XML 76 R20.htm IDEA: XBRL DOCUMENT
v3.25.0.1

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | Income before provision for income taxes shown below is based on the geographic location to which such income was attributed for years ended December 31:
(in millions) |  | 2024 |  | 2023 |  | 2022
United States |  | $ | 906 |  |  | $ | 813 |  |  | $ | 975 |
Foreign |  | 2,032 |  |  | 1,974 |  |  | 2,041 |
Income before provision for income taxes |  | $ | 2,938 |  |  | $ | 2,787 |  |  | $ | 3,016 |
The provision for income taxes consisted of the following components for the years ended December 31:
(in millions) |  | 2024 |  | 2023 |  | 2022
Current: |  |  |  |  |  |
Federal and state |  | $ | 426 |  |  | $ | 522 |  |  | $ | 492 |
Foreign |  | 642 |  |  | 485 |  |  | 511 |
Total current provision |  | 1,068 |  |  | 1,007 |  |  | 1,003 |
Deferred: |  |  |  |  |  |
Federal and state |  | (229) |  |  | (354) |  |  | (240) |
Foreign |  | (126) |  |  | 15 |  |  | (33) |
Total deferred income tax (benefit) |  | (355) |  |  | (339) |  |  | (273) |
Total provision for income taxes |  | $ | 713 |  |  | $ | 668 |  |  | $ | 730 |
We are involved in two separate ongoing disputes with the ITD in connection with previously disclosed share repurchase transactions undertaken by CTS India in 2013 and 2016 to repurchase shares from its shareholders (non-Indian Cognizant entities) valued at $523 million and $2.8 billion, respectively. The 2016 transaction was undertaken pursuant to a plan approved by the High Court in Chennai, India, and resulted in the payment of $135 million in Indian income taxes - an amount we believe includes all the applicable taxes owed for this transaction under Indian law. In March 2018, the ITD asserted that it is owed an additional 33 billion Indian rupees ($386 million at the December 31, 2024 exchange rate) on the 2016 transaction. We deposited 5 billion Indian rupees, representing 15% of the disputed tax amount related to the 2016 transaction, with the ITD. Additionally, certain time deposits of CTS India were placed under lien in favor of the ITD, representing the remainder of the disputed tax amount. As of December 31, 2023, the balance of deposits under lien was 30 billion Indian rupees, including previously earned interest, or $355 million, was presented in "Long-term investments." In April 2020, we received a formal assessment from the ITD on the 2016 transaction, which is consistent with the ITD's previous assertions. Our appeal was ruled on unfavorably by the CITA in March 2022 and by the ITAT in September 2023. We filed an appeal against the order of the ITAT with the High Court. On January 8, 2024, the SCI ruled that, in order to proceed with the appeal, we must deposit 30 billion Indian rupees, representing the time deposits of CTS India under lien, on the condition that, if CTS India prevails at the High Court, the amount deposited will be returned to CTS India, along with interest accrued, within four weeks of the judgment. We made the required deposit in January 2024 and, in April 2024, the case commenced before the High Court. As of December 31, 2024 and 2023, the deposit with the ITD was $403 million and $60 million, respectively at December 31, 2024 and 2023 exchange rates, respectively presented in "Other noncurrent assets". As of December 31, 2023, $96 million of the $355 million in deposits under lien were held in time deposits with a maturity of less than 30 days qualifying as cash equivalent instruments and thus were considered restricted cash equivalents as of December 31, 2023. The dispute in relation to the 2013 share repurchase transaction is also in litigation. At this time, the ITD has not made specific demands with regards to the 2013 transaction. We continue to believe we have paid all applicable taxes owed on both the 2016 and the 2013 transactions and we continue to defend our positions with respect to both matters. Accordingly, we have not recorded any reserves for these matters as of December 31, 2024. The reconciliation between the U.S. federal statutory rate and our effective income tax rate were as follows for the years ended December 31:
(Dollars in millions) |  | 2024 |  | % |  | 2023 |  | % |  | 2022 |  | %
Tax expense, at U.S. federal statutory rate |  | $ | 617 |  |  | 21.0 |  |  | $ | 585 |  |  | 21.0 |  |  | $ | 633 |  |  | 21.0 |
State and local income taxes, net of federal benefit |  | 74 |  |  | 2.5 |  |  | 55 |  |  | 2.0 |  |  | 63 |  |  | 2.1 |
Non-taxable income for Indian tax purposes |  | — |  |  | — |  |  | — |  |  | — |  |  | (6) |  |  | (0.2) |
Rate differential on foreign earnings |  | 104 |  |  | 3.5 |  |  | 95 |  |  | 3.4 |  |  | 98 |  |  | 3.2 |
Recognition of benefits related to uncertain tax positions |  | (15) |  |  | (0.5) |  |  | (33) |  |  | (1.2) |  |  | (43) |  |  | (1.4) |
Credits and other incentives |  | (57) |  |  | (1.9) |  |  | (37) |  |  | (1.3) |  |  | (17) |  |  | (0.6) |
Other |  | (10) |  |  | (0.3) |  |  | 3 |  |  | 0.1 |  |  | 2 |  |  | 0.1 |
Total provision for income taxes |  | $ | 713 |  |  | 24.3 |  |  | $ | 668 |  |  | 24.0 |  |  | $ | 730 |  |  | 24.2 |
