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Income Taxes | 12 Months Ended
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Dec. 31, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES In response to the COVID-19 pandemic, many governments have enacted or are contemplating measures to provide aid and economic stimulus. These measures may include deferring the due dates of tax payments or other changes to their income and non-income-based tax laws. The Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"), which was enacted on March 27, 2020 in the U.S., contained measures to assist companies, including allowing net operating losses originating in 2018, 2019, or 2020 to be carried back up to five years. During 2020, we elected to carry back losses to 2014 and accordingly recognized a $117 million tax benefit. As of December 31, 2021, we have received the cash refunds related to that benefit. The provision for income taxes is comprised of the following:
| 2021 | 2020 | 2019
Current: |  |  |
U.S. | $ | 11 |  | $ | (59) |  | $ | (12) |
Foreign | 614 |  | 458 |  | 443 |
Total current | 625 |  | 399 |  | 431 |
Deferred: |  |  |
U.S. | (24) |  | 11 |  | (12) |
Foreign | 157 |  | 149 |  | 63 |
Total deferred | 133 |  | 160 |  | 51 |
Provision for income taxes | $ | 758 |  | $ | 559 |  | $ | 482 |
The geographic sources of income (loss) before income taxes are as follows:
| 2021 | 2020 | 2019
U.S. | $ | (724) |  | $ | (14,288) |  | $ | (693) |
Foreign | 1,152 |  | (914) |  | 1,446 |
Income (loss) before income taxes | $ | 428 |  | $ | (15,202) |  | $ | 753 |
The provision for income taxes differs from the amount computed by applying the U.S. statutory income tax rate to the loss or income before income taxes for the reasons set forth below for the years ended December 31:
| 2021 | 2020 | 2019
Income (loss) before income taxes | $ | 428 |  | $ | (15,202) |  | $ | 753 |
Taxes at the U.S. federal statutory income tax rate | 90 |  | (3,192) |  | 158 |
Impact of goodwill impairment | — |  | 3,102 |  | — |
Effect of foreign operations | 216 |  | 148 |  | 84 |
Tax expense (benefit) due to unrecognized tax benefits (1) | 201 |  | 35 |  | (24) |
Tax impact of partnership structure | 137 |  | (33) |  | 17 |
Change in valuation allowances | 70 |  | 494 |  | 241 |
CARES Act | — |  | (117) |  | — |
Other - net | 44 |  | 122 |  | 6 |
Provision for income taxes | $ | 758 |  | $ | 559 |  | $ | 482 |
Actual income tax rate | 177.1 | % | (3.7) | % | 64.0 | %
(1)For December 31, 2021, $119 million of this amount is indemnified under the Tax Matters Agreement with GE. 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, as well as operating loss and tax credit carryforwards. The tax effects of our temporary differences and carryforwards are as follows at December 31:
| 2021 | 2020
Deferred tax assets: |  |
Operating loss carryforwards | $ | 2,255 |  | $ | 2,249 |
Tax credit carryforwards | 1,183 |  | 1,083 |
Investment in partnership | 457 |  | 160 |
Property | 156 |  | 127 |
Employee benefits | 116 |  | 138 |
Goodwill and other intangibles | 97 |  | 143 |
Receivables | 72 |  | 53 |
Inventory | 61 |  | 51 |
Other | 153 |  | 264 |
Total deferred income tax asset | 4,550 |  | 4,268 |
Valuation allowances | (3,928) |  | (3,472) |
Total deferred income tax asset after valuation allowance | 622 |  | 796 |
Deferred tax liabilities: |  |
Other | (14) |  | (29) |
Total deferred income tax liability | (14) |  | (29) |
Net deferred tax asset | $ | 608 |  | $ | 767 |
At December 31, 2021, we had approximately $419 million of non-U.S. tax credits which may be carried forward indefinitely under applicable foreign law, $563 million of U.S. foreign tax credits and $201 million of other U.S. credits, the majority of which will expire after tax year 2027 under U.S. tax law. Additionally, we had $2,255 million of net operating loss carryforwards ("NOLs"), of which approximately $321 million will expire within five years, $479 million will expire between 6 years and 20 years, and the remainder can be carried forward indefinitely. We record a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of the deferred tax assets depends on the ability to generate sufficient taxable income of the appropriate character in the future and in the appropriate taxing jurisdictions. At December 31, 2021, $3,928 million of valuation allowances are recorded against various deferred tax assets, including foreign NOLs of $1,687 million, U.S. NOLs of $220 million, U.S. foreign and non-U.S. tax credit carryforwards of $979 million, other tax credit carryforwards of $191 million, and certain other U.S. and foreign deferred tax assets of $851 million. There are $348 million of deferred tax assets related primarily to foreign NOLs without a valuation allowance as we expect that the deferred tax assets will be realized within the carryforward period. Indefinite reinvestment is determined by management’s intentions concerning the future operations of the Company. In cases where repatriation would otherwise incur significant withholding or income taxes, these earnings have been indefinitely reinvested in the Company's active non-U.S. business operations. As of December 31, 2021, the cumulative amount of undistributed foreign earnings is approximately $4.4 billion. Computation of the potential deferred tax liability associated with these undistributed earnings and any other basis differences is not practicable. At December 31, 2021, we had $531 million of tax liabilities for total gross unrecognized tax benefits related to uncertain tax positions. In addition to these uncertain tax positions, we had $153 million and $49 million related to interest and penalties, respectively, for total liabilities of $733 million for uncertain positions. If we were to prevail on all uncertain positions, the net effect would result in an income tax benefit of approximately $646 million. The remaining $87 million is comprised of $63 million for deferred tax assets that represent tax benefits that would be received in different taxing jurisdictions or in a different character and $24 million increased valuation allowances. As of December 31, 2021 and 2020, the Company had $170 million and $53 million, respectively, of current receivables related to uncertain tax positions, including interest and penalties of $87 million and $25 million, respectively, that are indemnified pursuant to the Tax Matters Agreement with GE. The following table presents the changes in our gross unrecognized tax benefits included in the consolidated statements of financial position.
Asset / (Liability) | 2021 | 2020
Balance at beginning of year | $ | (483) |  | $ | (451) |
Additions for tax positions of the current year | (32) |  | (71) |
Additions for tax positions of prior years | (166) |  | (31) |
Reductions for tax positions of prior years | 42 |  | 35 |
Settlements with tax authorities | 95 |  | 12 |
Lapse of statute of limitations | 13 |  | 23 |
Balance at end of year | $ | (531) |  | $ | (483) |
It is expected that the amount of unrecognized tax benefits will change in the next twelve months due to expiring statutes, audit activity, tax payments, and competent authority proceedings related to transfer pricing or final decisions in matters that are the subject of litigation in various taxing jurisdictions in which we operate. At December 31, 2021, we had approximately $63 million of tax liabilities related to uncertain tax positions, each of which are individually insignificant, and each of which are reasonably possible of being settled within the next twelve months. We conduct business in more than 120 countries and are subject to income taxes in most taxing jurisdictions in which we operate, each of which may have multiple open years subject to examination. All Internal Revenue Service examinations have been completed and closed through 2016 for the most significant U.S. returns. We believe that we have made adequate provision for all income tax uncertainties.

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