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Income Taxes | 12 Months Ended
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Dec. 31, 2023
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, |
|  | 2023 |  |  | 2022 |  |  | 2021 |
Domestic |  | $ | 249 |  |  | $ | 113 |  |  | $ | (257 | )
Foreign |  |  | 363 |  |  |  | 125 |  |  |  | 27 |
|  | $ | 612 |  |  | $ | 238 |  |  | $ | (230 | )
The components of the provision (benefit) for income taxes consisted of (in millions):
|  | Year Ended December 31, |
|  | 2023 |  |  | 2022 |  |  | 2021 |
Current: |  |  |  |  |  |  |  |  |
Federal |  | $ | (4 | ) |  | $ | (1 | ) |  | $ | 4 |
State |  |  | 2 |  |  |  | — |  |  |  | (1 | )
Foreign |  |  | 118 |  |  |  | 86 |  |  |  | 23 |
Total current income tax provision |  |  | 116 |  |  |  | 85 |  |  |  | 26 |
Deferred: |  |  |  |  |  |  |  |  |
Federal |  |  | (252 | ) |  |  | 3 |  |  |  | (1 | )
State |  |  | (47 | ) |  |  | — |  |  |  | — |
Foreign |  |  | (190 | ) |  |  | (5 | ) |  |  | (10 | )
Total deferred income tax provision |  |  | (489 | ) |  |  | (2 | ) |  |  | (11 | )
Total income tax provision (benefit) |  | $ | (373 | ) |  | $ | 83 |  |  | $ | 15 |
The difference between the effective tax rate reflected in the provision (benefit) for income taxes and the U.S. federal statutory rate was as follows (in millions):
|  | Year Ended December 31, |
|  | 2023 |  |  | 2022 |  |  | 2021 |
Federal income tax at U.S. statutory rate |  | $ | 129 |  |  | $ | 50 |  |  | $ | (48 | )
Foreign income tax rate differential |  |  | 3 |  |  |  | 1 |  |  |  | (9 | )
Change in deferred tax valuation allowance |  |  | (564 | ) |  |  | 24 |  |  |  | 31 |
Nondeductible expenses |  |  | 18 |  |  |  | 18 |  |  |  | 17 |
Foreign inclusions, net of foreign tax credits |  |  | 5 |  |  |  | (4 | ) |  |  | 38 |
Change in uncertain tax positions |  |  | 12 |  |  |  | 4 |  |  |  | 13 |
Withholding taxes |  |  | 30 |  |  |  | 31 |  |  |  | 16 |
Income tax credits |  |  | (8 | ) |  |  | (5 | ) |  |  | (11 | )
Other |  |  | 2 |  |  |  | (36 | ) |  |  | (32 | )
Total income tax provision (benefit) |  | $ | (373 | ) |  | $ | 83 |  |  | $ | 15 |
The effective tax rate for the year ended December 31, 2023 was (60.9%), compared to 34.9% for 2022. For the year-ended 2023, the effective tax rate was favorably impacted by the release of $485 million in valuation allowances in numerous jurisdictions. During the fourth quarter of 2023, the Company determined it was more likely than not the Company would be able to realize the benefit of a substantial portion of the deferred tax assets in the United States and the majority of its other international jurisdictions. In reaching this determination, the Company considered the growing trend of profitability over the last three years, particularly in the United States, as well as expectations regarding the generation of future taxable income and the sources of future taxable income. As a result of this analysis, the Company recognized a discrete tax benefit related to the release of valuation allowances of $299 million in the United States and $186 million outside the United States. As of December 31, 2023, the Company continues to maintain a valuation allowance of $346 million primarily related to foreign tax credit carryforwards in the United States and deferred tax assets in certain other jurisdictions due to several factors, including specific jurisdictions in which the Company does not project to generate sufficient future taxable income to realize all or a portion of its deferred tax assets specific to that jurisdiction; the specific nature and timing of future taxable income required to realize certain tax credit carryforwards, most notably U.S. foreign tax credits; and the timing of expiration of certain tax credit carryforwards. The effective tax rate was also favorably impacted by adjustments related to utilization of losses and tax credits for current and prior year tax returns, partially offset by current year losses in certain jurisdictions with no tax benefit. For the year ended December 31, 2022 the effective tax rate was negatively impacted by losses in certain jurisdictions with no tax benefit, partially offset by favorable adjustments related to the foreign currency translation gains and the 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, |
