XML 35 R18.htm IDEA: XBRL DOCUMENT
v3.22.4

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2022
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Income before income tax and the provision for income tax consist of the following (in millions):
| Years Ended December 31
| 2022 |  | 2021 |  | 2020
Income (loss) before income taxes: |  |  |  |  |
Ireland | $ | 85 |  |  | $ | 15 |  |  | $ | (86) |
U.K. | 502 |  |  | 549 |  |  | 634 |
U.S. | 161 |  |  | (818) |  |  | (28) |
Other | 2,408 |  |  | 2,185 |  |  | 1,946 |
Total | $ | 3,156 |  |  | $ | 1,931 |  |  | $ | 2,466 |
Income tax expense: |  |  |  |  |
Current: |  |  |  |  |
Ireland | $ | 2 |  |  | $ | 2 |  |  | $ | 2 |
U.K. | 206 |  |  | 50 |  |  | 30 |
U.S. federal | 195 |  |  | 197 |  |  | 126 |
U.S. state and local | 43 |  |  | 72 |  |  | 22 |
Other | 316 |  |  | 291 |  |  | 259 |
Total current tax expense | $ | 762 |  |  | $ | 612 |  |  | $ | 439 |
Deferred tax expense (benefit): |  |  |  |  |
Ireland | $ | — |  |  | $ | (1) |  |  | $ | (1) |
U.K. | (152) |  |  | 131 |  |  | 39 |
U.S. federal | (69) |  |  | (83) |  |  | (72) |
U.S. state and local | (21) |  |  | (30) |  |  | (4) |
Other | (10) |  |  | (6) |  |  | 47 |
Total deferred tax expense (benefit) | $ | (252) |  |  | $ | 11 |  |  | $ | 9 |
Total income tax expense | $ | 510 |  |  | $ | 623 |  |  | $ | 448 |
Income before income taxes shown above is based on the location of the business unit to which such earnings are attributable for tax purposes. In addition, because the earnings shown above may, in some cases, be subject to taxation in more than one country, the income tax provision shown above as Ireland, U.K., U.S. or Other may not correspond to the geographic attribution of the earnings. The Company performs a reconciliation of the income tax provisions based on its domicile and statutory rate at each reporting period. The reconciliation of the income tax provisions based on the Irish statutory corporate tax rate of 25% to the provisions reflected in the Consolidated Financial Statements is as follows:
| Years Ended December 31
| 2022 |  | 2021 |  | 2020
Statutory tax rate | 25.0% |  | 25.0% |  | 25.0%
U.S. state income taxes, net of U.S. federal benefit | 0.4 |  | 1.5 |  | 1.0
Taxes on international operations (1) (2) | (11.6) |  | (15.4) |  | (9.8)
Nondeductible expenses | 2.4 |  | 3.3 |  | 2.1
Adjustments to prior year tax requirements | (7.0) |  | (0.2) |  | —
Deferred tax adjustments, including statutory rate changes | (0.5) |  | 3.2 |  | 0.7
Deferred tax adjustments, international earnings | 0.2 |  | 1.8 |  | 0.7
Adjustments to valuation allowances | 1.9 |  | (0.2) |  | —
Change in uncertain tax positions | 8.6 |  | 2.1 |  | 1.5
Excess tax benefits related to shared based compensation (3) | (1.5) |  | (2.4) |  | (2.2)
Capital and other losses | (1.4) |  | — |  | (1.8)
Non-deductible transaction costs | — |  | 1.1 |  | 1.3
Non-deductible termination fee | — |  | 12.9 |  | —
Other — net | (0.3) |  | (0.4) |  | (0.3)
Effective tax rate | 16.2% |  | 32.3% |  | 18.2%
(1)The Company determines the adjustment for taxes on international operations based on the difference between the statutory tax rate applicable to earnings in each foreign jurisdiction and the enacted rate of 25.0%, 25.0% and 25.0% at December 31, 2022, 2021, and 2020, respectively. The benefit to the Company’s effective income tax rate from taxes on international operations relates to benefits from lower-taxed global operations, primarily due to the use of global funding structures and the tax holiday in Singapore. (2)In July 2020, final U.S. tax regulations were issued regarding the GILTI high tax election, allowing taxpayers to exclude from GILTI the income of a Controlled Foreign Corporation that incurs a foreign tax rate more than 90% of the top U.S. corporate tax rate. A GILTI high tax election may be made on an annual basis, and taxpayers may choose to apply the election to taxable years beginning after December 31, 2017. The Company expects to make the GILTI high-tax election for 2022 and therefore recorded the impact of making the election. (3)Excess tax benefits and deficiencies from share-based payment transactions are recognized as income tax expense or benefit in the Company’s Consolidated Statements of Income. The Company has elected to account for GILTI in the period in which it is incurred, and therefore has not provided deferred tax impacts of GILTI in its Consolidated Financial Statements. The components of the Company’s deferred tax assets and liabilities are as follows (in millions):
