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Income Taxes | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
Income Tax Disclosure [Text Block] | Income Taxes The provision for income taxes consists of the following components (in millions):
| Year Ended December 31,
| 2024 |  | 2023 |  | 2022
Current: |  |  |  |  |
Federal | $ | 128 |  |  | $ | 137 |  |  | $ | 212 |
State | 39 |  |  | 39 |  |  | 60 |
Foreign | 140 |  |  | 117 |  |  | 107 |
Total current provision for income taxes | $ | 307 |  |  | $ | 293 |  |  | $ | 379 |
Deferred: |  |  |  |  |
Federal | $ | (22) |  |  | $ | 10 |  |  | $ | — |
State | (3) |  |  | 3 |  |  | (2) |
Foreign | (9) |  |  | — |  |  | 8 |
Total deferred (benefit) provision for income taxes | $ | (34) |  |  | $ | 13 |  |  | $ | 6 |
Provision for income taxes | $ | 273 |  |  | $ | 306 |  |  | $ | 385 |
Income taxes have been based on the following components of income from continuing operations before provision for income taxes (in millions):
| Year Ended December 31,
| 2024 |  | 2023 |  | 2022
Domestic | $ | 577 |  |  | $ | 795 |  |  | $ | 1,078 |
Foreign | 381 |  |  | 440 |  |  | 440 |
Income from continuing operations before provision for income taxes | $ | 958 |  |  | $ | 1,235 |  |  | $ | 1,518 |
The U.S. federal statutory rate is reconciled to the effective tax rate as follows:
| Year Ended December 31,
| 2024 |  | 2023 |  | 2022
U.S. federal statutory rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State income taxes, net of state credits and federal tax impact | 2.7 | % |  | 2.8 | % |  | 3.0 | %
Impact of rates on international operations | 2.2 | % |  | 1.2 | % |  | 1.1 | %
Change in valuation allowances | 1.1 | % |  | 0.9 | % |  | 0.4 | %
Non-deductible expenses | 0.6 | % |  | 1.2 | % |  | 1.0 | %
Gains on foreign exchange contracts - acquisition related | — | % |  | (0.8) | % |  | — | %
Other, net | 0.9 | % |  | (1.5) | % |  | (1.2) | %
Effective tax rate | 28.5 | % |  | 24.8 | % |  | 25.3 | %
Undistributed earnings of our foreign subsidiaries amounted to approximately $2,075 million at December 31, 2024. Beginning in 2018, the Tax Cuts and Jobs Act generally provided a 100% participation exemption from further U.S. taxation of dividends received from 10-percent or more owned foreign corporations held by U.S. corporate shareholders. Although foreign dividend income is generally exempt from U.S. federal tax in the hands of the U.S. corporate shareholders, either as a result of the participation exemption, or due to the previous taxation of such earnings under the transition tax and GILTI regimes, companies must still apply the guidance of ASC 740: Income Taxes to account for the tax consequences of outside basis differences and other tax impacts of their investments in non-U.S. subsidiaries. Further, the 2017 transition tax reduced a majority of the previous outside basis differences in our foreign subsidiaries, and most of any new differences arising have extensive interaction with the GILTI regime. Based on a review of our global financing and capital expenditure requirements as of December 31, 2024, we continue to plan to permanently reinvest the undistributed earnings of our international subsidiaries. Thus, no deferred U.S. income taxes or potential foreign withholding taxes have been recorded. Due to the complexity of the U.S. tax regime, it remains impractical to estimate the amount of deferred taxes potentially payable were such earnings to be repatriated. The OECD released a framework, referred to as Pillar Two, to implement a global minimum corporate tax rate of 15% on certain multinational enterprises. Certain countries have enacted legislation to adopt the Pillar Two framework while several countries are considering or still announcing changes to their tax laws to implement the minimum tax directive. We have evaluated the developments and do not anticipate any material impact on our financial position, results of operations, or cash flows. The significant components of the deferred tax assets and liabilities are as follows (in millions):
| December 31,
| 2024 |  | 2023
Deferred Tax Assets: |  |  |
Accrued expenses and reserves | $ | 57 |  |  | $ | 58 |
Qualified and nonqualified retirement plans | 20 |  |  | 17 |
Inventory | 10 |  |  | 21 |
Accounts receivable | 22 |  |  | 22 |
Interest deduction carryforwards | 30 |  |  | 32 |
Stock-based compensation | 9 |  |  | 8 |
Operating lease liabilities | 346 |  |  | 334 |
Net operating loss carryforwards | 38 |  |  | 53 |
Other | 44 |  |  | 26 |
Total deferred tax assets, gross | 576 |  |  | 571 |
Less: valuation allowance | (51) |  |  | (64) |
Total deferred tax assets | $ | 525 |  |  | $ | 507 |
Deferred Tax Liabilities: |  |  |
Goodwill and other intangible assets | $ | 373 |  |  | $ | 414 |
Property, plant and equipment | 96 |  |  | 102 |
Trade names | 79 |  |  | 88 |
Operating lease assets, net | 336 |  |  | 319 |
Other | 10 |  |  | 9 |
Total deferred tax liabilities | $ | 894 |  |  | $ | 932 |
