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Income Taxes | 12 Months Ended
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Dec. 31, 2022
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Income Tax Provision Details of the Company's income tax provision from continuing operations are provided in the table below:
| Year Ended December 31,
(In millions) | 2022 |  | 2021 |  | 2020
Income (Loss) Before Income Taxes: (a) |  |  |  |  |
U.S | $ | 50 |  |  | $ | (26) |  |  | $ | (65) |
Non-U.S | 126 |  |  | 101 |  |  | 39 |
Total income (loss) before income taxes | $ | 176 |  |  | $ | 75 |  |  | $ | (26) |
Current Tax Provision: |  |  |  |  |
Non-U.S | $ | 45 |  |  | 31 |  |  | $ | 21 |
U.S. state and local | 1 |  |  | — |  |  | — |
Total current tax provision | 46 |  |  | 31 |  |  | 21 |
Deferred Tax Provision (Benefit): |  |  |  |  |
Non-U.S | (1) |  |  | — |  |  | 7 |
Total deferred tax provision (benefit) | (1) |  |  | — |  |  | 7 |
Provision for income taxes | $ | 45 |  |  | $ | 31 |  |  | $ | 28 |
(a) Income (loss) before income taxes excludes equity in net income from non-consolidated affiliates.
A summary of the differences between the provision for income taxes calculated at the U.S. statutory tax rate of 21% and the consolidated income tax provision from continuing operations is shown below:
| Year Ended December 31,
(In millions) | 2022 |  | 2021 |  | 2020
Tax provision (benefit) at U.S. statutory rate of 21% | $ | 37 |  |  | $ | 16 |  |  | $ | (5) |
Impact of foreign operations | 63 |  |  | 18 |  |  | (15) |
Non-U.S withholding taxes | 9 |  |  | 8 |  |  | 5 |
Tax holidays in foreign operations | (5) |  |  | (5) |  |  | (4) |
State and local income taxes | (2) |  |  | — |  |  | — |
Tax reserve adjustments | 3 |  |  | 2 |  |  | 1 |
Change in valuation allowance | (61) |  |  | (10) |  |  | 46 |
Impact of tax law change | — |  |  | 1 |  |  | — |
Research credits | (1) |  |  | (1) |  |  | (1) |
Other | 2 |  |  | 2 |  |  | 1 |
Provision for income taxes | $ | 45 |  |  | $ | 31 |  |  | $ | 28 |
The Company’s provision for income taxes for continuing operations was $45 million for the year ended December 31, 2022. The tax expense related to foreign operations of $63 million reflects $11 million related to U.S. income taxes in connection with global intangible low-tax income ("GILTI") and Subpart F inclusions; $3 million related to income tax expense, net of foreign tax credits, associated with income from foreign subsidiaries treated as branches for U.S. income tax purposes; net $44 million income tax expense related primarily to adjusting prior year tax returns to deduct foreign taxes prior to expiration; and $5 million tax expense on foreign earnings taxed at rates higher than the U.S. statutory rate. Of the $63 million income tax expense items above, $58 million were offset by a corresponding income tax benefit associated with a reduction in the U.S. valuation allowance. Items impacting the Company’s 2021 effective tax rate include tax expense related to foreign operations of $18 million which reflects $9 million related to U.S. income taxes in connection with GILTI and Subpart F inclusions; $6 million related to income tax expense, net of foreign tax credits, associated with income from foreign subsidiaries treated as branches for U.S. income tax purposes; net $2 million income tax expense related primarily to adjusting prior year tax returns to deduct foreign taxes prior to expiration; and $1 million tax expense on foreign earnings taxed at rates higher than the U.S. statutory rate. Of the $18 million income tax expense items above, $17 million were offset by a corresponding income tax benefit associated with a reduction in the U.S. valuation allowance. Items impacting the Company’s 2020 effective tax rate include tax benefits related to foreign operations of $15 million which reflects $10 million income tax benefit related to electing to deduct expiring foreign tax credits previously derecognized; and $5 million income tax benefit to reflect reduction in outside basis deferred tax liabilities and foreign tax credits associated with income from foreign subsidiaries treated as branches for U.S. income tax purposes. These amounts were entirely offset by a corresponding $15 million income tax expense associated with an increase in the U.S. valuation allowance. Deferred Income Taxes and Valuation Allowances The Company recorded deferred tax liabilities, net of valuation allowances, for U.S. and non-U.S. income taxes and non-U.S. withholding taxes of approximately $24 million as of both December 31, 2022 and 2021, on the undistributed earnings of certain consolidated and unconsolidated foreign affiliates as such earnings are intended to be repatriated in the foreseeable future. The amount the Company expects to repatriate is based upon a variety of factors including current year earnings of the foreign affiliates, foreign investment needs, and the cash flow needs the Company has in the U.S. and this practice has not changed following incurring the transition tax under the Tax Cuts and Jobs Act of 2017 (the “Act”). The Company has not