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INCOME TAXES
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
The components of (loss) income before income taxes were as follows:
Year Ended December 31,
(in millions)202220212020
United States$(531)$51 $(91)
Foreign(524)494 41 
Total (loss) income before income taxes
$(1,055)$545 $(50)

The components of the (benefit) provision for income taxes from operations were as follows:
Year Ended December 31,
(in millions)202220212020
Current:   
U.S. federal$1 $1 $(5)
U.S. state4 4 1 
Foreign118 154 89 
Total$123 $159 $85 
Deferred:   
U.S. federal$(145)$10 $4 
U.S. state(17)2 (1)
Foreign(66)(37)(65)
Total$(228)$(25)$(62)
Total (benefit) provision for income taxes$(105)$134 $23 

The reconciliation of the U.S. federal statutory tax rate to the effective rate were as follows:
Year Ended December 31,
(in millions)202220212020
Statutory U.S. federal income tax rate$(222)21.0 %$114 21.0 %$(11)21.0 %
Effect of:
State income taxes, net of federal benefit(11)1.0 4 0.8 (1)1.1 
Federal benefit of R&D and foreign tax credits(8)0.8 (5)(0.9)(9)18.9 
US other permanent differences9 (0.9)2 0.4 3 (6.1)
Tax effect of international operations(5)0.5 2 0.3 (5)10.0 
Global Intangible Low Taxed Income (GILTI)20 (1.9)13 2.4 7 (13.0)
Foreign Derived Intangible Income (FDII)(8)0.8 (7)(1.3)(6)11.8 
Net effect of tax audit activity15 (1.4)9 1.6 4 (8.2)
Tax effect of enacted statutory rate changes on Non-U.S. jurisdictions(3)0.3 10 1.9 — (0.2)
Federal tax on unremitted earnings of certain foreign subsidiaries1 (0.1)(1)(0.2)3 (5.4)
Valuation allowance adjustments(9)0.8 (9)(1.7)8 (15.3)
Tax effect of impairment of goodwill and intangibles114 (10.8)— — 30 (60.8)
Other2 (0.2)2 0.3 — 0.2 
Effective income tax rate on operations$(105)9.9 %$134 24.6 %$23 (46.0 %)
The tax effect of significant temporary differences giving rise to deferred tax assets and liabilities were as follows:
Year Ended December 31,
 (in millions)20222021
Deferred tax assets
Commission and bonus accrual$9 $6 
Employee benefit accruals46 51 
Inventory9 16 
Insurance premium accruals3 3 
Miscellaneous accruals37 27 
Other31 17 
Net unrealized gains/losses included in AOCI— 47 
Lease right-of-use liability48 47 
Product warranty accruals1 1 
Foreign tax credit and R&D carryforward40 49 
Restructuring and other cost accruals4 5 
Sales and marketing accrual9 14 
Tax loss carryforwards and other tax attributes654 275 
Total deferred tax assets$891 $558 
Less: Valuation allowances(645)(267)
Total deferred tax assets, net$246 $291 
Deferred tax liabilities
Identifiable intangible assets$(325)$(569)
Property, plant and equipment(41)(47)
Lease right-of-use asset(47)(47)
Net unrealized gains/losses included in AOCI(13)— 
Taxes on unremitted earnings of foreign subsidiaries(6)(5)
Total deferred tax liabilities(432)(668)
Net deferred tax liabilities$(186)$(377)

Deferred tax assets and liabilities are included in the following Consolidated Balance Sheets line items at December 31 were as follows:
(in millions)20222021
Assets
Other noncurrent assets$101 $14 
Liabilities
Deferred income taxes$287 $391 

The Company has $36 million of foreign tax credit carryforwards at December 31, 2022, of which $24 million will expire in 2025, $3 million will expire in 2027, and $9 million will expire at various times from 2028 through 2031.

