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Income Taxes | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Income tax expense (benefit) attributable to continuing operations for the years ended December 31, 2024, 2023 and 2022, consists of the following (in millions):
| 2024 |  | 2023 |  | 2022
Current provision (benefit): |  |  |  |  |
Federal | $ | 357 |  |  | $ | 235 |  |  | $ | 458 |
State | 103 |  |  | 96 |  |  | 130 |
Foreign | 109 |  |  | 96 |  |  | 84 |
Total current provision | $ | 569 |  |  | $ | 427 |  |  | $ | 672 |
Deferred provision (benefit): |  |  |  |  |
Federal | $ | (183) |  |  | $ | (193) |  |  | $ | (319) |
State | (41) |  |  | (73) |  |  | (54) |
Foreign | 17 |  |  | (4) |  |  | 15 |
Total deferred provision | (207) |  |  | (270) |  |  | (358) |
Total provision for income taxes | $ | 362 |  |  | $ | 157 |  |  | $ | 314 |
The provision for income taxes is based on pre-tax income from continuing operations, which is as follows for the years ended December 31, 2024, 2023 and 2022 (in millions):
| 2024 |  | 2023 |  | 2022
United States | $ | 920 |  |  | $ | 330 |  |  | $ | 718 |
Foreign | 377 |  |  | 332 |  |  | 180 |
Total | $ | 1,297 |  |  | $ | 662 |  |  | $ | 898 |
Total income tax expense (benefit) attributable to continuing and discontinued operations for the years ended December 31, 2024, 2023 and 2022, is allocated as follows (in millions):
| 2024 |  | 2023 |  | 2022
Tax expense (benefit) per statements of earnings (loss) | $ | 362 |  |  | $ | 157 |  |  | $ | 314 |
Tax expense (benefit) on income from discontinued operations | (1,062) |  |  | (301) |  |  | 52 |
Change in fair value of net investment hedges | 91 |  |  | (176) |  |  | 361 |
Foreign currency translation adjustments | — |  |  | 40 |  |  | (360) |
Share of equity method investment | (11) |  |  | — |  |  | — |
Other components of other comprehensive earnings (loss) | 8 |  |  | 20 |  |  | 3 |
Total income tax expense (benefit) allocated to other comprehensive earnings | 88 |  |  | (116) |  |  | 4 |
Total income tax expense (benefit) | $ | (612) |  |  | $ | (260) |  |  | $ | 370 |
A reconciliation of the federal statutory income tax rate to the Company's effective income tax rate for the years ended December 31, 2024, 2023 and 2022, is as follows:
| 2024 |  | 2023 |  | 2022
Federal statutory income tax rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State income taxes | 4.7 |  |  | 5.7 |  |  | 6.5 |
Federal benefit of state taxes | (1.0) |  |  | (1.0) |  |  | (1.3) |
Foreign rate differential | 1.1 |  |  | 0.8 |  |  | 2.9 |
Withholding on actual and estimated remittances | 2.4 |  |  | 2.4 |  |  | 1.2 |
Tax loss (benefit) from stock-based compensation | 0.7 |  |  | 2.3 |  |  | 4.0 |
U.K. tax rate adjustment | — |  |  | (0.1) |  |  | 0.3 |
Non-deductible executive compensation | 0.6 |  |  | 0.6 |  |  | 0.3 |
Foreign-derived intangible income deduction | (2.3) |  |  | (4.4) |  |  | (2.4) |
U.S. tax on foreign earnings | 1.4 |  |  | 1.0 |  |  | 0.4 |
Research and development credit | (1.1) |  |  | (1.8) |  |  | — |
Unrecognized tax benefits | (0.3) |  |  | (0.4) |  |  | (0.4) |
Return to provision | — |  |  | (1.7) |  |  | — |
Other | 0.7 |  |  | (0.6) |  |  | 2.5 |
Effective income tax rate | 27.9 | % |  | 23.8 | % |  | 35.0 | %
The significant components of deferred income tax assets and liabilities as of December 31, 2024 and 2023, consist of the following (in millions):
| 2024 |  | 2023
Deferred income tax assets: |  |  |
Net operating loss carryforwards | $ | 364 |  |  | $ | 219 |
Capital loss carryforwards | 220 |  |  | — |
Employee benefit accruals | 115 |  |  | 105 |
Outside basis difference | — |  |  | 919 |
Other deferred tax assets | 170 |  |  | 95 |
Total gross deferred income tax assets | 869 |  |  | 1,338 |
Less valuation allowance | (505) |  |  | (1,055) |
Total deferred income tax assets | 364 |  |  | 283 |
Deferred income tax liabilities: |  |  |
Equity method investments | (15) |  |  | — |
Amortization of goodwill and intangible assets | (707) |  |  | (2,066) |
Deferred contract costs | (259) |  |  | (245) |
Other deferred tax liabilities | (232) |  |  | (121) |
Total deferred income tax liabilities | (1,213) |  |  | (2,432) |
Net deferred income tax liability | $ | (849) |  |  | $ | (2,149) |
Deferred income taxes are classified in the consolidated balance sheets as of December 31, 2024 and 2023, as follows (in millions):
| 2024 |  | 2023
Noncurrent deferred income tax assets (included in Other noncurrent assets) | $ | 14 |  |  | $ | 30 |
Noncurrent deferred income tax liabilities | (863) |  |  | (2,179) |
Net deferred income tax liability | $ | (849) |  |  | $ | (2,149) |
