XML 39 R23.htm IDEA: XBRL DOCUMENT v3.22.4
Income Taxes
 12 Months Ended
Dec. 31, 2022
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):

 

 

 

Year Ended December 31,

 

 

 

2022

 

 

2021

 

 

2020

 

Domestic

 

$

113

 

 

$

(257

)

 

$

(2,169

)

Foreign

 

 

125

 

 

 

27

 

 

 

(610

)

 

 

$

238

 

 

$

(230

)

 

$

(2,779

)

 

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

 

 

 

Year Ended December 31,

 

 

 

2022

 

 

2021

 

 

2020

 

Current:

 

 

 

 

 

 

 

 

 

Federal

 

$

(1

)

 

$

4

 

 

$

(279

)

State

 

 

-

 

 

 

(1

)

 

 

(4

)

Foreign

 

 

86

 

 

 

23

 

 

 

106

 

Total current income tax provision

 

 

85

 

 

 

26

 

 

 

(177

)

Deferred:

 

 

 

 

 

 

 

 

 

Federal

 

 

3

 

 

 

(1

)

 

 

7

 

State

 

 

—

 

 

 

—

 

 

 

—

 

Foreign

 

 

(5

)

 

 

(10

)

 

 

(72

)

Total deferred income tax provision

 

 

(2

)

 

 

(11

)

 

 

(65

)

Total income tax provision

 

$

83

 

 

$

15

 

 

$

(242

)

 

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):

 

 

 

Year Ended December 31,

 

 

 

2022

 

 

2021

 

 

2020

 

Federal income tax at U.S. statutory rate

 

$

50

 

 

$

(48

)

 

$

(584

)

Foreign income tax rate differential

 

 

1

 

 

 

(9

)

 

 

(30

)

Goodwill impairment

 

 

—

 

 

 

—

 

 

 

271

 

Reduction of FTC carryforwards

 

 

—

 

 

 

—

 

 

 

184

 

Tax Benefit from CARES Act

 

 

—

 

 

 

—

 

 

 

(83

)

Change in deferred tax valuation allowance

 

 

24

 

 

 

31

 

 

 

(83

)

Nondeductible expenses

 

 

18

 

 

 

17

 

 

 

44

 

Foreign dividends, net of foreign tax credits

 

 

27

 

 

 

54

 

 

 

28

 

Change in uncertain tax positions

 

 

4

 

 

 

13

 

 

 

20

 

State income taxes - net of federal benefit

 

 

—

 

 

 

(1

)

 

 

(4

)

Income tax credits

 

 

(5

)

 

 

(11

)

 

 

—

 

Other

 

 

(36

)

 

 

(31

)

 

 

(5

)

Total income tax provision

 

$

83

 

 

$

15

 

 

$

(242

)

 

 

The effective tax rate for the year ended December 31, 2022 was 34.9%, compared to (6.5%) for 2021. For the year-ended 2022, 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 foreign currency translation gains and the utilization of losses and tax credits for prior year tax returns. For the year ended December 31, 2021 the effective tax rate was negatively impacted by 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.

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

 

 

 

December 31,

 

 

 

2022

 

 

2021

 

Deferred tax assets:

 

 

 

 

 

 

Allowances and operating liabilities

 

$

276

 

 

$

297

 

Net operating loss carryforwards

 

 

324

 

 

 

446

 

Stock Compensation

 

 

51

 

 

 

56

 

Tax credit carryforwards

 

 

292

 

 

 

398

 

Other

 

 

119

 

 

 

135

 

Valuation allowance

 

 

(920

)

 

 

(1,127

)

Total deferred tax assets

 

 

142

 

 

 

205

 

Deferred tax liabilities:

 

 

 

 

 

 

Tax over book depreciation

 

 

49

 

 

 

56

 

Capital leases

 

 

73

 

 

 

76

 

Intangible assets

 

 

34

 

 

 

52

 

Deferred income

 

 

16

 

 

 

51

 

Accrued tax on unremitted earnings

 

 

32

 

 

 

33

 

Other

 

 

6

 

 

 

3

 

Total deferred tax liabilities

 

 

210

 

 

 

271

 

Net deferred tax liability

 

$

68

 

 

$

66

 

 

The valuation allowance decreased by $207 million during 2022. This decrease is comprised of $128 million due to the expiration of foreign tax credit carryforwards in the US, $62 million for the removal of deferred tax assets for operations in Russia and Belarus, $25 million to remove other forfeited NOLs resulting from legal entity mergers and dissolutions, $13 million related to FX and $3 million related to changes in Other Comprehensive Income, partially offset by an increase of $24 million related to current year changes in the carrying value of deferred tax assets.

 

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

 

 

 

2022

 

 

2021

 

 

2020

 

Unrecognized tax benefit at beginning of year

 

$

60

 

 

$

57

 

 

$

38

 

Gross increase for tax positions in prior years

 

 

9

 

 

 

8

 

 

 

25

 

Gross decrease for tax positions in prior years

 

 

(1

)

 

 

(1

)

 

 

(2

)

Cash Settlements

 

 

(1

)

 

 

(1

)

 

 

(1

)

Lapse of statute of limitations

 

 

(5

)

 

 

(3

)

 

 

(3

)

Unrecognized tax benefit at end of year

 

$

62

 

 

$

60

 

 

$

57

 

 

The balance of unrecognized tax benefits at December 31, 2022, 2021 and 2020 was $62 million, $60 million and $57 million, respectively. Accruals related to prior year domestic and foreign jurisdiction issues resulted in uncertain tax position increases of $9 million in 2022. Resolutions of domestic and foreign jurisdiction audits resulted in a $1 million decrease in uncertain tax provisions for both the years ended December 31, 2022 and 2021.

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, 2022, 2021 and 2020, we recorded income tax expense of $8 million, $8 million and $2 million, respectively, for interest and penalty related to unrecognized tax benefits. As of December 31, 2022 and 2021, the Company had accrued $23 million and $20 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, China, the United Kingdom, the Netherlands, Denmark, and Mexico. 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 2017.

Net operating loss carryforwards by jurisdiction and expiration as of December 31, 2022 were as follows (in millions):

 

 

 

Federal

 

 

State

 

 

Foreign

 

 

Total

 

2023 - 2027 Expiration

 

$

15

 

 

$

4

 

 

$

63

 

 

$

82

 

2028 - 2042 Expiration

 

 

16

 

 

 

425

 

 

 

314

 

 

 

755

 

Unlimited Expiration

 

 

320

 

 

 

—

 

 

 

498

 

 

 

818

 

Total Net Operating Loss (NOL)

 

$

351

 

 

$

429

 

 

$

875

 

 

$

1,655

 

Tax Effected NOL

 

$

74

 

 

$

28

 

 

$

222

 

 

$

324

 

 

The Company has $273 million of excess foreign tax credits in the United States as of December 31, 2022, of which $144 million, $96 million, $12 million, $11 million, and $10 million will expire in 2027, 2028, 2030, 2031, and 2032 respectively. As of December 31, 2022, the Company has remaining tax-deductible goodwill of $83 million, resulting from acquisitions. The amortization of this goodwill is deductible over various periods ranging up to 9 years.