The Company has tax loss carryforwards related to certain foreign and domestic subsidiaries of approximately $2,790 million at December 31, 2022, of which $2,525 million expires at various times through 2042 and $265 million may be carried forward indefinitely. Included in deferred income tax assets at December 31, 2022 are tax benefits of $601 million and $53 million, before valuation allowances, related to tax loss carryforwards and disallowed interest carryforwards, respectively. As of December 31, 2021 the Company's deferred tax assets included $229 million of tax loss carryforwards and $46 million of disallowed interest carryforwards. The increase from the prior year is primarily attributable to the re-establishment of Luxembourg net operating loss carryforwards of $1.5 billion. The realizability of such net operating losses was previously determined to be remote and therefore a related deferred tax asset was not recorded. As of December 31, 2022, the Company believes that these Luxembourg net operating losses are no longer remote such that it is appropriate to recognize an increase in the deferred tax asset of $382 million, with a corresponding increase to the valuation allowance.
The Company has recorded $591 million of valuation allowance to offset the tax benefit of net operating losses, $36 million to offset the tax benefit of foreign tax credits, and $18 million of valuation allowance for other deferred tax assets. The increase in the valuation allowance is primarily driven by the aforementioned Luxembourg net operating loss. The Company has recorded these valuation allowances due to the uncertainty that these assets can be realized in the future.

The Company has provided $6 million of withholding taxes on certain undistributed earnings of its foreign subsidiaries that the Company anticipates will be repatriated.

Undistributed earnings of foreign subsidiaries and related companies that are considered to be permanently invested amounted to $2,492 million at December 31, 2022 and $1,771 million at December 31, 2021. The Tax Cuts and Jobs Act imposed U.S. tax on all post-1986 foreign unrepatriated earnings accumulated through December 31, 2017. Unrepatriated earnings generated after December 31, 2017, are now subject to tax in the current year. All undistributed earnings are still subject to certain taxes upon repatriation, primarily where foreign withholding taxes apply. It is not practicable to calculate the unrecognized deferred tax liability on undistributed earnings.

Tax Contingencies

The total amount of gross unrecognized tax benefits at December 31, 2022 is approximately $55 million, including interest of which, approximately $55 million represents the amount of unrecognized tax benefits that, if recognized, would affect the effective income tax rate. It is reasonably possible that certain amounts of unrecognized tax benefits will significantly increase or decrease within twelve months of the reporting date of the Company’s consolidated financial statements. Expiration of statutes of limitations in various jurisdictions during the next twelve months could include unrecognized tax benefits of approximately $11 million, if recognized, would affect the effective income tax rate.

The total amount of accrued interest and penalties were $6 million and $8 million at December 31, 2022 and 2021, respectively. The Company has consistently classified interest and penalties recognized in its consolidated financial statements as income taxes based on the accounting policy election of the Company. The Company recognized a tax benefit of $2 million and tax expense of $2 million for the years ended December 31, 2022 and 2021, respectively, related to interest and penalties.

The Company is subject to U.S. federal income tax as well as income tax of multiple state and foreign jurisdictions. The significant jurisdictions include the U.S., Germany, Sweden and Switzerland. The Company has substantially concluded all U.S. federal income tax matters for years through 2011. The Company is currently under audit for the tax years 2012, 2013, 2015 and 2016. For further information on the Internal Revenue Service (“IRS”) audit, see Note 22, Commitments and Contingencies. The tax years 2014 through 2021 are subject to future potential tax audit adjustments. The Company concluded audits in Germany through the tax year 2013 and is currently under audit for the years 2014 through 2017. The tax years 2018 through 2021 are subject to future potential audit adjustments in Germany. The taxable years that remain open for Sweden are 2013 through 2021. For information related to Sweden, see Note 22, Commitments and Contingencies. The taxable years that remain open for Switzerland are 2011 through 2021.

The activity recorded for unrecognized tax benefits were as follows:
(in millions) 202220212020
Unrecognized tax benefits at beginning of period$34 $27 $24 
Gross change for prior-period positions12 6 1 
Gross change for current year positions4 2 1 
Increase due to effect of foreign currency translation— — 1 
Decrease due to effect from foreign currency translation(1)(1)— 
Unrecognized tax benefits at end of period$49 $34 $27