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Income Taxes | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | Note 16—Income Taxes The components of the income tax (benefit) expense are as follows:
| Years Ended December 31,
| 2024 |  | 2023 |  | 2022
| (Dollars in millions)
Income tax (benefit) expense: |  |  |  |  |
Federal |  |  |  |  |
Current | $ | 87 |  |  | 7 |  |  | 838 |
Deferred | (251) |  |  | (2) |  |  | (332) |
State |  |  |  |  |
Current | (29) |  |  | (6) |  |  | 283 |
Deferred | 15 |  |  | 55 |  |  | (191) |
Foreign |  |  |  |  |
Current | 2 |  |  | — |  |  | 32 |
Deferred | 1 |  |  | 7 |  |  | (73) |
Total income tax (benefit) expense | $ | (175) |  |  | 61 |  |  | 557 |
Income tax (benefit) expense was allocated as follows:
| Years Ended December 31,
| 2024 |  | 2023 |  | 2022
| (Dollars in millions)
Income tax (benefit) expense in the consolidated statements of operations: |  |  |  |  |
Attributable to income | $ | (175) |  |  | 61 |  |  | 557 |
Stockholders' equity: |  |  |  |  |
Tax effect of the change in accumulated other comprehensive loss | $ | 26 |  |  | (21) |  |  | 297 |
The following is a reconciliation from the statutory federal income tax rate to our effective income tax rate:
| Years Ended December 31,
| 2024 |  | 2023 |  | 2022
| (Percentage of pre-tax loss)
Statutory federal income tax rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State income taxes, net of federal income tax benefit | 4.1 | % |  | (0.2) | % |  | (8.8) | %
Goodwill impairment | — | % |  | (21.9) | % |  | (68.9) | %
Change in liability for unrecognized tax position | (16.8) | % |  | (0.1) | % |  | (0.2) | %
Legislative changes to Global Intangible Low-Taxes Income ("GILTI") | (1.2) | % |  | — | % |  | — | %
Nondeductible executive stock compensation | (4.9) | % |  | — | % |  | (0.1) | %
Change in valuation allowance | 2.3 | % |  | 1.3 | % |  | 0.9 | %
Net foreign income taxes | (2.3) | % |  | — | % |  | 3.0 | %
Research and development credits | 6.5 | % |  | 0.1 | % |  | 1.1 | %
Divestitures of businesses(1) | — | % |  | (0.4) | % |  | (4.0) | %
Indemnification refunds | 11.2 | % |  | — | % |  | — | %
Cancellation of debt income | 59.3 | % |  | — | % |  | — | %
Other, net | (3.1) | % |  | (0.4) | % |  | (0.2) | %
Effective income tax rate | 76.1 | % |  | (0.6) | % |  | (56.2) | %
_______________________________________________________________________________ (1)Includes GILTI incurred as a result of the sale of our Latin American business. The effective tax rate for the year ended December 31, 2024 includes a $135 million favorable impact from the exclusion of cancellation of debt income ("CODI") under Section 108 of the Internal Revenue Code. The effective tax rate for the year ended December 31, 2023 includes a $2.2 billion unfavorable impact of a non-deductible goodwill impairment and a $137 million favorable impact as a result of utilizing available capital losses generated by the sale of our Latin American business in 2022. The effective tax rate for the year ended December 31, 2022 includes a $682 million unfavorable impact of non-deductible goodwill impairments and $128 million unfavorable impact related to incurring tax on GILTI as a result of the sale of our Latin American business. The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities were as follows:
| As of December 31,
| 2024 |  | 2023
| (Dollars in millions)
Deferred tax assets |  |  |
Post-retirement and pension benefit costs | $ | 583 |  |  | 659 |
Net operating loss carryforwards | 649 |  |  | 794 |
Other employee benefits | 22 |  |  | 23 |
Other | 744 |  |  | 511 |
Gross deferred tax assets | 1,998 |  |  | 1,987 |
Less valuation allowance | (343) |  |  | (399) |
Net deferred tax assets | 1,655 |  |  | 1,588 |
Deferred tax liabilities |  |  |
Property, plant and equipment, primarily due to depreciation differences | (3,447) |  |  | (3,332) |
Goodwill and other intangible assets | (1,002) |  |  | (1,271) |
Gross deferred tax liabilities | (4,449) |  |  | (4,603) |
Net deferred tax liability | $ | (2,794) |  |  | (3,015) |
Of the $2.8 billion and $3.0 billion net deferred tax liability at December 31, 2024 and 2023, respectively, $2.9 billion and $3.1 billion is reflected as a long-term liability and $96 million and $112 million is reflected as a net noncurrent deferred tax asset, in other, net on our consolidated balance sheets at December 31, 2024 and 2023, respectively. Income taxes receivable as of December 31, 2024 and 2023, were $483 million and $273 million, respectively. For U.S. tax purposes, the Company is required to recognize CODI on the difference between the adjusted issue price of the debt exchanged and the fair market value of the new debt issued. As a result of the 2023 Exchange Offers, the Company realized approximately $663 million of CODI for U.S. tax purposes. See Note 7—Long-Term Debt and Credit Facilities to our consolidated financial statements in Item 8 of Part II of this report for discussion of the 2023 Exchange Offers. The Internal Revenue Code provides that a debtor may exclude CODI from taxable income to the extent certain exceptions