Net deferred tax liability | $ | (369) |  |  | $ | (425) |
Deferred tax assets and liabilities are reflected on the Consolidated Balance Sheets as follows (in millions):
| December 31,
| 2024 |  | 2023
Noncurrent deferred tax assets | $ | 17 |  |  | $ | 23 |
Noncurrent deferred tax liabilities | 386 |  |  | 448 |
Noncurrent deferred tax assets and noncurrent deferred tax liabilities are included in Other noncurrent assets and Deferred income taxes, respectively, on the Consolidated Balance Sheets. We have net operating loss carryforwards, primarily for certain international tax jurisdictions, the tax benefits of which totaled approximately $38 million and $53 million at December 31, 2024 and 2023, respectively. The $15 million decrease in net operating loss carryforwards is primarily related to the sale of certain European entities. At December 31, 2024 and 2023, we had tax credit carryforwards for U.S. and certain U.S. state jurisdictions, the tax benefits of which totaled approximately $3 million and less than $1 million, respectively. As of December 31, 2024 and 2023, we had interest deduction carryforwards in Italy the tax benefits of which totaled $30 million and $32 million, respectively. As of December 31, 2024 and 2023, we had capital loss carryforwards, the tax benefit of which totaled an insignificant amount at both periods. As of December 31, 2024 and 2023, valuation allowances of $51 million and $64 million, respectively, were recorded for deferred tax assets related to the foreign interest deduction carryforwards, certain foreign and U.S. net operating loss carryforwards and capital loss carryforwards. The $13 million net decrease in valuation allowances was primarily attributable to the change in the net operating loss carryforward previously noted. The majority of the net operating losses will generally carry forward until 2034 to 2043. The interest deduction carryforwards in Italy do not expire. U.S. capital losses can be carried back three years and forward for five years. Realization of these deferred tax assets is dependent on the generation of sufficient taxable income prior to the expiration dates, where applicable, or in the case of interest deduction carryforward, subject to legislative thin capitalization constraints, typically based on profitability. Based on historical and projected operating results, we believe that it is more likely than not that earnings will be sufficient to realize the deferred tax assets for which valuation allowances have not been provided. While we expect to realize the deferred tax assets, net of valuation allowances, changes in tax laws or in estimates of future taxable income may alter this expectation. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows (in millions):
| 2024 |  | 2023 |  | 2022
Balance at January 1, | $ | 8 |  |  | $ | 5 |  |  | $ | 5 |
Additions for acquired tax positions | — |  |  | 6 |  |  | — |
Additions based on tax positions related to the current year | 10 |  |  | — |  |  | — |
Additions based on tax positions related to prior years | 15 |  |  | 3 |  |  | 2 |
Reductions for tax positions of prior year | — |  |  | (1) |  |  | — |
Lapse of statutes of limitations | (3) |  |  | (5) |  |  | — |
Settlements with taxing authorities | (2) |  |  | — |  |  | (2) |
Balance at December 31, | $ | 28 |  |  | $ | 8 |  |  | $ | 5 |
During the twelve months beginning January 1, 2025, it is reasonably possible that we will reduce unrecognized tax benefits by $17 million, none of which would impact our effective tax rate. Included in the balance of unrecognized tax benefits above as of December 31, 2024, 2023 and 2022, are approximately $10 million, $8 million and $5 million, respectively that, if recognized, would affect the effective tax rate. The balance of unrecognized tax benefits at December 31, 2024 includes $18 million, and at both December 31, 2023 and 2022, an insignificant amount of tax benefits that, if recognized, would result in adjustments to deferred taxes. We recognize interest and penalties accrued related to unrecognized tax benefits as income tax expense. As of the years ended December 31, 2024, 2023 and 2022, we had accumulated interest and penalties of $1 million, attributable to the unrecognized tax benefits noted above. During the years ended December 31, 2024, 2023 and 2022, we recorded $1 million or less of interest and penalties through the income tax provision, prior to any reversals for lapses in the statutes of limitations and settlements. The Company and/or its subsidiaries file income tax returns in the U.S. federal jurisdiction, and various U.S. state and international jurisdictions. With few exceptions, we are no longer subject to U.S. federal, state and local, or international income tax examinations by tax authorities for years before 2018. Adjustments from examinations, if any, are not expected to have a material effect on our Consolidated Financial Statements.

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