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, 2024 and 2023, the Company had net income taxes payable of $236 million and $3 million, respectively. As of December 31, 2024, $279 million of income tax payable was included in Accounts payable, accrued and other liabilities and $43 million of income tax receivable was included in Other receivables in the consolidated balance sheet. As of December 31, 2023, $3 million of income tax payable was included in Accounts payable, accrued and other liabilities. As of December 31, 2024 and 2023, the Company has federal, state and foreign net operating loss carryforwards resulting in deferred tax assets of $364 million and $219 million, respectively. The federal and state net operating losses result in deferred tax assets as of December 31, 2024 and 2023, of $70 million and $72 million, respectively, which expire between 2025 and 2043. The Company has a valuation allowance related to these deferred tax assets for net operating loss carryforwards in the amounts of $47 million and $46 million as of December 31, 2024 and 2023. The Company has foreign net operating loss carryforwards resulting in deferred tax assets as of December 31, 2024 and 2023, of $294 million and $147 million, respectively. The increase in foreign net operating loss carryforwards is driven by an underlying change of facts arising during 2024 with respect to amounts previously restricted under local law. The Company maintains a valuation allowance against substantially all of the foreign net operating loss amounts as of December 31, 2024 and 2023. As a result of the Worldpay Merchant Solutions disposal group being classified as held for sale as of December 31, 2023, the Company recognized 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, offset by a valuation allowance of $829 million for the portion of the outside basis difference for which it was not more likely than not to recognize a tax benefit. The net deferred tax asset of $90 million at December 31, 2023, represented the portion of then-future capital loss for which we had an available capital gain against which the loss could be utilized. As of December 31, 2024, as a result of the Worldpay Sale, the Company recorded a deferred tax asset of $220 million related to the U.S. capital loss recognized as part of the transaction, offset by a valuation allowance of $130 million. Consistent with the amount recognized as of December 31, 2023, the net deferred tax asset of $90 million represents the portion of the capital loss for which we have an available capital gain against which the loss can be utilized. Additionally, as a result of the Worldpay Sale, the Company recognized a $15 million deferred tax liability for the difference between the tax basis of the Worldpay equity method investment and the corresponding financial statement carrying value. The measurement and character of this deferred tax liability is consistent with our current intention to hold the investment. We will continue to assess our intention at each future reporting period. If the manner or expected time of recovery of our investment in Worldpay changes, the amount or character of deferred taxes associated with our investment could change and result in an incremental deferred tax liability, which could be material. 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, 2024 and 2023, the Company had gross unrecognized tax benefits of $49 million and $41 million of which $41 million and $38 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, 2022 | $ | 48 |
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 the prior period | 4 |
Increases as a result of tax positions taken in the current period | 2 |
Amount of unrecognized tax benefit as of December 31, 2023 | 41 |
Amount of decreases due to lapse of the applicable statute of limitations | (6) |
Amount of decreases due to settlements | 4 |
Increases as a result of tax positions taken in prior period | 4 |
Increases as a result of tax positions taken in the current period | 6 |
Amount of unrecognized tax benefit as of December 31, 2024 | $ | 49 |
The total amount of interest expense recognized in the consolidated statements of earnings (loss) for unpaid taxes is $3 million, $2 million and $3 million for the years ended December 31, 2024, 2023 and 2022, respectively. The total amount of interest and penalties included in the consolidated balance sheets is $10 million and $11 million as of December 31, 2024 and 2023, respectively. Interest and penalties are recorded as a component of income tax expense in the consolidated statements of earnings (loss).

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