As of December 31 | 2022 |  | 2021
Deferred tax assets: |  |  |
Net operating loss, capital loss, interest, and tax credit carryforwards | $ | 952 |  |  | $ | 581 |
Lease liabilities | 178 |  |  | 207 |
Employee benefit plans | 297 |  |  | 160 |
Other accrued expenses | 100 |  |  | 132 |
Accrued interest | — |  |  | 97 |
Federal and state benefit of interest from uncertain tax positions | 57 |  |  | 45 |
Deferred revenue | 26 |  |  | 36 |
Investment basis differences | 30 |  |  | 25 |
Lease and service guarantees | 1 |  |  | 1 |
Other | 38 |  |  | 25 |
Total | 1,679 |  |  | 1,309 |
Valuation allowance on deferred tax assets | (275) |  |  | (230) |
Total | $ | 1,404 |  |  | $ | 1,079 |
Deferred tax liabilities: |  |  |
Intangibles and property, plant and equipment | $ | (258) |  |  | $ | (243) |
Lease right-of-use asset | (151) |  |  | (173) |
Deferred costs | (147) |  |  | (159) |
Unremitted earnings | (38) |  |  | (58) |
Other accrued expenses | (20) |  |  | (27) |
Unrealized foreign exchange gains | (23) |  |  | (22) |
Other | (42) |  |  | (32) |
Total | $ | (679) |  |  | $ | (714) |
Net deferred tax asset | $ | 725 |  |  | $ | 365 |
Deferred income taxes (assets and liabilities have been netted by jurisdiction) have been classified in the Consolidated Statements of Financial Position as follows (in millions):
As of December 31 | 2022 |  | 2021
Deferred tax assets — non-current | $ | 824 |  |  | $ | 766 |
Deferred tax liabilities — non-current | (99) |  |  | (401) |
Net deferred tax asset | $ | 725 |  |  | $ | 365 |
In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized and adjusts the valuation allowance accordingly. Considerations with respect to the realizability of deferred tax assets include the period of expiration of the deferred tax asset, historical earnings and projected future taxable income by jurisdiction as well as tax liabilities for the tax jurisdiction to which the tax asset relates. Significant management judgment is required in determining the assumptions and estimates related to the amount and timing of future taxable income. Valuation allowances have been established primarily with regard to the tax benefits of certain tax credits and net operating losses, capital losses, and interest carryforwards. Valuation allowances increased by $45 million as of December 31, 2022, when compared to December 31, 2021. The change is primarily attributable to an increase in valuation allowances related to net operating losses and foreign tax credits. The Company generally intends to limit distributions from foreign subsidiaries in excess of U.S. tax earnings and profits (except where distributions would be limited by available cash) and to limit repatriations from certain other jurisdictions that would otherwise generate a U.S. tax liability. As of December 31, 2022, the Company has accrued $38 million for local country income taxes, withholding taxes and state income taxes on those undistributed earnings that are not indefinitely reinvested. The Company has not provided for deferred taxes on outside basis differences in our investments in our foreign subsidiaries that are unrelated to these accumulated undistributed earnings, as these outside basis differences are indefinitely reinvested. A determination of the unrecognized deferred taxes related to these other components of our outside basis differences is not practicable. The Company had the following carryforwards (in millions):
As of December 31 | 2022 |  | 2021
U.K. |  |  |
Operating loss carryforwards | $ | 608 |  |  | $ | 41 |
Capital loss carryforwards | $ | 533 |  |  | $ | 573 |
U.S. |  |  |
Federal operating loss carryforwards | $ | 1 |  |  | $ | 25 |
Federal capital loss carryforwards | $ | 112 |  |  | $ | 112 |
Federal interest carryforwards | $ | 2,269 |  |  | $ | 1,140 |
Federal foreign tax credit carryforwards | $ | 20 |  |  | $ | 18 |
State operating loss carryforwards | $ | 473 |  |  | $ | 398 |
State capital loss carryforwards | $ | 123 |  |  | $ | 123 |
State interest carryforwards | $ | 1,187 |  |  | $ | 551 |
Other Non-U.S. |  |  |
Operating loss carryforwards | $ | 490 |  |  | $ | 301 |
Capital loss carryforwards | $ | 8 |  |  | $ | 35 |
Interest carryforwards | $ | 26 |  |  | $ | 26 |
Other carryforwards | $ | 5 |  |  | $ | 5 |
The U.K. operating losses and capital losses have an indefinite carryforward period. The federal operating loss carryforwards generated through December 31, 2017 expire at various dates between 2034 and 2036 while federal operating loss carryforwards generated after this date have indefinite carryforward periods. State net operating losses as of December 31, 2022 have various carryforward periods and will begin to expire in 2023. Federal and state capital losses can be carried forward until 2023. Federal and state interest carryforwards have indefinite carryforward periods. Foreign tax credits can be carried forward for ten years and will begin to expire in 2028. Operating, capital losses, and other carryforwards in other non-U.S. jurisdictions have various carryforward periods and will begin to expire in 2023. The interest carryforwards in other non-U.S. jurisdictions have an indefinite carryforward period. During 2012, the Company was granted a tax holiday for the period from October 1, 2012 through September 30, 2022, with respect to withholding taxes and certain income derived from services in Singapore. The Company has been granted a new incentive for the period October 1, 2022 to September 30, 2032. The new incentive provides for a reduced withholding tax rate and a reduced tax rate on certain income derived from services in Singapore, as long as certain conditions are met. The benefit realized was approximately $115 million, $104 million, and $97 million during the years ended December 31, 2022, 2021, and 2020, respectively. The impact of this tax holiday on diluted earnings per share was $0.54, $0.46, and $0.42 during the years ended December 31, 2022, 2021, and 2020, respectively. Uncertain Tax Positions The following is a reconciliation of the Company’s beginning and ending amount of uncertain tax positions (in millions):
| 2022 |  | 2021
Balance at January 1 | $ | 347 |  |  | $ | 321 |
Additions based on tax positions related to the current year | 35 |  |  | 33 |
Additions for tax positions of prior years | 226 |  |  | 7 |
Reductions for tax positions of prior years | (1) |  |  | (4) |
Settlements | (1) |  |  | — |
Business combinations | — |  |  | — |
Lapse of statute of limitations | (5) |  |  | (10) |
Foreign currency translation | — |  |  | — |
Balance at December 31 | $ | 601 |  |  | $ | 347 |
The Company’s liability for uncertain tax positions as of December 31, 2022, 2021, and 2020, includes $535 million, $295 million, and $270 million, respectively, related to amounts that would impact the effective tax rate if recognized. It is possible that the amount of unrecognized tax benefits may change in the next twelve months; however, the Company does not expect the change to have a significant impact on its consolidated statements of income or consolidated balance sheets. These changes may be the result of settlements of ongoing audits. At this time, an estimate of the range of the reasonably possible outcomes within the next twelve months cannot be made. The Company recognizes interest and penalties related to uncertain tax positions in its provision for income taxes. The Company accrued potential interest and penalties of $40 million, $22 million, and $21 million in 2022, 2021, and 2020, respectively. The Company recorded a liability for interest and penalties of $181 million, $142 million, and $120 million as of December 31, 2022, 2021, and 2020, respectively. The Company and its subsidiaries file income tax returns in their respective jurisdictions. The Company has substantially concluded all U.S. federal income tax matters for years through 2007. Material U.S. state and local income tax jurisdiction examinations have been concluded for years through 2014. The Company has concluded income tax examinations in its primary non-U.S. jurisdictions through 2008.

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