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INCOME TAXES | 12 Months Ended
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Dec. 31, 2023
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES The components of income before income taxes were as follows:
For the years ended December 31, |  | 2023 |  | 2022 |  | 2021
Domestic |  | $ | 1,832,771 |  |  | $ | 1,816,622 |  | $ | 1,775,361
Foreign |  | 339,093 |  |  | 100,449 |  |  | 21,863 |
Income before income taxes |  | $ | 2,171,864 |  |  | $ | 1,917,071 |  | $ | 1,797,224
The components of our provision for income taxes were as follows:
For the years ended December 31, |  | 2023 |  | 2022 |  | 2021
Current: |  |  |  |  |  |
Federal |  | $ | 141,753 |  |  | $ | 121,968 |  |  | $ | 161,402 |
State |  | 83,802 |  |  | 85,741 |  |  | 60,979 |
Foreign |  | 68,289 |  |  | 27,656 |  |  | 78,650 |
|  | 293,844 |  |  | 235,365 |  |  | 301,031 |
Deferred: |  |  |  |  |  |
Federal |  | 28,191 |  |  | 34,848 |  |  | 26,726 |
State |  | (9,531) |  |  | 3,393 |  |  | 8,253 |
Foreign |  | (2,427) |  |  | (1,352) |  |  | (21,605) |
|  | 16,233 |  |  | 36,889 |  |  | 13,374 |
Total provision for income taxes |  | $ | 310,077 |  |  | $ | 272,254 |  |  | $ | 314,405 |
Deferred taxes reflect temporary differences between the tax basis and financial statement carrying value of assets and liabilities. The significant temporary differences that comprised the deferred tax assets and liabilities are as follows:
December 31, |  | 2023 |  | 2022
Deferred tax assets: |  |  |  |
Post-retirement benefit obligations |  | $ | 24,969 |  |  | $ | 40,100 |
Accrued expenses and other reserves |  | 85,601 |  |  | 78,523 |
Stock-based compensation |  | 21,656 |  |  | 19,847 |
Derivative instruments |  | 12,268 |  |  | 3,983 |
Lease liabilities |  | 90,405 |  |  | 91,099 |
Accrued trade promotion reserves |  | 18,796 |  |  | 23,082 |
Net operating loss carryforwards |  | 110,342 |  |  | 130,944 |
Capital loss carryforwards |  | — |  |  | 1,999 |
Other |  | 83,011 |  |  | 52,802 |
Gross deferred tax assets |  | 447,048 |  |  | 442,379 |
Valuation allowance |  | (114,149) |  |  | (137,531) |
Total deferred tax assets |  | 332,899 |  |  | 304,848 |
Deferred tax liabilities: |  |  |  |
Property, plant and equipment, net |  | 271,465 |  |  | 247,964 |
Acquired intangibles |  | 228,711 |  |  | 193,160 |
Lease ROU assets |  | 71,150 |  |  | 72,602 |
Inventories |  | 13,250 |  |  | 28,573 |
Pension |  | 10,001 |  |  | 11,038 |
Other |  | 39,566 |  |  | 39,416 |
Total deferred tax liabilities |  | 634,143 |  |  | 592,753 |
Net deferred tax liabilities |  | $ | (301,244) |  |  | $ | (287,905) |
Included in: |  |  |  |
Non-current deferred tax assets, net |  | $ | 44,454 |  |  | $ | 40,498 |
Non-current deferred tax liabilities, net |  | (345,698) |  |  | (328,403) |
Net deferred tax liabilities |  | $ | (301,244) |  |  | $ | (287,905) |
Changes in deferred taxes were primarily due to acquired intangibles and accelerated tax depreciation on property, plant and equipment. The valuation allowances as of December 31, 2023 and 2022 were primarily related to various foreign jurisdictions' net operating loss carryforwards and other deferred tax assets that we do not expect to realize. The following table reconciles the federal statutory income tax rate with our effective income tax rate:
For the years ended December 31, |  | 2023 |  | 2022 |  | 2021
Federal statutory income tax rate |  | 21.0 | % |  | 21.0 | % |  | 21.0 | %
Increase (reduction) resulting from: |  |  |  |  |  |
State income taxes, net of Federal income tax benefits |  | 2.8 |  |  | 3.2 |  |  | 2.8 |
Foreign rate differences |  | (1.0) |  |  | (0.1) |  |  | (0.2) |
Historic and solar tax credits |  | (9.5) |  |  | (9.9) |  |  | (6.2) |
Tax contingencies |  | 1.1 |  |  | 0.4 |  |  | 1.7 |
Stock compensation |  | (0.5) |  |  | (0.7) |  |  | (0.5) |
Other, net |  | 0.4 |  |  | 0.3 |  |  | (1.1) |
Effective income tax rate |  | 14.3 | % |  | 14.2 | % |  | 17.5 | %
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
December 31, |  | 2023 |  | 2022