provided for deferred income taxes or foreign withholding taxes on the remainder of undistributed earnings from consolidated foreign affiliates because such earnings are considered to be permanently reinvested. It is not practicable to determine the amount of deferred tax liability on such earnings as the actual tax liability, if any, is dependent on circumstances existing when remittance occurs. The Company evaluates its deferred income taxes quarterly to determine if valuation allowances are required or should be adjusted. This assessment considers, among other matters, the nature, frequency, and amount of recent losses, the duration of statutory carryforward periods, and tax planning strategies. In making such judgments, significant weight is given to evidence that can be objectively verified. If (i) recent improvements to financial results continue in the U.S., or (ii) recovery of the global economy after the COVID-19 pandemic including the related lockdowns in China, the geopolitical situation in Eastern Europe, and the ongoing semiconductor shortages, occurs faster than expected, the Company believes it is possible that sufficient positive evidence may be available to release all, or a portion, of its U.S. valuation allowance in the next six to 18 months. Release of all, or a portion, of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period the release is recorded. During the fourth quarter of 2022, the Company determined that future taxable income at two foreign subsidiaries was not likely to be sufficient to realize net deferred tax assets due primarily to recent operating losses. Consequently, the Company recorded $9 million income tax expense related to establishing valuation allowances against deferred tax assets during the fourth quarter of 2022. In September 2020, the Company approved a restructuring program impacting engineering and administrative functions globally, including German operations. The September action, combined with earlier 2020 actions, necessitated a reassessment of the future utilization of deferred tax assets in Germany resulting in recording a $4 million discrete income tax expense adjustment during the third quarter of 2020 to increase the valuation allowance. During the fourth quarter of 2020, the Company completed an analysis related to its Brazil affiliate, Visteon Amazonas (“Amazonas”), resulting in the permanent exclusion of certain incentive income from taxable profits. Consequently, the Company concluded the generation of future taxable income is no longer sufficient to realize the Company’s net deferred tax assets at Amazonas resulting in recording a $3 million valuation allowance during the fourth quarter of 2020. The components of deferred income tax assets and liabilities are as follows:
| December 31,
(In millions) | 2022 |  | 2021
Deferred Tax Assets: |  |  |
Net operating losses and credit carryforwards | $ | 1,030 |  |  | $ | 1,163 |
Employee benefit plans | 28 |  |  | 46 |
Lease liability | 42 |  |  | 47 |
Fixed assets and intangibles | 19 |  |  | 17 |
Warranty | 10 |  |  | 11 |
Inventory | 13 |  |  | 9 |
Restructuring | 5 |  |  | 6 |
Capitalized expenditures | 58 |  |  | 5 |
Deferred income | 11 |  |  | 13 |
Other | 49 |  |  | 55 |
Gross deferred tax assets | 1,265 |  |  | 1,372 |
Valuation allowance | (1,120) |  |  | (1,207) |
Total deferred tax assets | $ | 145 |  |  | $ | 165 |
Deferred Tax Liabilities: |  |  |
Outside basis investment differences, including withholding tax | $ | 61 |  |  | $ | 63 |
Right-of-use assets | 41 |  |  | 46 |
Fixed assets and intangibles | 11 |  |  | 14 |
All other | 17 |  |  | 22 |
Total deferred tax liabilities | 130 |  |  | 145 |
Net deferred tax assets | $ | 15 |  |  | $ | 20 |
Consolidated Balance Sheet Classification: |  |  |
Other non-current assets | $ | 42 |  |  | $ | 47 |
Deferred tax liabilities non-current | 27 |  |  | 27 |
Net deferred tax assets | $ | 15 |  |  | $ | 20 |
At December 31, 2022, the Company had available non-U.S. net operating loss carryforwards and capital loss carryforwards of $1.3 billion and $16 million, respectively, which have remaining carryforward periods ranging from having no carryforwards to indefinite carryforwards. The Company had available U.S. federal net operating loss carryforwards of $1.4 billion at December 31, 2022, which have remaining carryforward periods ranging from 7 years to indefinite. U.S. foreign tax credit carryforwards are $331 million at December 31, 2022, which have remaining carryforward periods ranging from 1 to 7 years. U.S. research tax credit carryforwards are $23 million at December 31, 2022. These credits will begin to expire in 2030. The Company had available tax-effected U.S. state operating loss carryforwards of $30 million at December 31, 2022, which will expire at various dates between 2023 and 2042. In connection with the Company's emergence from bankruptcy and resulting change in ownership on the Effective Date, an annual limitation was imposed on the utilization of U.S. net operating losses, U.S. credit carryforwards and certain U.S. built-in losses (collectively referred to as “tax