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INCOME TAXES | 12 Months Ended
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Dec. 31, 2023
Income Tax Disclosure [Abstract] |
INCOME TAXES | NOTE 15. INCOME TAXES
| Years ended December 31,
| 2023 |  | 2022 |  | 2021
Components of Income (Loss) Before Taxes | ($ in millions)
U.S. | $ | 456.7 |  |  | $ | 1,231.2 |  |  | $ | 977.3 |
Foreign | 102.6 |  |  | 444.8 |  |  | 561.4 |
Income before taxes | $ | 559.3 |  |  | $ | 1,676.0 |  |  | $ | 1,538.7 |
Components of Income Tax Provision (Benefit) |  |  |  |  |
Current: |  |  |  |  |
Federal | $ | 96.2 |  |  | $ | 225.0 |  |  | $ | 139.6 |
State | 19.4 |  |  | 31.1 |  |  | 24.5 |
Foreign | 48.0 |  |  | 121.7 |  |  | 131.3 |
Total current | 163.6 |  |  | 377.8 |  |  | 295.4 |
Deferred: |  |  |  |  |
Federal | (25.3) |  |  | (32.1) |  |  | 39.1 |
State | (7.9) |  |  | (4.3) |  |  | 6.2 |
Foreign | (23.1) |  |  | 7.7 |  |  | (98.7) |
Total deferred | (56.3) |  |  | (28.7) |  |  | (53.4) |
Income tax provision | $ | 107.3 |  |  | $ | 349.1 |  |  | $ | 242.0 |
The following table accounts for the difference between the actual tax provision and the amounts obtained by applying the statutory U.S. federal income tax rate to the income (loss) before taxes.
| Years ended December 31,
Effective Tax Rate Reconciliation (Percent) | 2023 |  | 2022 |  | 2021
Statutory federal tax rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State income taxes, net | 2.7 |  |  | 2.3 |  |  | 1.9 |
Foreign rate differential | (1.8) |  |  | 1.5 |  |  | 2.9 |
U.S. tax on foreign earnings | 1.7 |  |  | (0.8) |  |  | 0.3 |
Salt depletion | (1.7) |  |  | (0.5) |  |  | (0.6) |
Change in valuation allowance | 2.0 |  |  | 0.4 |  |  | (10.4) |
Remeasurement of U.S. state deferred taxes | (0.2) |  |  | (0.8) |  |  | 0.1 |
Change in tax contingencies | (0.5) |  |  | 0.5 |  |  | 1.5 |
Share-based payments | (1.0) |  |  | (0.3) |  |  | (0.7) |
Return to provision | (3.1) |  |  | (0.6) |  |  | (0.5) |
U.S. federal tax credits | — |  |  | (0.1) |  |  | — |
Legal entity liquidation | (0.5) |  |  | (2.0) |  |  | — |
Other, net | 0.6 |  |  | 0.2 |  |  | 0.2 |
Effective tax rate | 19.2 | % |  | 20.8 | % |  | 15.7 | %
The effective tax rate for 2023 included benefits associated with a legal entity liquidation, prior year tax positions, stock-based compensation, remeasurement of deferred taxes due to a decrease in our state effective tax rates and foreign rate changes, and from a change in tax contingencies, and an expense from a net increase in the valuation allowance related to deferred tax assets in foreign jurisdictions. These factors resulted in a net $29.4 million tax benefit. Excluding these items, the effective tax rate for 2023 of 24.4% was higher than the 21.0% U.S. federal statutory rate primarily due to state taxes, an increase in the valuation allowance related to losses in foreign jurisdictions and foreign income inclusions, partially offset by foreign rate differential and favorable permanent salt depletion deductions. The effective tax rate for 2022 included benefits associated with a legal entity liquidation, prior year tax positions, stock-based compensation, and remeasurement of deferred taxes due to a decrease in our state effective tax rates, and expenses associated with a net increase in the valuation allowance related to state tax credits and a change in tax contingencies. These factors resulted in a net $60.2 million tax benefit. Excluding these items, the effective tax rate for 2022 of 24.4% was higher than the 21.0% U.S. federal statutory rate primarily due to state taxes, an increase in the valuation allowance related to losses in foreign jurisdictions and foreign income taxes, partially offset by foreign income exclusions and favorable permanent salt depletion deductions. The effective tax rate for 2021 included benefits from a net decrease in the valuation allowance related to deferred tax assets in foreign jurisdictions, domestic tax credits, prior year tax positions, stock-based compensation, and expenses from remeasurement of deferred taxes due to an increase in our state effective tax rates and a change in tax contingencies. These factors resulted in a net $103.6 million tax benefit. Excluding these items, the effective tax rate for 2021 of 22.5% was higher than the 21.0% U.S. federal statutory rate primarily due to state taxes, foreign income inclusions and foreign rate differential, partially offset by a net decrease in the valuation allowance related to utilization of losses in foreign jurisdictions and favorable permanent salt depletion deductions.
