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Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Income tax expense (benefit) attributable to continuing operations for the years ended December 31, 2023, 2022 and 2021, consists of the following (in millions):
 202320222021
Current provision (benefit):   
Federal$235 $467 $196 
State96 132 54 
Foreign96 84 87 
Total current provision$427 $683 $337 
Deferred provision (benefit):   
Federal$(193)$(319)$(113)
State(73)(54)(12)
Foreign(4)15 191 
Total deferred provision(270)(358)66 
Total provision for income taxes$157 $325 $403 

The provision for income taxes is based on pre-tax income from continuing operations, which is as follows for the years ended December 31, 2023, 2022 and 2021 (in millions):
 202320222021
United States$331 $761 $537 
Foreign332 180 182 
Total$663 $941 $719 

Total income tax expense (benefit) attributable to continuing and discontinued operations for the years ended December 31, 2023, 2022 and 2021, is allocated as follows (in millions):
 202320222021
Tax expense (benefit) per statements of earnings (loss)$157 $325 $403 
Tax expense (benefit) on income from discontinued operations(301)52 (32)
Change in fair value of net investment hedges(176)361 317 
Foreign currency translation adjustments40 (360)(33)
Other components of other comprehensive earnings (loss)20 3 — 
Total income tax expense (benefit) allocated to other comprehensive earnings(116)4 284 
Total income tax expense (benefit)$(260)$381 $655 
A reconciliation of the federal statutory income tax rate to the Company's effective income tax rate for the years ended December 31, 2023, 2022 and 2021, is as follows:
 202320222021
Federal statutory income tax rate21.0 %21.0 %21.0 %
State income taxes5.7 6.0 5.4 
Federal benefit of state taxes(1.0)(1.3)(1.1)
Foreign rate differential0.8 2.0 1.2 
Withholding on actual and estimated remittances2.4 1.2 3.2 
Tax loss (benefit) from stock-based compensation2.3 4.0 (2.4)
U.K. tax rate adjustment(0.1)0.3 25.8 
Non-deductible executive compensation0.6 0.3 3.7 
Foreign-derived intangible income deduction(3.4)(1.1)0.4 
Research and development credit(1.8)— (1.2)
Unrecognized tax benefits(0.4)(0.4)1.1 
Return to provision(1.7)— (0.3)
Other(0.6)2.5 (0.8)
Effective income tax rate23.8 %34.5 %56.0 %

The significant components of deferred income tax assets and liabilities as of December 31, 2023 and 2022, consist of the following (in millions):
 20232022
Deferred income tax assets:  
Net operating loss carryforwards$219 $196 
Employee benefit accruals105 103 
Outside basis difference919 38 
Other deferred tax assets95 105 
Total gross deferred income tax assets1,338 442 
Less valuation allowance(1,055)(218)
Total deferred income tax assets283 224 
Deferred income tax liabilities:  
Amortization of goodwill and intangible assets(2,066)(2,363)
Deferred contract costs(245)(209)
Other deferred tax liabilities(121)(308)
Total deferred income tax liabilities(2,432)(2,880)
Net deferred income tax liability$(2,149)$(2,656)

Deferred income taxes are classified in the consolidated balance sheets as of December 31, 2023 and 2022, as follows (in millions):
 20232022
Noncurrent deferred income tax assets (included in Other noncurrent assets)$30 $33 
Noncurrent deferred income tax liabilities(2,179)(2,689)
Net deferred income tax liability$(2,149)$(2,656)

We believe that based on our historical pattern of taxable income, projections of future income, tax planning strategies as necessary and other relevant evidence, the Company will produce sufficient income in the future to realize its deferred income tax assets (net of valuation allowance). A valuation allowance is established for any portion of a deferred income tax asset for which we believe it is more likely than not that the Company will not be able to realize the benefits of all or a portion of that deferred income tax asset. We also receive periodic assessments from taxing authorities challenging our positions; these
assessments must be taken into consideration in determining our tax accruals. Resolving these assessments, which may or may not result in additional taxes due, may require an extended period of time. Adjustments to the valuation allowance will be made if there is a change in our assessment of the amount of deferred income tax asset that is realizable.