The significant components of deferred income tax assets and liabilities recorded on the consolidated statements of financial position were as follows as of December 31:
(in millions) |  | 2024 |  | 2023
Deferred income tax assets: |  |  |  |
Net operating losses |  | $ | 50 |  |  | $ | 52 |
Revenue recognition (including intercompany revenue) |  | 51 |  |  | 126 |
Compensation and benefits |  | 164 |  |  | 172 |
Credit carryforwards |  | 11 |  |  | 16 |
Expenses not currently deductible |  | 1,189 |  |  | 672 |
|  | 1,465 |  |  | 1,038 |
Less: valuation allowance |  | (48) |  |  | (53) |
Deferred income tax assets, net |  | 1,417 |  |  | 985 |
Deferred income tax liabilities: |  |  |  |
Depreciation and amortization |  | 298 |  |  | 184 |
Deferred costs |  | 24 |  |  | 31 |
Other |  | 1 |  |  | 3 |
Deferred income tax liabilities |  | 323 |  |  | 218 |
Net deferred income tax assets |  | $ | 1,094 |  |  | $ | 767 |
At December 31, 2024, we had foreign and U.S. net operating loss carryforwards of approximately $131 million and $83 million, respectively. We have recorded valuation allowances on certain net operating loss carryforwards. We conduct business globally and file income tax returns in the United States, including federal and state, as well as various foreign jurisdictions. Tax years that remain subject to examination by the IRS are 2019 and onward, and years that remain subject to examination by state authorities vary by state. Years under examination by foreign tax authorities are 2003 and onward. In addition, transactions between our affiliated entities are arranged in accordance with applicable transfer pricing laws, regulations and relevant guidelines. As a result, and due to the interpretive nature of certain aspects of these laws and guidelines, we have pending applications for APAs before the taxing authorities in some of our most significant jurisdictions. Changes in unrecognized income tax benefits were as follows for the years ended December 31:
(in millions) |  | 2024 |  | 2023 |  | 2022
Balance, beginning of year |  | $ | 260 |  |  | $ | 269 |  |  | $ | 194 |
Additions based on tax positions related to the current year |  | 15 |  |  | 31 |  |  | 53 |
Additions for tax positions of prior years |  | 65 |  |  | 22 |  |  | 65 |
Reductions for tax positions due to lapse of statutes of limitations |  | (15) |  |  | (15) |  |  | (43) |
Reductions for tax positions related to prior years |  | (6) |  |  | (33) |  |  | — |
Settlements |  | — |  |  | (14) |  |  | — |
Balance, end of year |  | $ | 319 |  |  | $ | 260 |  |  | $ | 269 |
In the third quarter of 2022, we recognized an income tax benefit of $36 million related to a specific uncertain tax position that was previously unrecognized in our prior year consolidated financial statements. The recognition of the benefit in the third quarter of 2022 was based on management’s reassessment regarding whether this unrecognized tax benefit met the more-likely-than-not threshold in light of the lapse in the statute of limitations as to a portion of such benefit. The unrecognized income tax benefits would affect our effective income tax rate, if recognized. While the Company believes uncertain tax positions may be settled or resolved within the next twelve months, it is difficult to estimate the specific timing or the income tax impact of these potential resolutions at this time. We recognize accrued interest and any penalties associated with uncertain tax positions as part of our provision for income taxes. The total amount of accrued net interest and penalties was $35 million a nd $33 million as of December 31, 2024 and 2023, respectively, and related to U.S. and foreign tax matters. The total amount of net interest and penalties recorded in the provision for income taxes in each of 2024, 2023 and 2022 was immaterial.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income tax. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12 Reference 2: http://www.xbrl.org/2003/role/exampleRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 231 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482663/740-10-55-231 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12C -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12C Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12B -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12B Reference 5: 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/1943274/2147477891/740-270-50-1 Reference 6: 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 7: 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 8: 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 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/740/tableOfContent Reference 10: 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 11: 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 12: 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 13: 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 14: 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
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration