XML 39 R21.htm IDEA: XBRL DOCUMENT v3.25.0.1
INCOME TAXES
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
Earnings before income taxes by geographical area consisted of the following (in millions of dollars):
For the Years Ended December 31,
202420232022
U.S.$2,265 $2,211 $1,903 
Foreign319 289 243 
Total
$2,584 $2,500 $2,146 


Income tax expense consisted of the following (in millions of dollars):
For the Years Ended December 31,
202420232022
Current income tax expense:
U.S. Federal
$404 $431 $374 
U.S. State
84 100 77 
Foreign
89 81 78 
Total current
577 612 529 
Deferred income tax (benefit) expense 18 (15)4 
Total income tax expense$595 $597 $533 
The income tax effects of temporary differences that gave rise to the net deferred tax asset (liability) as of December 31, 2024 and 2023 were as follows (in millions of dollars):
As of December 31,
20242023
Deferred tax assets:
Accrued expenses
172 177 
U.S. and foreign loss carryforwards82 84 
Accrued employment-related benefits
42 51 
Tax credit carryforward
20 22 
Other
23 30 
Deferred tax assets
339 364 
           Less valuation allowance(100)(93)
Deferred tax assets – net of valuation allowance$239 $271 
Deferred tax liabilities:
Property, buildings, equipment and other capital assets(216)(238)
Intangibles
(55)(58)
Inventory(16)(11)
Other
(14)(11)
Deferred tax liabilities
(301)(318)
Net deferred tax liability$(62)$(47)
The net deferred tax asset (liability) is classified as follows:
Noncurrent assets
$15 $10 
Noncurrent liabilities (foreign)(77)(57)
Net deferred tax liability$(62)$(47)
As of December 31, 2024 and 2023, the Company had $328 million and $335 million, respectively, of gross loss carryforwards related to foreign operations and U.S. transactions. Some of the loss carryforwards may expire at various dates through 2044. The Company has recorded a valuation allowance, which represents a provision for uncertainty as to the realization of the tax benefits of these carryforwards and deferred tax assets that may not be realized.

The Company's valuation allowance changed as follows (in millions of dollars):
For the Years Ended December 31,
20242023
Balance at beginning of period$(93)$(71)
Increases primarily related to foreign NOLs(8)(5)
Releases primarily related to foreign NOLs— 1 
Foreign exchange rate changes1 (2)
Decrease related to U.S. foreign tax credits2 3 
Increase related to capital loss carryforwards(1)(19)
Other changes – net(1)— 
Balance at end of period$(100)$(93)

A reconciliation of income tax expense with federal income taxes at the statutory rate follows (in millions of dollars):
For the Years Ended December 31,
202420232022
Federal income tax$543 $525 $451 
State income taxes – net of federal income tax benefit68 74 64 
Stock compensation(16)(16)(5)
Foreign rate difference33 31 26 
Change in valuation allowance(1)
2 6 7 
Other – net(35)(23)(10)
Income tax expense$595 $597 $533 
Effective tax rate23.0 %23.9 %24.8 %
(1) Net of changes in related tax attributes.

The decrease to the Company's effective tax rate for the year ended December 31, 2024 was primarily driven by the expiration of a statute of limitation period in 2024.

Foreign Undistributed Earnings
Estimated gross undistributed earnings of foreign subsidiaries as of December 31, 2024 and 2023, totaled $651 million and $544 million, respectively. The Company considers these undistributed earnings permanently reinvested in its foreign operations and is not recording a deferred tax liability for any foreign withholding taxes on such amounts. If at some future date the Company ceases to be permanently reinvested in its foreign subsidiaries, the Company may be subject to foreign withholding and other taxes on these undistributed earnings and may need to record a deferred tax liability for any outside basis difference in its investments in its foreign subsidiaries.

Tax Uncertainties
The Company recognizes in the financial statements a provision for tax uncertainties, resulting from application of complex tax regulations in multiple tax jurisdictions.
The changes in the liability for tax uncertainties, excluding interest, are as follows (in millions of dollars):
For the Years Ended December 31,
202420232022
Balance at beginning of year$42 $41 $38 
Additions for tax positions related to the current year3 6 4 
Additions for tax positions of prior years— 1 2 
Reductions for tax positions of prior years(1)(1)— 
Reductions due to statute lapse(22)(3)(2)
Settlements, audit payments, refunds – net(1)(2)(1)
Balance at end of year$21 $42 $41 

The Company classifies the liability for tax uncertainties in deferred income taxes and tax uncertainties. Included in
this amount is $4 million as of December 31, 2024, of tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. Any changes in the timing of deductibility of these items would not affect the annual effective tax rate but would accelerate the payment of cash to the taxing authorities to an earlier period. In 2024, 2023 and 2022, the changes to tax positions were primarily related to the impact of expiring statutes and current year state and local reserves.

The Company is regularly subject to examination of its federal income tax returns by the Internal Revenue Service (IRS). The Company’s 2021 and 2022 tax years are currently under IRS audit. Tax year 2023 is open. The Company is also subject to audit by state, local and foreign taxing authorities. Tax years 2012 through 2023 remain subject to state, local and foreign audits. The amount of liability associated with the Company's tax uncertainties may change within the next 12 months due to pending audit activity, expiring statute of limitations periods or tax payments.