XML 36 R21.htm IDEA: XBRL DOCUMENT
v3.24.0.1

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The components of earnings before income taxes and the components of our income tax provision are as follows:
| Year ended December 31,
| 2023 |  | 2022 |  | 2021
| (in millions)
Domestic | $ | 2,248 |  |  | $ | 4,699 |  |  | $ | 1,979 |
Non-U.S. | — |  |  | 396 |  |  | (436) |
Earnings before income taxes | $ | 2,248 |  |  | $ | 5,095 |  |  | $ | 1,543 |
Current |  |  |  |  |
Federal | $ | 271 |  |  | $ | 702 |  |  | $ | 394 |
Foreign | (26) |  |  | 395 |  |  | 30 |
State | 84 |  |  | 168 |  |  | 55 |
| 329 |  |  | 1,265 |  |  | 479 |
Deferred |  |  |  |  |
Federal | 108 |  |  | (102) |  |  | (137) |
Foreign | (5) |  |  | (18) |  |  | (50) |
State | (22) |  |  | 13 |  |  | (9) |
| 81 |  |  | (107) |  |  | (196) |
Income tax provision | $ | 410 |  |  | $ | 1,158 |  |  | $ | 283 |
Differences in the expected income tax provision based on statutory rates applied to earnings before income taxes and the income tax provision reflected in the consolidated statements of operations are summarized below.
| Year ended December 31, |  |
| 2023 |  |  |  | 2022 |  |  |  | 2021 |  |
| (in millions, except percentages)
Earnings before income taxes | $ | 2,248 |  |  |  |  | $ | 5,095 |  |  |  |  | $ | 1,543 |  |  |
Expected tax provision at U.S. statutory rate of 21% | $ | 472 |  |  |  |  | $ | 1,070 |  |  |  |  | $ | 324 |  |  |
State income taxes, net of federal | 44 |  |  |  |  | 143 |  |  |  |  | 34 |  |  |
Net earnings attributable to noncontrolling interest | (66) |  |  |  |  | (124) |  |  |  |  | (72) |  |  |
Foreign tax rate differential | (1) |  |  |  |  | (9) |  |  |  |  | (1) |  |  |
U.S. tax on foreign earnings | 4 |  |  |  |  | 3 |  |  |  |  | — |  |  |
Non-deductible goodwill impairment | — |  |  |  |  | — |  |  |  |  | 60 |  |  |
Transfer pricing arbitration | — |  |  |  |  | 69 |  |  |  |  | — |  |  |
Federal income tax return audits | — |  |  |  |  | — |  |  |  |  | (38) |  |  |
Other | (43) |  |  |  |  | 6 |  |  |  |  | (24) |  |  |
Income tax provision | $ | 410 |  |  |  |  | $ | 1,158 |  |  |  |  | $ | 283 |  |  |
Effective tax rate | 18.3 | % |  |  |  | 22.7 | % |  |  |  | 18.3 | % |  |
Our effective tax rate is impacted by earnings attributable to the noncontrolling interest in CFN, as our consolidated income tax provision does not include a tax provision on the earnings attributable to the noncontrolling interest. As a result, earnings attributable to the noncontrolling interest of $313 million, $591 million and $343 million in 2023, 2022 and 2021, respectively, which are included in earnings before income taxes, impacted the effective tax rate in all three years. See Note 19—Noncontrolling Interest for additional information. The foreign tax rate differential is impacted by the inclusion of equity earnings from our equity method investment in PLNL, a foreign operating affiliate, which are included in pre-tax earnings on an after-tax basis. In 2021, the foreign tax rate differential includes $12 million of tax expense for the revaluing of deferred taxes due to an enacted rate change in the jurisdiction of a foreign subsidiary. U.S. tax on foreign earnings is inclusive of the current year tax on global intangible low-tax income (GILTI), benefit from the GILTI Section 250 deduction and foreign tax credits, as well as adjustments to prior year amounts for these items. Non-deductible goodwill impairment in the table above relates to the goodwill impairment recognized in 2021 as described in Note 7—United Kingdom Operations Restructuring and Impairment Charges. We did not record an income tax benefit for the goodwill impairment as it is nondeductible for income tax purposes. In 2021, we reached agreement on certain issues related to U.S. federal income tax audits for the tax years 2012 through 2016 and reversed accruals for unrecognized tax benefits of $13 million related to those tax years. This resulted in a $38 million federal income tax benefit, which included the reduction in our unrecognized tax benefits. The federal income tax benefit was offset by $12 million of state income tax liability resulting from adjustments to U.S. federal taxable income, which is included in the line “State income tax, net of federal” in the table above. Canada Revenue Agency Competent Authority Matter In 2016, the Canada Revenue Agency (CRA) and Alberta Tax and Revenue Administration (Alberta TRA) issued Notices of Reassessment for tax years 2006 through 2009 to one of our Canadian subsidiaries asserting a disallowance of certain patronage deductions. We filed Notices of Objection with respect to the Notices of Reassessment with the CRA and Alberta TRA and posted letters of credit in lieu of paying the additional tax liability assessed. The letters of credit served as security until the matter was resolved, as discussed below. In 2018, the matter, including the related transfer pricing topic regarding the allocation of profits between Canada and the United States, was accepted for consideration under the bilateral settlement provisions of the U.S.-Canada tax treaty (the Treaty) by the United States and Canadian competent authorities, and included tax years 2006 through 2011. In the second quarter of 2021, the Company submitted the transfer pricing aspect of the matter into the arbitration process under the terms of the Treaty. In February 2022, we were informed that a decision was reached by the arbitration panel for tax years 2006 through 2011. In March 2022, we received further details of the results of the arbitration proceedings and the settlement provisions between the United States and Canadian competent authorities, and we accepted the decision of the arbitration panel. Under the terms of the arbitration decision, additional income for tax years 2006 through 2011 was subject to tax in Canada, resulting in our having additional Canadian tax liability for those tax years of approximately $129 million. As a result of the impact of these events on our Canadian and U.S. federal and state income taxes, we recognized an income tax provision of $78 million, reflecting the net impact of $129 million of accrued income taxes payable to Canada for tax years 2006 to 2011, partially offset by net income tax receivables of approximately $51 million in the United States, and we accrued net interest of $102 million, primarily reflecting the estimated interest payable to Canada. The $69 million in the effective tax rate table above excludes the state income tax liability of $9 million, which is included in the line “State income tax, net of federal.” In the second half of 2022, this tax liability and the related interest was assessed and paid, resulting in total payments of $224 million, which also reflect the impact of changes in foreign currency exchange rates. As a result, the letters of credit we had posted in lieu of paying the additional tax liability assessed by the Notices of Reassessment were cancelled. Due primarily to the availability of additional foreign tax credits to offset in part the increased Canadian tax referenced above, we filed amended tax returns in the United States to request a refund of taxes paid. Deferred Taxes Deferred tax assets and deferred tax liabilities are as follows:
| December 31,
| 2023 |  | 2022
| (in millions)
Deferred tax assets: |  |  |
Net operating loss and capital loss carryforwards, state | $ | 68 |  |  | $ | 34 |
Net operating loss and capital loss carryforwards, foreign | 116 |  |  | 114 |
Retirement and other employee benefits | 14 |  |  | 25 |
Foreign tax credits | 55 |  |  | 44 |
State tax credits | 16 |  |  | 7 |
Operating lease liabilities | 63 |  |  | 64 |
Other | 38 |  |  | 35 |
| 370 |  |  | 323 |
Valuation allowance | (194) |  |  | (190) |
| 176 |  |  | 133 |
Deferred tax liabilities: |  |  |
Depreciation and amortization | (300) |  |  | (139) |
Investments in partnerships | (780) |  |  | (858) |
Operating lease right-of-use assets | (63) |  |  | (63) |
Foreign earnings | (9) |  |  | (12) |
Other | (23) |  |  | (19) |
| (1,175) |  |  | (1,091) |
Net deferred tax liability | $ | (999) |  |  | $ | (958) |
As of December 31, 2023, we recorded a deferred tax liability of $9 million on the undistributed earnings of our Canadian subsidiaries for which the Company does not have an indefinite reinvestment assertion. We have not provided for deferred taxes on the remainder of undistributed earnings from our foreign subsidiaries because such earnings would not give rise to additional tax liabilities upon repatriation or such earnings are considered to be indefinitely reinvested. As of December 31, 2023, our net operating loss and capital loss carryforwards consist primarily of state net operating loss carryforwards of $66 million, of which $32 million will expire at various dates between 2031 and 2043 and the remaining $34 million can be carried forward indefinitely and foreign capital loss carryforwards of $116 million, which can be carried forward indefinitely. Our foreign subsidiaries have operations that do not normally generate capital gains and have no practical plans to do so in the future. As a result, we have recorded a full valuation allowance against all foreign capital loss carryforwards. As of December 31, 2023, we have state tax credit carryforwards resulting in a deferred tax asset of $16 million. The state tax credits have expiration dates generally ranging from 2038 to 2043. In 2023, the net increase in the valuation allowance is primarily attributable to excess foreign tax credits associated with certain U.S. taxed foreign branch income and the impact of changes in foreign currency exchange rates, partially offset by the utilization of deferred tax assets of one of our foreign subsidiaries in the United Kingdom. The excess foreign tax credits carried forward, subject to U.S. foreign tax credit limitation rules, are not expected to be utilized prior to expiration and have a full valuation allowance of $55 million reflecting an increase of $11 million in 2023. Based on recent income generated in the United Kingdom, a portion of the deferred tax assets for which a full valuation allowance had been recorded in 2022 was utilized in 2023, resulting in a $7 million decrease to the deferred tax assets and the valuation allowance of one of our foreign subsidiaries in the United Kingdom. In 2022, the net increase in the valuation allowance is primarily attributable to excess foreign tax credits associated with certain U.S. taxed foreign branch income and the reversal of future deductible temporary differences of one of our foreign subsidiaries in the United Kingdom, partially offset by the impact of changes in foreign currency exchange rates. The excess foreign tax credits carried forward, subject to U.S. foreign tax credit limitation rules, are not expected to be utilized prior to expiration and have a full valuation allowance of $44 million reflecting an increase of $26 million in 2022. Based on recent losses generated in the United Kingdom, and projections for future income over the period for which the deferred tax