attributes”) under Internal Revenue Code (“IRC”) Sections 382 and 383. The collective limitation is approximately $121 million per year on tax attributes in existence at the date of change in ownership. Additionally, the Company has approximately $331 million of U.S. foreign tax credits and approximately $49 million of U.S. federal net operating loss carryforwards that are not subject to any current limitation since they were realized after the Effective Date. Unrecognized Tax Benefits, Inclusive of Discontinued Operations The Company operates in multiple jurisdictions throughout the world and the income tax returns of its subsidiaries in various tax jurisdictions are subject to periodic examination by respective tax authorities. The Company regularly assesses the status of these examinations and the potential for adverse and/or favorable outcomes to determine the adequacy of its provision for income taxes. The Company believes that it has adequately provided for tax adjustments that it believes are more likely than not to be realized as a result of any ongoing or future examination. Accounting estimates associated with uncertain tax positions require the Company to make judgments regarding the sustainability of each uncertain tax position based on its technical merits. If the Company determines it is more likely than not a tax position will be sustained based on its technical merits, the Company records the largest amount that is greater than 50% likely of being realized upon ultimate settlement. These estimates are updated at each reporting date based on the facts, circumstances and information available. Due to the complexity of these uncertainties, the ultimate resolution may result in a payment that is materially different from the Company's current estimate of the liabilities recorded. Gross unrecognized tax benefits at December 31, 2022 and 2021 were $18 million and $16 million, respectively. Of these amounts, approximately $10 million and $9 million respectively, represent the amount of unrecognized benefits that, if recognized, would impact the effective tax rate. The gross unrecognized tax benefit differs from that which would impact the effective tax rate due to uncertain tax positions embedded in other deferred tax attributes carrying a full valuation allowance. The Company records interest and penalties related to uncertain tax positions as a component of income tax expense and related amounts accrued at December 31, 2022 and 2021 were $2 million in both years. With few exceptions, the Company is no longer subject to U.S. federal tax examinations for years before 2014, or state, local or non-U.S. income tax examinations for years before 2003, although U.S. net operating losses carried forward into open tax years technically remain open to adjustment. Although it is not possible to predict the timing of the resolution of all ongoing tax audits with accuracy, it is reasonably possible that certain tax proceedings in the U.S., Europe, Asia and Mexico could conclude within the next twelve months and result in a significant increase or decrease in the balance of gross unrecognized tax benefits. Given the number of years, jurisdictions and positions subject to examination, the Company is unable to estimate the full range of possible adjustments to the balance of unrecognized tax benefits. The long-term portion of uncertain income tax positions (including interest) in the amount of $7 million is included in Other non-current liabilities on the consolidated balance sheet, while $5 million is reflected as a reduction of deferred tax assets included in Other non-current assets. Outstanding income tax refund claims related primarily to India and Brazil jurisdictions, total $6 million as of December 31, 2022, and are included in other non-current assets on the balance sheets. A reconciliation of the beginning and ending amount of unrecognized tax benefits including amounts attributable to discontinued operations is as follows:
| Year Ended December 31,
(In millions) | 2022 |  | 2021
Beginning balance | $ | 16 |  |  | $ | 14 |
Tax positions related to current period |  |  |
Additions | 3 |  |  | 3 |
Tax positions related to prior periods |  |  |
Additions | — |  |  | — |
Reductions | (1) |  |  | (1) |
Ending balance | $ | 18 |  |  | $ | 16 |
Other Tax Matters In January 2023, the Company received a decision by the Indian Tax Authority (“ITA”) that tax applies to certain IT-related services fees paid to the U.S. which spans several years. Until this matter is resolved, the Company will likely need to remit taxes on the services in question for which payments could be significant in the aggregate. The Company believes the ITA’s decision is without merit, and intends to defend its position vigorously, and expects to recoup any taxes paid. If this matter is adversely resolved, the Company would record significant additional tax expense, which would include any taxes ultimately paid

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI https://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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