apply but must reduce certain of its tax attributes by the amount of the excluded CODI. For the year ended December 31, 2023, the Company excluded approximately $663 million of CODI from taxable income under Section 108 of the Code and, accordingly, the Company’s tax attributes have been reduced by a corresponding amount. At December 31, 2024, we had federal NOLs of approximately $570 million, net of expirations from Section 382 limitations and uncertain tax positions, for U.S. federal income tax purposes. We expect to use substantially all of these NOLs to reduce our future federal tax liabilities, although the timing of that use will depend upon our future earnings and future tax circumstances. Our ability to use these NOLs is subject to annual limits imposed by Section 382. If unused, the NOLs will expire between 2027 and 2031. At December 31, 2024, we had state NOLs of $12 billion (net of uncertain tax positions). Our ability to use these NOLs is subject to annual limits imposed by Section 382. We establish valuation allowances when necessary to reduce the deferred tax assets to amounts we expect to realize. As of December 31, 2024, we established a valuation allowance of $343 million as it is more likely than not that this amount of NOLs will not be utilized prior to expiration. Our valuation allowance at December 31, 2024 and 2023 is primarily related to NOLs. This valuation allowance decreased by $56 million during 2024, primarily due to changes in our state NOL carryforwards. A reconciliation of the change in our gross unrecognized tax benefits (excluding both interest and any related federal benefit) for the years ended December 31, 2024 and 2023 is as follows:
| 2024 |  | 2023
| (Dollars in millions)
Unrecognized tax benefits at beginning of year | $ | 1,424 |  |  | 1,318 |
Decrease in tax positions of prior periods netted against deferred tax assets | (4) |  |  | (411) |
Decrease in tax positions taken in the current year | (64) |  |  | (73) |
Increase in tax positions taken in the prior year | 65 |  |  | 752 |
Decrease due to payments/settlements | — |  |  | (1) |
Decrease from the lapse of statute of limitations | (158) |  |  | (52) |
Decrease related to divestitures of businesses | — |  |  | (109) |
Unrecognized tax benefits at end of year | $ | 1,263 |  |  | 1,424 |
As of December 31, 2024, the total amount of unrecognized tax benefits that, if recognized, would impact the effective income tax rate was $404 million. The unrecognized tax benefits also include tax positions that, if recognized, would result in adjustments to other tax accounts, primarily deferred taxes, which would not impact the effective tax rate but could impact cash tax amounts payable to taxing authorities. Our policy is to reflect interest expense associated with unrecognized tax benefits in income tax (benefit) expense. We had accrued interest (presented before related tax benefits) of approximately $217 million and $100 million at December 31, 2024 and 2023, respectively. We, or at least one of our subsidiaries, file income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. With few exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2004. The Internal Revenue Service and state and local taxing authorities reserve the right to audit any period where NOLs are available. Based on our current assessment of various factors, including (i) the potential outcomes of these ongoing examinations, (ii) the expiration of statute of limitations for specific jurisdictions, (iii) the negotiated settlement of certain disputed issues, and (iv) the administrative practices of applicable taxing jurisdictions, it is reasonably possible that the related unrecognized tax benefits for uncertain tax positions previously taken may decrease by up to $395 million within the next 12 months. The actual amount of such decrease, if any, will depend on several future developments and events, many of which are outside our control. In August 2022, the Inflation Reduction Act was signed into law and which, among other things, implemented a corporate alternative minimum tax (“CAMT”) on adjusted financial statement income effective for tax periods occurring after December 31, 2022. The CAMT had no material impact on our financial results as of December 31, 2024. In addition, in 2021, the Organization for Economic Co-operation and Development (“OECD”) issued Pillar Two model rules introducing a new global minimum corporate tax of 15% and the OECD and the majority of its participating countries continue to work toward the enactment of such tax. While the U.S. has not adopted Pillar Two legislation, various other governments around the world have enacted such legislation that is effective for tax periods after December 31, 2023. These global minimum tax rules have increased our administrative and compliance burdens, but the impact to our financial statements for the year ended December 31, 2024 was immaterial. We anticipate further legislative activity and administrative guidance throughout 2025 and continue to monitor evolving global tax legislation.

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