XML 39 R23.htm IDEA: XBRL DOCUMENT v3.22.0.1
Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes

15. Income Taxes

The domestic and foreign components of income (loss) before income taxes were as follows (in millions):

 

 

 

Years Ended December 31,

 

 

 

2021

 

 

2020

 

 

2019

 

Domestic

 

$

(257

)

 

$

(2,169

)

 

$

(4,501

)

Foreign

 

 

27

 

 

 

(610

)

 

 

(1,961

)

 

 

$

(230

)

 

$

(2,779

)

 

$

(6,462

)

 

The components of the provision for income taxes consisted of (in millions):

 

 

 

Years Ended December 31,

 

 

 

2021

 

 

2020

 

 

2019

 

Current:

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

$

4

 

 

$

(279

)

 

$

(7

)

State

 

 

(1

)

 

 

(4

)

 

 

4

 

Foreign

 

 

23

 

 

 

106

 

 

 

60

 

Total current income tax provision

 

 

26

 

 

 

(177

)

 

 

57

 

Deferred:

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

 

(1

)

 

 

7

 

 

 

(344

)

State

 

 

—

 

 

 

—

 

 

 

(18

)

Foreign

 

 

(10

)

 

 

(72

)

 

 

(64

)

Total deferred income tax provision

 

 

(11

)

 

 

(65

)

 

 

(426

)

Total income tax provision

 

$

15

 

 

$

(242

)

 

$

(369

)

 

The difference between the effective tax rate reflected in the provision for income taxes and the U.S. federal statutory rate was as follows (in millions):

 

 

 

Years Ended December 31,

 

 

 

2021

 

 

2020

 

 

2019

 

Federal income tax at U.S. statutory rate

 

$

(48

)

 

$

(584

)

 

$

(1,357

)

Foreign income tax rate differential

 

 

(9

)

 

 

(30

)

 

 

(40

)

Goodwill impairment

 

 

—

 

 

 

271

 

 

 

666

 

Reduction of FTC carryforwards

 

 

—

 

 

 

184

 

 

 

—

 

Tax Benefit from CARES Act

 

 

—

 

 

 

(83

)

 

 

—

 

Change in deferred tax valuation allowance

 

 

31

 

 

 

(83

)

 

 

218

 

Nondeductible expenses

 

 

17

 

 

 

44

 

 

 

61

 

Foreign dividends, net of foreign tax credits

 

 

54

 

 

 

28

 

 

 

163

 

Change in uncertain tax positions

 

 

13

 

 

 

20

 

 

 

(60

)

State income taxes - net of federal benefit

 

 

(1

)

 

 

(4

)

 

 

(16

)

Income tax credits

 

 

(11

)

 

 

—

 

 

 

—

 

Other

 

 

(31

)

 

 

(5

)

 

 

(4

)

Total income tax provision

 

$

15

 

 

$

(242

)

 

$

(369

)

 

 

 

The effective tax rate for the year ended December 31, 2021 was (6.5%), compared to 8.7% for 2020. For the year-ended 2021, the effective tax rate was negatively impacted by current year losses in certain jurisdictions with no tax benefit, partially offset by favorable adjustments related to utilization of losses and tax credits for prior year tax returns. For the year ended December 31, 2020 the effective tax rate was negatively impacted by the impairment of nondeductible goodwill and the establishment of additional valuation allowances for current year losses and other tax attributes, partially offset by the release of valuation allowance as a result of (a) the carryback of $591 million of U.S. net operating losses from 2019 to 2014 as a result of the CARES Act and (b) the filing of an amended U.S. tax return to deduct foreign tax credits and carryback the resulting $287 million U.S. net operating loss from 2016 to 2014.