Balance at beginning of year |  | $ | 148,345 |  |  | $ | 143,305 |
Additions for tax positions taken during prior years |  | 11,567 |  |  | 17,987 |
Reductions for tax positions taken during prior years |  | (26) |  |  | (9,310) |
Additions for tax positions taken during the current year |  | 6,194 |  |  | 4,112 |
Settlements |  | (9,838) |  |  | — |
Expiration of statutes of limitations |  | (6,617) |  |  | (7,749) |
Balance at end of year |  | $ | 149,625 |  |  | $ | 148,345 |
The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $122,706 as of December 31, 2023 and $120,699 as of December 31, 2022. We report accrued interest and penalties related to unrecognized tax benefits in income tax expense. We recognized a net tax expense of $12,027, $4,862 and $8,924 in 2023, 2022 and 2021, respectively, for interest and penalties. Accrued net interest and penalties were $37,355 as of December 31, 2023 and $25,328 as of December 31, 2022. The Company and its subsidiaries file tax returns in the United States, including various state and local returns, and in other foreign jurisdictions. We are routinely audited by taxing authorities in our filing jurisdictions, and a number of these disputes are currently underway, including multi-year controversies at various stages of review, negotiation and litigation in Mexico, Canada, Switzerland and the United States. The outcome of tax audits cannot be predicted with certainty, including the timing of resolution or potential settlements. If any issues addressed in our tax audits are resolved in a manner not consistent with management’s expectations, we could be required to adjust our provision for income taxes in the period such resolution occurs. Based on our current assessments, we believe adequate provision has been made for all income tax uncertainties. We reasonably expect reductions in the liability for unrecognized tax benefits of approximately $51,355 within the next 12 months because of the expiration of statutes of limitations and settlements of tax audits. As of December 31, 2023, we had approximately $656,389 of undistributed earnings of our international subsidiaries. We continue to reinvest the remainder of the earnings outside of the United States for which there would be a material tax implication to distributing, such as withholding tax, for the foreseeable future and, therefore, have not recognized additional tax expense on these earnings beyond the one-time U.S. repatriation tax due under the 2017 Tax Cuts and Jobs Act. Investments in Partnerships Qualifying for Tax Credits We invest in partnerships which make equity investments in projects eligible to receive federal historic and energy tax credits. The investments are accounted for under the equity method and reported within other non-current assets in our Consolidated Balance Sheets. The tax credits, when realized, are recognized as a reduction of tax expense under the flow-through method, at which time the corresponding equity investment is written-down to reflect the remaining value of the future benefits to be realized. For the years ended December 31, 2023, 2022 and 2021 we recognized investment tax credits and related outside basis difference benefits totaling $251,827, $228,819 and $136,243, respectively, and we wrote-down the equity investment by $210,484, $188,286 and $113,756, respectively, to reflect the realization of these benefits. The equity investment write-down is reflected within other (income) expense, net in the Consolidated Statements of Income (see Note 17). Inflation Reduction Act On August 16, 2022, the Inflation Reduction Act (“IRA”) was signed into law. The IRA enacted a 15% corporate minimum tax on certain corporations and an excise tax on share repurchases after December 31, 2022, and created and extended certain energy-related tax credits and incentives. For the year ended December 31, 2023, the tax-related provisions of the IRA did not have a material impact on our consolidated financial statements, including our annual effective tax rate, or on our liquidity.

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