| December 31,
| 2023 |  | 2022
Components of Deferred Tax Assets and Liabilities | ($ in millions)
Deferred Tax Assets |
Pension and postretirement benefits | $ | 42.4 |  |  | $ | 42.9 |
Environmental reserves | 38.3 |  |  | 37.4 |
Asset retirement obligations | 16.6 |  |  | 13.9 |
Accrued liabilities | 46.1 |  |  | 47.4 |
Lease liabilities | 88.1 |  |  | 91.4 |
Tax credits | 47.3 |  |  | 37.4 |
Net operating losses (NOL) | 54.1 |  |  | 23.2 |
Other miscellaneous items | 3.0 |  |  | 2.7 |
Total deferred tax assets | 335.9 |  |  | 296.3 |
Valuation allowance | (99.5) |  |  | (76.4) |
Net deferred tax assets | 236.4 |  |  | 219.9 |
Deferred Tax Liabilities |  |  |
Property, plant and equipment | 439.5 |  |  | 481.7 |
Right-of-use lease assets | 86.5 |  |  | 89.8 |
Intangible amortization | 76.9 |  |  | 68.7 |
Inventory and prepaids | 5.5 |  |  | 12.1 |
Taxes on unremitted earnings | 16.8 |  |  | 12.0 |
Other miscellaneous items | — |  |  | 2.4 |
Total deferred tax liabilities | 625.2 |  |  | 666.7 |
Net deferred income tax liability | $ | (388.8) |  |  | $ | (446.8) |
Realization of the net deferred tax assets, irrespective of indefinite-lived deferred tax liabilities, is dependent on future reversals of existing taxable temporary differences and adequate future taxable income, exclusive of reversing temporary differences and carryforwards. Although realization is not assured, we believe that it is more likely than not that the net deferred tax assets will be realized. At December 31, 2023, we had deferred state tax assets of $14.9 million relating to state NOLs, which will expire in years 2024 through 2042, if not utilized. At December 31, 2023, we had deferred state tax assets of $19.3 million relating to state tax credits, which will expire in years 2024 through 2038, if not utilized. At December 31, 2023, we had foreign tax credits of $23.1 million, that will expire in years 2027 through 2032, if not utilized. At December 31, 2023, we had NOLs of approximately $141.4 million (representing $39.1 million of deferred tax assets) in various foreign jurisdictions. Of these, $67.9 million (representing $16.9 million of deferred tax assets) expire in various years from 2024 to 2033. The remaining $73.5 million (representing $22.2 million of deferred tax assets) do not expire. As of December 31, 2023, we had recorded a valuation allowance of $99.5 million, compared to $76.4 million as of December 31, 2022, and $70.1 million as of December 31, 2021. The increase of $23.1 million in 2023 is primarily due to increases in valuation allowances on foreign tax credits and foreign NOLs. We continue to have net deferred tax assets in several jurisdictions which we expect to realize, assuming sufficient taxable income can be generated to utilize these deferred tax benefits, which is based on certain estimates and assumptions. If these estimates and related assumptions change in the future, we may be required to reduce the value of the deferred tax assets resulting in additional tax expense. The activity of our deferred income tax valuation allowance was as follows:
| December 31,
| 2023 |  | 2022
Deferred Income Tax Valuation Allowance | ($ in millions)
Beginning balance | $ | 76.4 |  |  | $ | 70.1 |
Increases to valuation allowances | 23.6 |  |  | 14.6 |
Decreases to valuation allowances | (0.1) |  |  | (6.6) |
Foreign currency translation adjustments | (0.4) |  |  | (1.7) |
Ending balance | $ | 99.5 |  |  | $ | 76.4 |
As of December 31, 2023, we had $50.3 million of gross unrecognized tax benefits, which would have a net $49.9 million impact on the effective tax rate, if recognized. As of December 31, 2022, we had $51.6 million of gross unrecognized tax benefits, which would have a net $50.6 million impact on the effective tax rate, if recognized. The change for both 2023 and 2022 primarily relates to additional gross unrecognized benefits for current and prior year tax positions, as well as decreases for prior year tax positions. The amounts of unrecognized tax benefits were as follows:
| December 31,
| 2023 |  | 2022
Unrecognized Tax Benefits | ($ in millions)
Beginning balance | $ | 51.6 |  |  | $ | 43.4 |
Increase for current year tax positions | 1.7 |  |  | 10.3 |
Increase for prior year tax positions | 1.3 |  |  | 0.3 |
Decrease for prior year tax positions | (0.5) |  |  | (0.8) |
Reduction due to lapse in statute of limitations | (5.1) |  |  | — |
Foreign currency translation adjustments | 1.3 |  |  | (1.6) |
Ending balance | $ | 50.3 |  |  | $ | 51.6 |
We recognize interest and penalty expense related to unrecognized tax positions as a component of the income tax provision. As of December 31, 2023 and 2022, interest and penalties accrued were $1.9 million and $1.2 million, respectively. For 2023, 2022 and 2021, we recorded expense related to interest and penalties of $0.7 million, $0.7 million and $0.5 million, respectively. As of December 31, 2023, we believe it is reasonably possible that our total amount of unrecognized tax benefits will decrease by approximately $36.9 million over the next twelve months. The anticipated reduction primarily relates to expected settlements with tax authorities and the expiration of federal, state and foreign statutes of limitation. We operate globally and file income tax returns in numerous jurisdictions. Our tax returns are subject to examination by various federal, state and local tax authorities. Additionally, examinations are ongoing in various states and foreign jurisdictions. We believe we have adequately provided for all tax positions; however, amounts asserted by taxing authorities could be greater than our accrued position. For our primary tax jurisdictions, the tax years that remain subject to examination are as follows:
| Tax Years
U.S. federal income tax | 2020 - 2022
U.S. state income tax | 2012 - 2022
Canadian federal income tax | 2015 - 2022
Brazil | 2015 - 2022
Germany | 2015 - 2022
China | 2014 - 2022
The Netherlands | 2015 - 2022

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