related to contingent tax liabilities is included in the effective tax rate reconciliation above.

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows (excluding interest and penalties):
 Year Ended December 31,
Dollars in millions202420232022
Beginning balance
$1,914 $1,766 $2,042 
Gross additions to tax positions related to current year68 38 53 
Gross additions to tax positions related to prior years64 145 137 
Gross additions to tax positions assumed in acquisitions113 — 15 
Gross reductions to tax positions related to prior years(670)(5)(381)
Settlements(50)(30)(8)
Reductions to tax positions related to lapse of statute(3)(4)(83)
Cumulative translation adjustment(8)4 (9)
Ending balance$1,428 $1,914 $1,766 

Additional information regarding unrecognized tax benefits is as follows:
 Year Ended December 31,
Dollars in millions202420232022
Unrecognized tax benefits that if recognized would impact the effective tax rate$1,394 $1,872 $1,736 
Accrued interest507 434 332 
Accrued penalties19 23 25 
Interest and penalties expense/(benefit)89 110 (87)

Accrued interest and penalties payable for unrecognized tax benefits are included in either current or non-current income taxes payable. Interest and penalties related to unrecognized tax benefits are included in income tax expense. These amounts reflect the beneficial impacts of various tax settlements, including the settlement discussed below.

BMS is currently under examination by a number of tax authorities that proposed or are considering proposing material adjustments to tax positions for issues such as transfer pricing, certain tax credits and the deductibility of certain expenses. As previously disclosed, BMS received several notices of proposed adjustments from the IRS related to transfer pricing and other tax issues for the 2008 to 2012 tax years. BMS disagrees with the IRS’s positions and continues to work cooperatively with the IRS to resolve these issues. In 2022, BMS entered the IRS administrative appeals process to resolve these matters. Timing of the final resolution of these complex matters is uncertain and could have a material impact on BMS’s financial statements. Tax positions for these years unrelated to matters that entered the administrative appeals process are considered effectively settled.

It is reasonably possible that new issues will be raised by tax authorities that may increase unrecognized tax benefits; however, an estimate of such increases cannot reasonably be made at this time. BMS believes that it has adequately provided for all open tax years by tax jurisdiction.

It is also reasonably possible that the total amount of unrecognized tax benefits at December 31, 2024 could decrease in the range of approximately $360 million to $400 million in the next twelve months as a result of the settlement of certain tax audits and other events. The expected change in unrecognized tax benefits may result in the payment of additional taxes, adjustment of certain deferred taxes and/or recognition of tax benefits. The following is a summary of major tax jurisdictions for which tax authorities may assert additional taxes based upon tax years currently under audit and subsequent years that are subject to audit:
U.S.
2008 to 2012, 2016 to 2024
Canada
2012 to 2024
France
2020 to 2024
Germany
2015 to 2024
Italy
2018 to 2024
Japan
2023 to 2024
UK
2012 to 2024