XML 51 R31.htm IDEA: XBRL DOCUMENT
v3.22.4

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2022
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES Significant components of the provisions for income taxes were as follows:
| 2022 |  | 2021 |  | 2020
Current: |  |  |  |  |
Federal | $ | 505.5 |  |  | $ | 331.2 |  |  | $ | 457.7 |
Foreign | 90.3 |  |  | 86.5 |  |  | 92.0 |
State and local | 102.0 |  |  | 46.8 |  |  | 84.4 |
Total current | 697.8 |  |  | 464.5 |  |  | 634.1 |
Deferred: |  |  |  |  |
Federal | (81.7) |  |  | (36.5) |  |  | (102.7) |
Foreign | (47.3) |  |  | (40.4) |  |  | (19.0) |
State and local | (15.8) |  |  | (3.4) |  |  | (23.6) |
Total deferred | (144.8) |  |  | (80.3) |  |  | (145.3) |
Total provisions for income taxes | $ | 553.0 |  |  | $ | 384.2 |  |  | $ | 488.8 |
A reconciliation of the statutory federal income tax rate to the effective tax rate follows:
| 2022 |  | 2021 |  | 2020
Statutory federal income tax rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
Effect of: |  |  |  |  |
State and local income taxes | 2.8 |  |  | 2.2 |  |  | 2.5 |
Investment vehicles | (0.4) |  |  | (0.8) |  |  | (0.8) |
Employee share-based payments | (1.4) |  |  | (4.8) |  |  | (3.8) |
Research and development credits | (0.6) |  |  | (0.6) |  |  | (0.5) |
Amended returns and refunds | 0.4 |  |  | 0.2 |  |  | 0.3 |
Other - net | (0.3) |  |  | (0.1) |  |  | 0.7 |
Reported effective tax rate | 21.5 | % |  | 17.1 | % |  | 19.4 | %
The increase in the effective tax rate for 2022 compared to 2021 was primarily due to a decrease in tax benefits related to employee share-based payments and the net unfavorable impact of various other tax benefits received by the Company in 2022 compared to 2021. Significant components of income before income taxes as used for income tax purposes, were as follows:
| 2022 |  | 2021 |  | 2020
Domestic | $ | 2,427.6 |  |  | $ | 2,106.8 |  |  | $ | 2,317.9 |
Foreign | 145.5 |  |  | 141.8 |  |  | 201.3 |
| $ | 2,573.1 |  |  | $ | 2,248.6 |  |  | $ | 2,519.2 |
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes using the enacted tax rates and laws that are currently in effect. Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2022, 2021 and 2020 were as follows:
| 2022 |  | 2021 |  | 2020
Deferred tax assets: |  |  |  |  |
Environmental and other similar items | $ | 66.4 |  |  | $ | 73.2 |  |  | $ | 82.9 |
Employee related and benefit items | 157.1 |  |  | 170.3 |  |  | 166.6 |
Operating lease liabilities | 478.1 |  |  | 463.1 |  |  | 448.9 |
Research and development capitalization | 52.6 |  |  |  |  |
Other items | 204.1 |  |  | 192.0 |  |  | 232.8 |
Total deferred tax assets | 958.3 |  |  | 898.6 |  |  | 931.2 |
Deferred tax liabilities: |  |  |  |  |
Intangible assets and Property, plant, and equipment | 973.4 |  |  | 1,053.7 |  |  | 1,156.4 |
LIFO inventories | 97.3 |  |  | 68.6 |  |  | 87.6 |
Operating lease right-of-use assets | 460.5 |  |  | 448.4 |  |  | 434.0 |
Other items | 31.7 |  |  | 33.3 |  |  | 31.7 |
Total deferred tax liabilities | 1,562.9 |  |  | 1,604.0 |  |  | 1,709.7 |
Net deferred tax liabilities | $ | 604.6 |  |  | $ | 705.4 |  |  | $ | 778.5 |
As of December 31, 2022, the Company’s net deferred income tax liability relates primarily to deferred tax liabilities recorded for intangible assets acquired through the Valspar acquisition. Netted against the Company’s other deferred tax assets were valuation allowances of $97.5 million, $97.2 million and $104.6 million at December 31, 2022, 2021 and 2020, respectively. The Company has $15.7 million of domestic net operating loss carryforwards acquired through acquisitions that have expiration dates through tax year 2037, foreign tax credits of $18.0 million that expire in calendar years 2028 through 2032 and foreign net operating losses of $339.0 million. The foreign net operating losses are related to various jurisdictions that provide for both indefinite carryforward periods and others with carryforward periods that expire between tax years 2022 to 2042. The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. The IRS audited the Company’s 2013 through 2016 income tax returns. As a result of these audits, certain adjustments have been agreed upon with the IRS. The Company continues to evaluate its position and believes that it is adequately reserved for any potential exposure. The IRS is currently auditing the Company’s 2017, 2018 and 2019 income tax returns. As of December 31, 2022, the U.S. federal statute of limitations has not expired for the 2013 through 2021 tax years. As of December 31, 2022, the Company is subject to non-U.S. income tax examinations for the tax years of 2014 through 2021. In addition, the Company is subject to state and local income tax examinations for the tax years 1998 through 2022. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
| 2022 |  | 2021 |  | 2020
Balance at beginning of year | $ | 228.5 |  |  | $ | 227.0 |  |  | $ | 203.0 |
Additions based on tax positions related to the current year | 18.7 |  |  | 14.0 |  |  | 13.8 |
Additions for tax positions of prior years | 10.6 |  |  | 23.1 |  |  | 16.4 |
Reductions for tax positions of prior years | (6.0) |  |  | (22.1) |  |  | (3.3) |
Settlements | (1.7) |  |  | (5.6) |  |  | (2.0) |
Lapses of statutes of limitations | (7.7) |  |  | (7.9) |  |  | (0.9) |
Balance at end of year | $ | 242.4 |  |  | $ | 228.5 |  |  | $ | 227.0 |
The increase in unrecognized tax benefits was primarily related to the reversal of benefits recognized from certain positions taken on current and prior year income tax returns filed in U.S. federal and various state jurisdictions. These additions were partially offset by various positions taken on prior year income tax returns filed in U.S. and various foreign jurisdictions that were no longer deemed to be at risk. At December 31, 2022, 2021 and 2020, the total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $230.3 million, $218.9 million and $216.3 million, respectively. Included in the balance of unrecognized tax benefits at December 31, 2022 is $92.7 million related to tax positions for which it is reasonably possible that the total amounts could significantly change during the next twelve months. This amount represents expected settlements related to federal renewable energy tax credit funds with DC Solar Solutions, Inc. and certain of its affiliates and also includes items currently under review with IRS Appeals in each of the years 2013 through 2016. The Company classifies all income tax related interest and penalties as income tax expense. During the year ended December 31, 2022, there was an increase in income tax interest and penalties of $10.3 million. During the years ended December 31, 2021 and 2020, there was a (decrease) increase in income tax interest and penalties of $(2.7) million and $4.0 million, respectively. The Company accrued $36.6 million, $26.4 million and $30.3 million at December 31, 2022, 2021 and 2020, respectively, for the potential payment of interest and penalties.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration