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INCOME TAXES (Tables) | 12 Months Ended
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Dec. 31, 2022
Income Tax Disclosure [Abstract] |
Schedule of Income Tax Expense (Benefit) | Earnings before income taxes and the provision for income taxes are presented in the following table.
| Year Ended December 31,
(in millions) | 2022 |  | 2021 |  | 2020
Earnings (loss) before income taxes: |  |  |  |  |
U.S.1 | $ | 51 |  |  | $ | (423) |  |  | $ | 437 |
Non-U.S.1 | 1,267 |  |  | 1,212 |  |  | 527 |
Total | $ | 1,318 |  |  | $ | 789 |  |  | $ | 964 |
Provision for income taxes: |  |  |  |  |
Current: |  |  |  |  |
Federal | $ | 75 |  |  | $ | 43 |  |  | $ | 19 |
State | 7 |  |  | 7 |  |  | 2 |
Foreign | 276 |  |  | 276 |  |  | 252 |
Total current expense | 358 |  |  | 326 |  |  | 273 |
Deferred: |  |  |  |  |
Federal | (58) |  |  | (98) |  |  | 70 |
State | (9) |  |  | (13) |  |  | 11 |
Foreign | 1 |  |  | (65) |  |  | 43 |
Total deferred (benefit) expense | (66) |  |  | (176) |  |  | 124 |
Total provision for income taxes | $ | 292 |  |  | $ | 150 |  |  | $ | 397 |
__________________________ 1 In 2021, the U.S. loss before income taxes was primarily related to the $362 million unrealized loss related to the Company’s investment in Romeo Power, Inc. In 2020, the Company recognized a $382 million unrealized gain related to its investment in Romeo Power, Inc.
Schedule of Effective Income Tax Rate Reconciliation | The following table provides a reconciliation of tax expense based on the U.S. statutory tax rate to final tax expense.
| Year Ended December 31,
(in millions) | 2022 |  | 2021 |  | 2020
Income taxes at U.S. statutory rate of 21% | $ | 277 |  |  | $ | 166 |  |  | $ | 203 |
Increases (decreases) resulting from: |  |  |  |  |
Valuation allowance adjustments, net | 67 |  |  | 39 |  |  | 53 |
Net tax on remittance of foreign earnings | 36 |  |  | 43 |  |  | 93 |
Foreign rate differentials | 25 |  |  | 36 |  |  | 21 |
Reserve adjustments, settlements and claims | 16 |  |  | (17) |  |  | 45 |
Impact of tax law and rate change | 2 |  |  | (20) |  |  | — |
State taxes, net of federal benefit | (4) |  |  | (9) |  |  | 10 |
Affiliates' earnings | (6) |  |  | (10) |  |  | (4) |
U.S. tax on non-U.S. earnings | (11) |  |  | 4 |  |  | 10 |
Changes in accounting methods and filing positions | (14) |  |  | (18) |  |  | (18) |
Tax credits | (16) |  |  | (5) |  |  | (12) |
Enhanced research and development deductions | (42) |  |  | (27) |  |  | (9) |
Tax holidays | (43) |  |  | (76) |  |  | (36) |
Other, net | 5 |  |  | 44 |  |  | 41 |
Provision for income taxes, as reported | $ | 292 |  |  | $ | 150 |  |  | $ | 397 |
Schedule of Reconciliation of Total Gross Unrecognized Tax Benefits | A roll forward of the Company’s total gross unrecognized tax benefits is presented below:
(in millions) | 2022 |  | 2021 |  | 2020
Balance, January 1 | $ | 221 |  |  | $ | 231 |  |  | $ | 146 |
Additions based on tax positions related to current year | 20 |  |  | 23 |  |  | 14 |
Acquisitions | — |  |  | 8 |  |  | 54 |
(Reductions) additions for tax positions of prior years | (8) |  |  | — |  |  | 9 |
Reductions for lapse in statute of limitations | (14) |  |  | (36) |  |  | (5) |
Reductions for closure of tax audits and settlements | (21) |  |  | — |  |  | — |
Translation adjustment | (14) |  |  | (5) |  |  | 13 |
Balance, December 31 | $ | 184 |  |  | $ | 221 |  |  | $ | 231 |
Schedule of Tax Jurisdiction | The Company is no longer subject to income tax examinations by tax authorities in its major tax jurisdictions as follows:
Tax jurisdiction |  | Years no longer subject to audit |  | Tax jurisdiction |  | Years no longer subject to audit
U.S. Federal |  | 2015 and prior |  | Japan |  | 2018 and prior
Barbados |  | 2016 and prior |  | Luxembourg |  | 2016 and prior
China |  | 2015 and prior |  | Mexico |  | 2015 and prior
France |  | 2015 and prior |  | Poland |  | 2016 and prior
Germany |  | 2011 and prior |  | South Korea |  | 2015 and prior
Hungary |  | 2015 and prior |  | United Kingdom |  | 2015 and prior
Schedule of Deferred Tax Assets (Liabilities) | The components of deferred tax assets and liabilities consist of the following:
| December 31,
(in millions) | 2022 |  | 2021
Deferred tax assets: |  |  |
Net operating loss and capital loss carryforwards | $ | 607 |  |  | $ | 634 |
Interest limitation carryforwards | 156 |  |  | 123 |
Research and development capitalization | 146 |  |  | 91 |
Pension and other postretirement benefits | 45 |  |  | 41 |
Employee compensation | 46 |  |  | 44 |
Warranty | 31 |  |  | 31 |
State tax credits | 29 |  |  | 28 |
Unrecognized tax benefits | 24 |  |  | 32 |
Unrealized loss on equity securities | 8 |  |  | — |
Foreign tax credits | 7 |  |  | 8 |
Other comprehensive loss | — |  |  | 39 |
Other | 167 |  |  | 167 |
Total deferred tax assets | $ | 1,266 |  |  | $ | 1,238 |
Valuation allowance | (591) |  |  | (551) |
Net deferred tax asset | $ | 675 |  |  | $ | 687 |
Deferred tax liabilities: |  |  |
Goodwill and intangible assets | (267) |  |  | (274) |
Unremitted foreign earnings | (141) |  |  | (146) |
Fixed assets | (121) |  |  | (126) |
Other comprehensive income | (14) |  |  | — |
Unrealized gain on equity securities | — |  |  | (5) |
Other | (87) |  |  | (88) |
Total deferred tax liabilities | $ | (630) |  |  | $ | (639) |
Net deferred taxes | $ | 45 |  |  | $ | 48 |

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