As of December 31, 2023 and 2022, the Company had, respectively, net income taxes payable of $17 million included in Accounts payable, accrued and other liabilities in the consolidated balance sheet and net income taxes receivable of $169 million included in Other receivables in the consolidated balance sheet.

As of December 31, 2023 and 2022, the Company had federal, state and foreign net operating loss carryforwards resulting in deferred tax assets of $219 million and $196 million, respectively. The federal and state net operating losses result in deferred tax assets as of December 31, 2023 and 2022, of $72 million and $67 million, respectively, which expire between 2024 and 2042. The Company has a valuation allowance related to these deferred tax assets for net operating loss carryforwards in the amounts of $46 million and $41 million as of December 31, 2023 and 2022. The Company has foreign net operating loss carryforwards resulting in deferred tax assets as of December 31, 2023 and 2022, of $147 million and $129 million, respectively. The Company has a full valuation allowance against the foreign net operating losses as of December 31, 2023 and 2022.

As a result of classifying the Worldpay Merchant Solutions disposal group as held for sale in the third quarter of 2023, in accordance with ASC 740, the Company recognized in Deferred income taxes on the consolidated balance sheet as of December 31, 2023, a deferred tax asset of $919 million related to the excess tax-over-book outside basis difference for Worldpay Merchant Solutions' investment in foreign subsidiaries, net of a valuation allowance of $829 million for the portion of the outside basis difference for which it is not more likely than not to recognize a tax benefit. The net deferred tax asset of $90 million represents the portion of future capital loss for which we have an available capital gain against which the loss can be utilized. The corresponding net tax benefit was recorded in discontinued operations. In accordance with the provisions of ASC 740, the net deferred tax asset at December 31, 2023, does not include the final estimated tax expense related to the closing of the Worldpay Sale, which will be computed by comparing the proceeds allocated to our investments in both U.S. and foreign subsidiaries against their respective tax bases.
The Company participates in the IRS' Compliance Assurance Process ("CAP"), which is a real-time continuous audit. The IRS has completed its review for years through 2021. Currently, we believe the ultimate resolution of the IRS examinations will not result in a material adverse effect to the Company's financial position or results of operations. Tax years that remain subject to examination by major foreign and state tax jurisdictions are 2017 and forward.

As of December 31, 2023 and 2022, the Company had gross unrecognized tax benefits of $41 million and $48 million of which $38 million and $42 million, respectively, would favorably impact our income tax rate in the event that the unrecognized tax benefits are recognized.

The following table reconciles the gross amounts of unrecognized tax benefits at the beginning and end of the period (in millions):
 Gross Amount
Amounts of unrecognized tax benefits as of December 31, 2021$54 
Amount of decreases due to lapse of the applicable statute of limitations(1)
Amount of decreases due to settlements(13)
Increases as a result of tax positions taken in the prior period5 
Increases as a result of tax positions taken in the current period4 
Foreign currency translation(1)
Amount of unrecognized tax benefit as of December 31, 202248 
Amount of decreases due to lapse of the applicable statute of limitations(5)
Amount of decreases due to settlements(8)
Increases as a result of tax positions taken in prior period4 
Increases as a result of tax positions taken in the current period2 
Amount of unrecognized tax benefit as of December 31, 2023$41 
The total amount of interest expense recognized in the consolidated statements of earnings (loss) for unpaid taxes is $2 million, $3 million and $3 million for the years ended December 31, 2023, 2022 and 2021, respectively. The total amount of interest and penalties included in the consolidated balance sheets is $11 million and $14 million as of December 31, 2023 and 2022, respectively. Interest and penalties are recorded as a component of income tax expense in the consolidated statements of earnings (loss).