Significant components of our deferred tax assets and liabilities were as follows (in millions):

 

 

 

December 31,

 

 

 

2021

 

 

2020

 

Deferred tax assets:

 

 

 

 

 

 

 

 

Allowances and operating liabilities

 

$

297

 

 

$

318

 

Net operating loss carryforwards

 

 

446

 

 

 

387

 

Stock Compensation

 

 

56

 

 

 

61

 

Tax credit carryforwards

 

 

398

 

 

 

411

 

Other

 

 

135

 

 

 

122

 

Valuation allowance

 

 

(1,127

)

 

 

(1,093

)

Total deferred tax assets

 

 

205

 

 

 

206

 

Deferred tax liabilities:

 

 

 

 

 

 

 

 

Tax over book depreciation

 

 

56

 

 

 

60

 

Capital leases

 

 

76

 

 

 

80

 

Intangible assets

 

 

52

 

 

 

49

 

Deferred income

 

 

51

 

 

 

47

 

Accrued tax on unremitted earnings

 

 

33

 

 

 

33

 

Other

 

 

3

 

 

 

15

 

Total deferred tax liabilities

 

 

271

 

 

 

284

 

Net deferred tax liability

 

$

66

 

 

$

78

 

 

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in millions):

 

 

 

2021

 

 

2020

 

 

2019

 

Unrecognized tax benefit at beginning of year

 

$

57

 

 

$

38

 

 

$

98

 

Gross increase for tax positions in prior years

 

 

8

 

 

 

25

 

 

 

10

 

Gross decrease for tax positions in prior years

 

 

(1

)

 

 

(2

)

 

 

(60

)

Cash Settlements

 

 

(1

)

 

 

(1

)

 

 

(3

)

Lapse of statute of limitations

 

 

(3

)

 

 

(3

)

 

 

(7

)

Unrecognized tax benefit at end of year

 

$

60

 

 

$

57

 

 

$

38

 

 

The balance of unrecognized tax benefits at December 31, 2021, 2020 and 2019 was $60 million, $57 million and $38 million, respectively. Accruals related to prior year domestic and foreign jurisdiction issues resulted in uncertain tax position increases of $8 million in 2021. Resolutions of domestic and foreign jurisdiction audits resulted in a $1 million and $4 million decrease in uncertain tax provisions for the years ended December 31, 2021 and 2020, respectively.

Substantially all of the unrecognized tax benefits, if ultimately realized, would be recorded as a benefit to the effective tax rate. The Company does not anticipate any material change within the next twelve months due to settlements and conclusions of tax examinations. To the extent penalties and interest would be assessed on any underpayment of income tax, such accrued amounts have been classified as a component of income tax expense in the financial statements consistent with the Company’s policy. For the years ended December 31, 2021, 2020 and 2019, we recorded income tax expense of $8 million, $2 million and nil, respectively, for interest and penalty related to

unrecognized tax benefits. As of December 31, 2021 and 2020, the Company had accrued $20 million and $11 million, respectively, of interest and penalty relating to unrecognized tax benefits.

The Company is subject to taxation in the United States as well as various states and foreign jurisdictions. The Company has significant operations in the United States, Norway, Saudi Arabia, Brazil, Canada, the United Kingdom, the Netherlands and Denmark. Tax years that remain subject to examination by major tax jurisdictions vary by legal entity, but are generally open in the U.S. for tax years ending after 2013 and outside the U.S. for tax years ending after 2016.

Net operating loss carryforwards by jurisdiction and expiration as of December 31, 2021 were as follows (in millions):

 

 

 

Federal

 

 

State

 

 

Foreign

 

 

Total

 

2021 - 2025 Expiration

 

$

19

 

 

$

4

 

 

$

244

 

 

$

267

 

2026 - 2040 Expiration

 

 

31

 

 

 

383

 

 

 

381

 

 

 

795

 

Unlimited Expiration

 

 

505

 

 

 

—

 

 

 

646

 

 

 

1,151

 

Total Net Operating Loss (NOL)

 

$

555

 

 

$

387

 

 

$

1,271

 

 

$

2,213

 

Tax Effected NOL

 

$

117

 

 

$

25

 

 

$

304

 

 

$

446

 

 

The Company has $387 million of excess foreign tax credits in the United States as of December 31, 2021, of which $128 million, $144 million, $96 million, $12 million, and $7 million will expire in 2022, 2027, 2028, 2030, and 2031 respectively. As of December 31, 2021, the Company has remaining tax-deductible goodwill of $93 million, resulting from acquisitions. The amortization of this goodwill is deductible over various periods ranging up to 10 years.