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INCOME TAXES | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES The components of "Earnings from continuing operations before income taxes" and the "Provision for income taxes" from continuing operations in the Consolidated Statements of Earnings were as follows:
(In millions) |  | 2024 |  | 2023 |  | 2022
Earnings from continuing operations before income taxes |  |  |  |  |  |
United States |  | $ | 555 |  |  | $ | 479 |  |  | $ | 1,021 |
Foreign |  | 106 |  |  | 139 |  |  | 195 |
Total |  | $ | 661 |  |  | $ | 618 |  |  | $ | 1,216 |
Provision for income taxes |  |  |  |  |  |
Current tax expense from continuing operations: |  |  |  |  |  |
Federal |  | $ | 112 |  |  | $ | 35 |  |  | $ | 30 |
State |  | 15 |  |  | 45 |  |  | 43 |
Foreign |  | 24 |  |  | 17 |  |  | 14 |
|  | 151 |  |  | 97 |  |  | 87 |
Deferred tax expense (income) from continuing operations: |  |  |  |  |  |
Federal |  | (13) |  |  | 88 |  |  | 214 |
State |  | 28 |  |  | (8) |  |  | 23 |
Foreign |  | 6 |  |  | 35 |  |  | 29 |
|  | 21 |  |  | 115 |  |  | 266 |
Total |  | $ | 172 |  |  | $ | 212 |  |  | $ | 353 |
Federal, state, and foreign net ope rating losses were uti lized to offset current income taxes payable resulting in tax benef its of $10 million, $56 million, and $103 million in 2024, 2023 and 2022, respectively. A reconciliation of the federal statutory tax rate with the effective tax rate from continuing operations follows:
(Percentage of pre-tax earnings) |  | 2024 |  | 2023 |  | 2022
Federal statutory tax rate |  | 21.0 | % |  | 21.0 | % |  | 21.0 | %
Impact on deferred taxes for changes in tax rates |  | 0.6 | % |  | (0.8) | % |  | (0.4) | %
State income taxes, net of federal income tax benefit |  | 5.0 | % |  | 5.8 | % |  | 5.1 | %
Foreign rates varying from federal statutory tax rate |  | 1.2 | % |  | 2.2 | % |  | (5.3) | %
FMS U.K. business exit |  | — | % |  | 1.9 | % |  | 3.2 | %
Tax contingencies |  | (0.8) | % |  | (0.2) | % |  | (0.3) | %
Tax credits |  | (1.2) | % |  | (1.8) | % |  | (0.2) | %
Other permanent book-tax differences |  | 0.2 | % |  | 0.9 | % |  | 0.6 | %
Change in foreign valuation allowance (1) |  | (11.9) | % |  | (0.3) | % |  | 5.4 | %
Foreign net operating loss write-off (1) |  | 11.9 | % |  | — | % |  | — | %
Currency translation adjustment |  | — | % |  | 5.5 | % |  | — | %
Other |  | — | % |  | 0.1 | % |  | — | %
Effective tax rate |  | 26.0 | % |  | 34.3 | % |  | 29.1 | %
_______________ (1)The cessation of business activities in a foreign subsidiary during 2024 led to the write-off of the subsidiary's net operating losses and the associated valuation allowance. Deferred Income Taxes The components of the net deferred income tax liability were as follows:
|  | December 31,
(In millions) |  | 2024 |  | 2023
Deferred income tax assets: |  |  |  |
Self-insurance accruals |  | $ | 131 |  |  | $ | 110 |
Net operating loss carryforwards |  | 33 |  |  | 94 |
Accrued compensation and benefits |  | 102 |  |  | 87 |
Pension benefits |  | 35 |  |  | 50 |
Deferred revenue |  | 23 |  |  | 133 |
Interest expense limitation |  | 75 |  |  | 28 |
Other |  | 47 |  |  | 39 |
|  | 446 |  |  | 541 |
Valuation allowance |  | (12) |  |  | (87) |
|  | 434 |  |  | 454 |
Deferred income tax liabilities: |  |  |  |
Property and equipment basis differences |  | (1,979) |  |  | (2,012) |
Intangible assets bases difference |  | (92) |  |  | (65) |
Other |  | (20) |  |  | (22) |
|  | (2,091) |  |  | (2,099) |
Net deferred income tax liability (1) |  | $ | (1,657) |  |  | $ | (1,645) |
_______________ (1)Deferred tax assets of $14 million and $13 million have been included in "Sales-type leases and other assets" as of December 31, 2024 and 2023. Changes to the valuation allowance on deferred tax assets consisted of the following:
(In millions) |  | 2024 |  | 2023 |  | 2022
Balance at January 1 |  | $ | 87 |  |  | $ | 88 |  |  | $ | 24 |
Additions charged to income tax expense |  | — |  |  | — |  |  | 64 |
Deductions credited to income tax expense |  | (75) |  |  | (1) |  |  | — |
Balance as of December 31 |  | $ | 12 |  |  | $ | 87 |  |  | $ | 88 |
