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Income Taxes | 9 Months Ended
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Sep. 30, 2025
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes During the three months ended September 30, 2025, we recorded a total income tax provision of $199 million on a pre-tax income of $219 million, resulting in an effective tax rate of 90.9% for the quarter. The effective tax rate for this period was primarily impacted by the additional valuation allowance recognized in the amount of $125 million on our deferred tax assets, along with the pre-tax $392 million of impairments and other charges, and the $23 million impairment of an investment in Argentina. During the three months ended September 30, 2024, we recorded a total income tax provision of $154 million, which included a partial release of a valuation allowance on our deferred tax assets in the amount of $41 million, on a pre-tax income of $734 million, resulting in an effective tax rate of 21.0% for the quarter. During the nine months ended September 30, 2025, we recorded a total income tax provision of $433 million on a pre- tax income of $1.1 billion, resulting in an effective tax rate of 38.1% for the period. The effective tax rate for this period was primarily impacted by the additional valuation allowance recognized in the amount of $125 million on our deferred tax assets, along with the pre-tax $748 million of impairments and other charges, and the $23 million impairment of an investment in Argentina. During the nine months ended September 30, 2024, we recorded a total income tax provision of $539 million, which included a partial release of a valuation allowance on our deferred tax assets in the amount of $41 million on a pre-tax income of $2.4 billion, resulting in an effective tax rate of 22.1% for the period. Our tax returns are subject to review by the taxing authorities in the jurisdictions where we file tax returns. In most cases we are no longer subject to examination by tax authorities for years before 2013. The only significant operating jurisdiction that has tax filings under review or subject to examination by the tax authorities is the United States. As of September 30, 2025, the United States federal income tax filings for tax years 2016 through 2023 are currently under review or remain open for review by the Internal Revenue Service (the IRS). As of September 30, 2025, the primary unresolved issue for the IRS audit for 2016 relates to the classification of the $3.5 billion ordinary deduction that we claimed for the termination fee we paid to Baker Hughes in the second quarter of 2016 for which we received a Notice of Proposed Adjustment (NOPA) from the IRS on September 28, 2023. We regularly assess the likelihood of adverse outcomes resulting from tax examinations to determine the adequacy of our tax reserves, and we believe our income tax reserves are appropriately provided for all open tax years. We do not expect a final resolution of this issue in the next twelve months. Based on the information currently available, we do not anticipate a significant increase or decrease to our tax contingencies within the next twelve months. I n December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires greater disaggregation of income tax disclosures. The new standard requires additional information to be disclosed with respect to the income tax rate reconciliation and income taxes paid disaggregated by jurisdiction. This ASU should be applied prospectively for fiscal years beginning after December 15, 2024, with retrospective application permitted. The Company will adopt this standard for the Form 10-K for the year ending December 31, 2025, on a prospective basis and has implemented custom reporting processes and internal workflows to support the new disclosure requirements. The adoption of ASU 2023-09 is not expected to have a material impact on our consolidated financial statements. On July 4, 2025, President Donald Trump signed into law the “One Big Beautiful Bill Act,” which includes federal tax law revisions that may affect the Company’s ability to utilize Foreign Tax Credits (FTC). C ompanies are required to recognize the effects of changes in tax laws in the period in which the new legislation is enacted. As of September 30, 2025, the Company reassessed the realizability of its FTC carryforwards. Based on updated forecasts of future taxable income, tax planning strategies, and changes to tax law that impact FTC utilization, the Company determined that it is more likely than not that a portion of its FTC carryforwards would not be realized. As a result, the Company recorded an additional valuation allowance of $125 million against its FTC deferred tax assets during the three months ended September 30, 2025.

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