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Income Taxes | 12 Months Ended
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Dec. 31, 2023
Income Tax Disclosure [Abstract] |
INCOME TAXES | 15. INCOME TAXES Income Statement Components Income before income tax expense was as follows (in millions):
| Year Ended December 31,
| 2023 |  | 2022 |  | 2021
U.S. operations | $ | 9,335 |  |  | $ | 11,716 |  |  | $ | 1,023 |
Foreign operations | 2,433 |  |  | 3,591 |  |  | 520 |
Income before income tax expense | $ | 11,768 |  |  | $ | 15,307 |  |  | $ | 1,543 |
Statutory income tax rates applicable to the countries in which we operate were as follows:
| Year Ended December 31,
| 2023 |  | 2022 |  | 2021
U.S. | 21 | % |  | 21 | % |  | 21 | %
Canada | 15 | % |  | 15 | % |  | 15 | %
U.K. (a) | 25 | % |  | 19 | % |  | 19 | %
Ireland | 13 | % |  | 13 | % |  | 13 | %
Peru | 30 | % |  | 30 | % |  | 30 | %
Mexico | 30 | % |  | 30 | % |  | 30 | %
________________________ (a)Statutory income tax rate was increased to 25 percent effective April 1, 2023. The following is a reconciliation of income tax expense computed by applying statutory income tax rates to actual income tax expense (dollars in millions):
| U.S. |  | Foreign |  | Total
| Amount |  | Percent |  | Amount |  | Percent |  | Amount |  | Percent
Year ended December 31, 2023 |  |  |  |  |  |  |  |  |  |  |
Income tax expense at statutory rates | $ | 1,960 |  |  | 21.0 | % |  | $ | 449 |  |  | 18.5 | % |  | $ | 2,409 |  |  | 20.5 | %
U.S. state and Canadian provincial tax expense, net of federal income tax effect | 114 |  |  | 1.2 | % |  | 161 |  |  | 6.6 | % |  | 275 |  |  | 2.3 | %
Permanent differences | (87) |  |  | (0.9) | % |  | (18) |  |  | (0.7) | % |  | (105) |  |  | (0.9) | %
GILTI tax | 167 |  |  | 1.8 | % |  | — |  |  | — |  |  | 167 |  |  | 1.4 | %
Foreign tax credits | (149) |  |  | (1.6) | % |  | — |  |  | — |  |  | (149) |  |  | (1.3) | %
Repatriation withholding tax | 45 |  |  | 0.5 | % |  | — |  |  | — |  |  | 45 |  |  | 0.4 | %
Tax effects of income associated with noncontrolling interests | (84) |  |  | (0.9) | % |  | 30 |  |  | 1.2 | % |  | (54) |  |  | (0.4) | %
Other, net | 8 |  |  | — | % |  | 23 |  |  | 0.9 | % |  | 31 |  |  | 0.3 | %
Income tax expense | $ | 1,974 |  |  | 21.1 | % |  | $ | 645 |  |  | 26.5 | % |  | $ | 2,619 |  |  | 22.3 | %
________________________ See notes on page 119.
| U.S. |  | Foreign |  | Total
| Amount |  | Percent |  | Amount |  | Percent |  | Amount |  | Percent
Year ended December 31, 2022 |  |  |  |  |  |  |  |  |  |  |
Income tax expense at statutory rates | $ | 2,460 |  |  | 21.0 | % |  | $ | 611 |  |  | 17.0 | % |  | $ | 3,071 |  |  | 20.1 | %
U.S. state and Canadian provincial tax expense, net of federal income tax effect | 182 |  |  | 1.6 | % |  | 255 |  |  | 7.1 | % |  | 437 |  |  | 2.8 | %
Permanent differences | (61) |  |  | (0.5) | % |  | (16) |  |  | (0.5) | % |  | (77) |  |  | (0.5) | %
GILTI tax | 413 |  |  | 3.5 | % |  | — |  |  | — |  |  | 413 |  |  | 2.7 | %
Foreign tax credits | (396) |  |  | (3.4) | % |  | — |  |  | — |  |  | (396) |  |  | (2.6) | %
Repatriation withholding tax | 51 |  |  | 0.4 | % |  | — |  |  | — |  |  | 51 |  |  | 0.3 | %
Tax effects of income associated with noncontrolling interests | (78) |  |  | (0.7) | % |  | 25 |  |  | 0.7 | % |  | (53) |  |  | (0.3) | %
Other, net | (27) |  |  | (0.2) | % |  | 9 |  |  | 0.3 | % |  | (18) |  |  | (0.1) | %
Income tax expense | $ | 2,544 |  |  | 21.7 | % |  | $ | 884 |  |  | 24.6 | % |  | $ | 3,428 |  |  | 22.4 | %
Year ended December 31, 2021 |  |  |  |  |  |  |  |  |  |  |
Income tax expense at statutory rates | $ | 215 |  |  | 21.0 | % |  | $ | 73 |  |  | 14.0 | % |  | $ | 288 |  |  | 18.7 | %
U.S. state and Canadian provincial tax expense, net of federal income tax effect | 16 |  |  | 1.6 | % |  | 53 |  |  | 10.2 | % |  | 69 |  |  | 4.5 | %
Permanent differences | (34) |  |  | (3.3) | % |  | (14) |  |  | (2.7) | % |  | (48) |  |  | (3.1) | %
Changes in tax law (a) | (10) |  |  | (1.0) | % |  | 74 |  |  | 14.2 | % |  | 64 |  |  | 4.1 | %
CARES Act (b) | (56) |  |  | (5.5) | % |  | — |  |  | — |  |  | (56) |  |  | (3.6) | %
GILTI tax | 125 |  |  | 12.2 | % |  | — |  |  | — |  |  | 125 |  |  | 8.1 | %
Foreign tax credits | (103) |  |  | (10.1) | % |  | — |  |  | — |  |  | (103) |  |  | (6.7) | %
Settlements | (22) |  |  | (2.1) | % |  | — |  |  | — |  |  | (22) |  |  | (1.4) | %
Tax effects of income associated with noncontrolling interests | (74) |  |  | (7.2) | % |  | 30 |  |  | 5.8 | % |  | (44) |  |  | (2.9) | %
Other, net | (7) |  |  | (0.7) | % |  | (11) |  |  | (2.1) | % |  | (18) |  |  | (1.2) | %
Income tax expense | $ | 50 |  |  | 4.9 | % |  | $ | 205 |  |  | 39.4 | % |  | $ | 255 |  |  | 16.5 | %
________________________ (a)During the three months ended June 30, 2021, certain statutory income tax rate changes (primarily an increase in the U.K. rate from 19 percent to 25 percent effective in 2023) were enacted that resulted in the remeasurement of our deferred tax liabilities and related deferred income tax expense. (b)Upon filing our superseding 2020 federal income tax return in the fourth quarter of 2021, we recorded an additional tax benefit during the year ended December 31, 2021 related to the additional 2020 tax net operating loss (NOL) carryback to 2015, as permitted by the Coronavirus Aid, Relief and Economic Security (CARES) Act enacted on March 27, 2020. Components of income tax expense were as follows (in millions):
| U.S. |  | Foreign |  | Total
Year ended December 31, 2023 |  |  |  |  |
Current: |  |  |  |  |
Country | $ | 1,804 |  |  | $ | 415 |  |  | $ | 2,219 |
U.S. state / Canadian provincial | 157 |  |  | 140 |  |  | 297 |
Total current | 1,961 |  |  | 555 |  |  | 2,516 |
Deferred: |  |  |  |  |
Country | 25 |  |  | 69 |  |  | 94 |
U.S. state / Canadian provincial | (12) |  |  | 21 |  |  | 9 |
Total deferred | 13 |  |  | 90 |  |  | 103 |
Income tax expense | $ | 1,974 |  |  | $ | 645 |  |  | $ | 2,619 |
Year ended December 31, 2022 |  |  |  |  |
Current: |  |  |  |  |
Country | $ | 2,147 |  |  | $ | 766 |  |  | $ | 2,913 |
U.S. state / Canadian provincial | 153 |  |  | 312 |  |  | 465 |
Total current | 2,300 |  |  | 1,078 |  |  | 3,378 |
Deferred: |  |  |  |  |
Country | 164 |  |  | (138) |  |  | 26 |
U.S. state / Canadian provincial | 80 |  |  | (56) |  |  | 24 |
Total deferred | 244 |  |  | (194) |  |  | 50 |
Income tax expense | $ | 2,544 |  |  | $ | 884 |  |  | $ | 3,428 |
Year ended December 31, 2021 |  |  |  |  |
Current: |  |  |  |  |
Country | $ | 68 |  |  | $ | 215 |  |  | $ | 283 |
U.S. state / Canadian provincial | 1 |  |  | 97 |  |  | 98 |
Total current | 69 |  |  | 312 |  |  | 381 |
Deferred: |  |  |  |  |
Country | 5 |  |  | (63) |  |  | (58) |