As of December 31, 2024, we have a cumulative valuation allowance of $12 million against our deferred tax assets, a net decrease of $75 million from the prior year. The decrease is primarily due to the cessation of all business activities by a foreign subsidiary on December 27, 2024, leading to the write-off of the subsidiary's net operating losses and the associated valuation allowance. The valuation allowance is subject to change in future years based on the availability of future sources of taxable income. In 2024, we repatriated $14 million of current year earnings from our Mexico subsidiary with minimal tax cost. In 2023, we repatriated $78 million of undistributed earnings from our U.K. subsidiaries. As of December 31, 2024, we continue to consider our U.K. earnings to no longer be indefinitely reinvested and determined that there was no impact to deferred taxes. We consider the historical earnings of Mexico, along with our remaining foreign jurisdictions to be permanently reinvested, which collectively had $653 million of undistributed foreign earnings as of December 31, 2024. Any future repatriations of unremitted earnings could be subject to additional federal, state and foreign income taxes, withholding taxes, and/or the tax impact of foreign currency exchange gains or losses. The determination of the amount of unrecognized deferred tax liability associated with the $653 million of undistributed foreign earnings is not practicable because of the complexities associated with the hypothetical calculations used in evaluating whether we will maintain the indefinite reinvestment assertion on the remaining foreign subsidiaries. Our carryforwards for net operating losses and tax benefits with the related valuation allowances were as follows:
|  | December 31, 2024 |  | December 31, 2023
(Dollars in millions) |  | Carryforwards (1) |  | Valuation Allowance |  | Net Carryforwards |  | Carryforwards (1) |  | Valuation Allowance |  | Net Carryforwards
Net operating losses and tax benefits |  |  |  |  |  |  |  |  |  |  |  |
U.S. Federal jurisdictions (2) |  | $ | 6 |  |  | $ | (3) |  |  | $ | 3 |  |  | $ | 6 |  |  | $ | (1) |  |  | $ | 5 |
U.S. Federal jurisdictions (with no expiration) |  | 11 |  |  | — |  |  | 11 |  |  | 3 |  |  | — |  |  | 3 |
U.S. State jurisdictions (3) |  | 27 |  |  | — |  |  | 27 |  |  | 26 |  |  | (1) |  |  | 25 |
U.S. State jurisdictions (with no expiration) |  | 3 |  |  | — |  |  | 3 |  |  | 4 |  |  | — |  |  | 4 |
Foreign jurisdictions (4) |  | 7 |  |  | (7) |  |  | — |  |  | 82 |  |  | (82) |  |  | — |
Foreign jurisdictions (with no expiration) |  | 4 |  |  | (2) |  |  | 2 |  |  | 4 |  |  | (3) |  |  | 1 |
Total carryforwards |  | $ | 58 |  |  | $ | (12) |  |  | $ | 46 |  |  | $ | 125 |  |  | $ | (87) |  |  | $ | 38 |
_______________ (1)Net operating losses are shown before unrecognized tax benefits. (2)Expires between the years 2034 to 2037. (3)Expires between the years 2026 to 2044. (4)Expires between the years 2031 to 2043. Amounts in the table may not be additive due to rounding. U.S. federal net operating loss deductions are limited to 80% of taxable income for losses generated in taxable years beginning after December 31, 2017. As of December 31, 2024, all remaining U.S. federal net operating losses are subject to IRC Section 382 limitations, further reducing the amount available for offset in any given future year. Uncertain Tax Positions In many cases, our uncertain tax positions are related to tax years that remain subject to examination by the relevant taxing authorities. The following table summarizes these open tax years by jurisdiction:
Jurisdiction |  | Open Tax Year
United States (Federal) |  | 2018 - 2024
Canada |  | 2013 - 2015, 2017 - 2024
Mexico |  | 2019 - 2024
United Kingdom (discontinued operations) |  | 2023 - 2024
Brazil (discontinued operations) |  | 2020- 2024
The following table summarizes the activity related to unrecognized tax benefits (excluding the federal benefit received from state positions):
(In millions) |  | 2024 |  | 2023 |  | 2022
Balance at January 1 |  | $ | 32 |  |  | $ | 34 |  |  | $ | 38 |
Additions based on tax positions related to the current year |  | 2 |  |  | 2 |  |  | 2 |
Reductions due to lapse of applicable statutes of limitation |  | (8) |  |  | (4) |  |  | (6) |
Total before interest and penalties at December 31 |  | 26 |  |  | 32 |  |  | 34 |
Interest and penalties |  | 3 |  |  | 3 |  |  | 3 |
Balance at December 31 |  | $ | 29 |  |  | $ | 35 |  |  | $ | 37 |
Of the total unrecognized tax benefits as of December 31, 2024, $24 million (net of the federal benefit on state issues) represents the amount of unrecognized tax benefits that, if recognized, would favorably affect the effective tax rate in future periods. Unrecognized tax benefits related to federal, state and foreign tax positions may decrease $8 million by December 31, 2025, if audits are completed or tax years close during 2025.

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