|  | 2023 |  |  | 2022 |
Deferred tax assets: |  |  |  |  |  |
Allowances and operating liabilities |  | $ | 264 |  |  | $ | 276 |
Net operating loss carryforwards |  |  | 249 |  |  |  | 324 |
Stock Compensation |  |  | 48 |  |  |  | 51 |
Tax credit carryforwards |  |  | 301 |  |  |  | 292 |
Other |  |  | 121 |  |  |  | 119 |
Valuation allowance |  |  | (346 | ) |  |  | (920 | )
Total deferred tax assets |  |  | 637 |  |  |  | 142 |
Deferred tax liabilities: |  |  |  |  |  |
Tax over book depreciation |  |  | 43 |  |  |  | 49 |
Capital leases |  |  | 67 |  |  |  | 73 |
Intangible assets |  |  | 39 |  |  |  | 34 |
Deferred income |  |  | 24 |  |  |  | 16 |
Accrued tax on unremitted earnings |  |  | 38 |  |  |  | 32 |
Other |  |  | 8 |  |  |  | 6 |
Total deferred tax liabilities |  |  | 219 |  |  |  | 210 |
Net deferred tax asset (liability) |  | $ | 418 |  |  | $ | (68 | )
The valuation allowance decreased by $574 million during 2023. This decrease is comprised of $485 million due to the Company’s evaluation of the realizability of deferred tax assets based on future projections of taxable income, $68 million related to utilized NOLs and other timing differences in the United States, $8 million related to utilized NOLs in foreign jurisdictions, $7 million related to foreign currency exchange rate changes, and $6 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):
|  | 2023 |  |  | 2022 |  |  | 2021 |
Unrecognized tax benefit at beginning of year |  | $ | 62 |  |  | $ | 60 |  |  | $ | 57 |
Gross increase for tax position in current year |  |  | 18 |  |  |  | — |  |  |  | — |
Gross increase for tax positions in prior years |  |  | 1 |  |  |  | 9 |  |  |  | 8 |
Gross decrease for tax positions in prior years |  |  | (3 | ) |  |  | (1 | ) |  |  | (1 | )
Cash Settlements |  |  | (4 | ) |  |  | (1 | ) |  |  | (1 | )
Lapse of statute of limitations |  |  | (7 | ) |  |  | (5 | ) |  |  | (3 | )
Unrecognized tax benefit at end of year |  | $ | 67 |  |  | $ | 62 |  |  | $ | 60 |
The balance of unrecognized tax benefits at December 31, 2023, 2022 and 2021 was $67 million, $62 million and $60 million, respectively. Accruals related to prior year domestic and foreign jurisdiction issues resulted in uncertain tax position increases of $19 million in 2023. Resolutions of domestic and foreign jurisdiction audits resulted in a $4 million and $1 million decrease in uncertain tax provisions for the years ended December 31, 2023 and 2022, respectively. Substantially all of the unrecognized tax benefits, if ultimately realized, would be recorded as a reduction to income tax expense in the period realized. 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, 2023, 2022 and 2021, we recorded income tax expense of $5 million, $8 million and $8 million, respectively, for interest and penalty related to unrecognized tax benefits. As of December 31, 2023 and 2022, the Company had accrued $20 million and $23 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 2018. Net operating loss carryforwards by jurisdiction and expiration as of December 31, 2023 were as follows (in millions):
|  | Federal |  |  | State |  |  | Foreign |  |  | Total |
2024 - 2028 Expiration |  | $ | — |  |  | $ | 9 |  |  | $ | 51 |  |  | $ | 60 |
2029 - 2043 Expiration |  |  | 13 |  |  |  | 344 |  |  |  | 212 |  |  |  | 569 |
Unlimited Expiration |  |  | 41 |  |  |  | — |  |  |  | 546 |  |  |  | 587 |
Total Net Operating Loss (NOL) |  | $ | 54 |  |  | $ | 353 |  |  | $ | 809 |  |  | $ | 1,216 |
Tax Effected NOL |  | $ | 11 |  |  | $ | 24 |  |  | $ | 214 |  |  | $ | 249 |
The Company has $277 million of excess foreign tax credits in the United States as of December 31, 2023, of which $145 million, $92 million, $12 million, $11 million, and $10 million and $7 million will expire in 2027, 2028, 2030, 2031, 2032 and 2033 respectively. As of December 31, 2023, the Company has remaining tax-deductible goodwill of $70 million, resulting from acquisitions. The amortization of this goodwill is deductible over various periods ranging up to 8 years.

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