assets will reverse, we believe it is more likely than not that the foreign subsidiary in the United Kingdom will not realize the deferred tax assets and therefore have recorded a full valuation allowance of $24 million. See Note 7—United Kingdom Operations Restructuring and Impairment Charges for additional detail. In 2021, the valuation allowance activity was primarily attributable to state tax credit carryforwards and excess foreign tax credits associated with certain U.S. taxed foreign branch income. Due to the expiration of statute of limitations on state tax credits and increases in taxable income, we no longer have valuation allowances on the remaining state tax credit carryforwards resulting in a decrease of $27 million. The excess foreign tax credits carried forward, subject to U.S. foreign tax credit limitation rules, are not expected to be utilized prior to expiration and have a full valuation allowance of approximately $18 million. Unrecognized Tax Benefits A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
| December 31,
| 2023 |  | 2022
| (in millions)
Unrecognized tax benefits: |  |  |
Balance as of January 1 | $ | 181 |  |  | $ | 27 |
Additions for tax positions taken during the current year | 5 |  |  | — |
Additions for tax positions taken during prior years | 69 |  |  | 154 |
Reductions related to lapsed statutes of limitations | — |  |  | — |
Reductions related to settlements with tax jurisdictions | (33) |  |  | — |
Balance as of December 31 | $ | 222 |  |  | $ | 181 |
In 2023, we increased the amount of our unrecognized tax benefits by $74 million, which primarily relates to refunds claimed on the U.S. amended returns filed during the year, as discussed above under Canada Revenue Agency Competent Authority Matter. In addition, we reduced the amount of unrecognized tax benefits by $33 million, reflecting primarily the settlement of issues raised on state and Canadian income tax audits for various open tax years. As of December 31, 2023, we had $222 million of unrecognized tax benefits. The majority of our unrecognized tax benefits relate to transfer pricing positions, which have a corollary receivable for the other jurisdiction impacted by the transfer pricing relationship. Recognizing these unrecognized tax benefits would result in additional tax expense of $29 million in the future. These receivables are included in other assets on our consolidated balance sheet. In 2022, we increased the amount of our unrecognized tax benefits by $154 million, which relates primarily to the Canada Revenue Agency Competent Authority Matter discussed above. As a result of the outcome of the arbitration decision, we evaluated our transfer pricing positions between Canada and the United States for open years 2012 and after. In order to mitigate the assessment of future Canadian interest on these Canadian transfer pricing positions, in the fourth quarter of 2022, we made payments to the Canadian taxing authorities of CAD $363 million (approximately $267 million), which were recorded as noncurrent income tax receivables and included in other assets on our consolidated balance sheet. For the amounts ultimately owed and paid to the Canadian tax authorities upon resolution of these tax years, we would seek refunds of related taxes paid in the United States. In 2021, we increased the amount of our unrecognized tax benefits by $5 million related to an addition for state investment tax credits. In addition, we reduced the amount of unrecognized tax benefits in 2021 by $59 million primarily related to the effective settlement of the U.S. federal income tax audits for the tax years 2012 through 2016, as described above. We file federal, provincial, state and local income tax returns principally in the United States, Canada and the United Kingdom, as well as in certain other foreign jurisdictions. In general, filed tax returns remain subject to examination by United States tax jurisdictions for years 2017 and thereafter, by Canadian tax jurisdictions for years 2012 and thereafter, and by the United Kingdom for years 2021 and thereafter. As a result of uncertainties regarding tax audits and their possible outcomes, an estimate of the range of possible impacts to unrecognized tax benefits in the next twelve months cannot be made at this time. Interest expense and penalties related to our unrecognized tax benefits of $(4) million and $66 million were recorded for the years ended December 31, 2023 and 2022, respectively. Interest expense and penalties recorded for the year ended December 31, 2021 were not material. Amounts recognized in our consolidated balance sheets for accrued interest and penalties related to our unrecognized tax benefits of $51 million and $62 million as of December 31, 2023 and 2022, respectively, are included in other liabilities.

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 taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: 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 2: 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 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//740/tableOfContent Reference 4: 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 5: 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 6: 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//1943274/2147482526/740-270-50-1 Reference 7: 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 8: 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 9: 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 10: 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