U.S. state / Canadian provincial | (24) |  |  | (44) |  |  | (68) |
Total deferred | (19) |  |  | (107) |  |  | (126) |
Income tax expense | $ | 50 |  |  | $ | 205 |  |  | $ | 255 |
Income Taxes Paid (Refunded) Income taxes paid to (received from) U.S. and foreign taxing authorities were as follows (in millions):
| Year Ended December 31, |
| 2023 |  | 2022 |  | 2021 |
U.S. | $ | 2,158 |  |  | $ | 2,396 |  |  | $ | (878) |  | (a)
Foreign | 1,336 |  |  | 892 |  |  | 36 |  |
Income taxes paid (refunded), net | $ | 3,494 |  |  | $ | 3,288 |  |  | $ | (842) |  |
________________________ (a)This amount includes a refund of $962 million that we received related to our U.S. federal income tax return for 2020. Deferred Income Tax Assets and Liabilities The tax effects of significant temporary differences representing deferred income tax assets and liabilities were as follows (in millions):
| December 31,
| 2023 |  | 2022
Deferred income tax assets: |  |  |
Tax credit carryforwards | $ | 809 |  |  | $ | 660 |
NOLs | 710 |  |  | 642 |
Inventories | 237 |  |  | 326 |
Compensation and employee benefit liabilities | 32 |  |  | 44 |
Environmental liabilities | 59 |  |  | 57 |
Finance lease obligations | 314 |  |  | 309 |
Operating lease liabilities | 519 |  |  | 512 |
Other | 130 |  |  | 186 |
Total deferred income tax assets | 2,810 |  |  | 2,736 |
Valuation allowance | (1,383) |  |  | (1,234) |
Net deferred income tax assets | 1,427 |  |  | 1,502 |
Deferred income tax liabilities: |  |  |
Property, plant, and equipment | 5,121 |  |  | 5,022 |
Deferred turnaround costs | 399 |  |  | 369 |
Operating lease ROU assets | 546 |  |  | 507 |
Inventories | 106 |  |  | 234 |
Investments | 423 |  |  | 431 |
Other | 181 |  |  | 156 |
Total deferred income tax liabilities | 6,776 |  |  | 6,719 |
Net deferred income tax liabilities | $ | 5,349 |  |  | $ | 5,217 |
We had the following income tax credit and loss carryforwards as of December 31, 2023 (in millions):
| Amount |  | Expiration
U.S. state income tax credits (gross amount) | $ | 76 |  |  | 2024 through 2033
U.S. state income tax credits (gross amount) | 2 |  |  | Unlimited
U.S. foreign tax credits | 748 |  |  | 2027 through 2033
U.S. state income tax NOLs (gross amount) | 12,164 |  |  | 2024 through 2040
Foreign NOLs (gross amount) | 329 |  |  | Unlimited
We have recorded a valuation allowance as of December 31, 2023 and 2022 due to uncertainties related to our ability to utilize some of our deferred income tax assets associated with our U.S. foreign tax credits, certain U.S. state income tax credits, certain foreign deferred tax assets, and certain NOLs before they expire. The valuation allowance is based on our estimates of future taxable income in the various jurisdictions in which we operate and the period over which deferred income tax assets will be recoverable. The valuation allowance increased by $149 million in 2023 primarily due to the generation of foreign tax credits that cannot be realized. Unrecognized Tax Benefits Changes in Unrecognized Tax Benefits The following is a reconciliation of the changes in unrecognized tax benefits, excluding related interest and penalties (in millions):
| Year Ended December 31,
| 2023 |  | 2022 |  | 2021
Balance as of beginning of year | $ | 284 |  |  | $ | 816 |  |  | $ | 847 |
Additions for tax positions related to the current year | 18 |  |  | 27 |  |  | 3 |
Additions for tax positions related to prior years | 4 |  |  | 19 |  |  | 13 |
Reductions for tax positions related to prior years | (73) |  |  | (573) |  |  | (25) |
Reductions for tax positions related to the lapse of applicable statute of limitations | (9) |  |  | (5) |  |  | — |
Settlements | (38) |  |  | — |  |  | (22) |
Balance as of end of year | $ | 186 |  |  | $ | 284 |  |  | $ | 816 |
As of December 31, 2023 and 2022, there was $126 million and $190 million, respectively, of unrecognized tax benefits that if recognized would reduce our annual effective tax rate. Interest and penalties incurred during the years ended December 31, 2023, 2022, and 2021 were not material. Accrued interest and penalties as of December 31, 2023 and 2022 were not material. Although reasonably possible, we do not anticipate that any of our tax audits will be resolved during the next 12 months that would result in a reduction in our liability for unrecognized tax benefits either due to our tax positions being sustained or due to our agreement to their disallowance. Should any reductions occur, we do not expect that they would have a material impact on our financial statements because such reductions would not materially affect our annual effective tax rate. Tax Returns Under Audit U.S. Federal In 2023, we settled the audits related to our U.S. federal income tax returns for 2012 through 2015, with the exception of one issue regarding the timing of deductibility of certain costs at our refineries. We intend to file formal claims for refund with the Internal Revenue Service (IRS) for this disagreed-upon issue. The settlement related to these audits resulted in a favorable reduction in our unrecognized tax benefits. As of December 31, 2023, our U.S. federal income tax returns for 2017 through 2020 were under audit by the IRS. We continue to work with the IRS to resolve these audits and we believe that they will be resolved for amounts consistent with our recorded amounts of unrecognized tax benefits associated with these audits. U.S. State As of December 31, 2023, our California tax returns for 2011 through 2019 were under audit by the state of California. We do not expect the ultimate disposition of these audits will result in a material change to our financial condition, results of operations, and liquidity. We believe these audits will be resolved for amounts consistent with our recorded amounts for unrecognized tax benefits associated with these audits. Foreign As of December 31, 2023, certain of our Canadian subsidiaries’ federal tax returns for 2013 through 2015 and 2017 through 2020 were under audit by the Canada Revenue Agency and our Quebec provincial tax returns for 2013 through 2015 and 2017 through 2020 were under audit by Revenue Quebec. As of December 31, 2023, the 2020 tax return for one of our Mexican subsidiaries was under audit by Servicio de Administración Tributaria, and we are protesting proposed adjustments for this tax return. We do not expect the ultimate disposition of these audits or inquiries will result in a material change to our financial condition, results of operations, and liquidity. Other Disclosures Undistributed Earnings of Foreign Subsidiaries As of December 31, 2023, the cumulative undistributed earnings of our foreign subsidiaries that is considered permanently reinvested in the relevant foreign countries were $7.1 billion. This amount excludes $1.4 billion of earnings that are no longer considered permanently reinvested. We are able to distribute cash via a dividend from our foreign subsidiaries with a full dividend received deduction in the U.S. However, there is a cost to repatriate the undistributed earnings of certain of our foreign subsidiaries to us, including, but not limited to, withholding taxes imposed by certain foreign jurisdictions, U.S. state income taxes, and U.S. federal income tax on foreign exchange gains. We have accrued $45 million of withholding and other taxes on the $1.4 billion of earnings previously noted, but it is not practicable to estimate the amount of additional tax that would be payable on the undistributed earnings that are considered permanently reinvested. Repatriation Tax Liability Our repatriation tax liability relates to our recognition of a one-time transition tax on the deemed repatriation of previously undistributed accumulated earnings and profits of our foreign subsidiaries and is included in other long-term liabilities (see Note 8). This transition tax will be remitted to the IRS over the eight-year period provided in the Internal Revenue Code of 1986, as amended, with annual installments through 2025.

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- 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 -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Publisher FASB -URI https://asc.fasb.org//1943274/2147480990/946-20-50-13 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//740/tableOfContent Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 14 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-14 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-21 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 270 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482526/740-270-50-1 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 17 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-17 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-2 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482603/740-30-50-2 + Details
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