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Income Taxes | 12 Months Ended
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Dec. 31, 2019
Income Tax Disclosure [Abstract] |
Income Taxes | Note 9. Income Taxes The following table sets forth the components of the Company’s provision for (benefit from) income taxes for the years ended December 31, 2019, 2018, and 2017.
|  | Year Ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Current tax expense (benefit): |  |  |  |  |  |  |  |  |  |  |  |
U.S. federal |  | $ | 13 |  |  | $ | 23 |  |  | $ | (8 | )
U.S. state and local |  |  | (1 | ) |  |  | 4 |  |  |  | 1 |
International |  |  | 79 |  |  |  | 110 |  |  |  | 89 |
Total current tax expense |  |  | 91 |  |  |  | 137 |  |  |  | 82 |
Deferred tax expense (benefit): |  |  |  |  |  |  |  |  |  |  |  |
U.S. federal |  |  | (77 | ) |  |  | 20 |  |  |  | 60 |
U.S. state and local |  |  | (5 | ) |  |  | 3 |  |  |  | 6 |
International |  |  | (81 | ) |  |  | (1 | ) |  |  | 17 |
Total deferred tax (benefit) expense |  |  | (163 | ) |  |  | 22 |  |  |  | 83 |
Total (benefit from) provision for income taxes |  | $ | (72 | ) |  | $ | 159 |  |  | $ | 165 |
The following table sets forth the components of the Company’s deferred tax assets and liabilities at December 31, 2019 and 2018.
|  | December 31, |
|  | 2019 |  |  | 2018 |
Deferred tax assets: |  |  |  |  |  |  |  |
Environmental and other liabilities |  | $ | 99 |  |  | $ | 80 |
Accrued litigation |  |  | 37 |  |  |  | 28 |
Stock-based compensation and accrued employee benefits |  |  | 29 |  |  |  | 28 |
Other assets and other accrued liabilities |  |  | 6 |  |  |  | 8 |
Tax attribute carryforwards |  |  | 96 |  |  |  | 29 |
Operating lease liability |  |  | 75 |  |  |  | — |
Foreign tax credit carryforwards |  |  | 18 |  |  |  | 18 |
Total deferred tax assets |  |  | 360 |  |  |  | 191 |
Less: Valuation allowance |  |  | (10 | ) |  |  | (2 | )
Total deferred tax assets, net |  |  | 350 |  |  |  | 189 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Pension and other liabilities |  |  | (7 | ) |  |  | (35 | )
Property, plant, and equipment |  |  | (320 | ) |  |  | (313 | )
Operating lease asset |  |  | (71 | ) |  |  | — |
Inventories and other assets |  |  | (30 | ) |  |  | (12 | )
Total deferred tax liabilities |  |  | (428 | ) |  |  | (360 | )
Deferred tax liability, net |  | $ | (78 | ) |  | $ | (171 | )
The following table sets forth an analysis of the Company’s effective tax rates for the years ended December 31, 2019, 2018, and 2017.
|  | Year Ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
|  | $ |  |  | % |  |  | $ |  |  | % |  |  | $ |  |  | % |
Statutory U.S. federal income tax rate |  | $ | (26 | ) |  |  | 21.0 | % |  | $ | 243 |  |  |  | 21.0 | % |  | $ | 319 |  |  |  | 35.0 | %
State income taxes, net of federal benefit |  |  | (7 | ) |  |  | 5.6 | % |  |  | 7 |  |  |  | 0.6 | % |  |  | 7 |  |  |  | 0.7 | %
Lower effective tax rate on international operations, net |  |  | (28 | ) |  |  | 22.7 | % |  |  | (44 | ) |  |  | (3.8 | )% |  |  | (149 | ) |  |  | (16.3 | )%
Depletion |  |  | (5 | ) |  |  | 4.0 | % |  |  | (6 | ) |  |  | (0.5 | )% |  |  | (8 | ) |  |  | (0.9 | )%
Exchange (gains) losses |  |  | (7 | ) |  |  | 5.6 | % |  |  | (4 | ) |  |  | (0.3 | )% |  |  | 5 |  |  |  | 0.6 | %
Provision to return and other adjustments |  |  | (4 | ) |  |  | 3.2 | % |  |  | (9 | ) |  |  | (0.8 | )% |  |  | 6 |  |  |  | 0.6 | %
Valuation allowance |  |  | 8 |  |  |  | (6.5 | )% |  |  | (15 | ) |  |  | (1.3 | )% |  |  | (33 | ) |  |  | (3.6 | )%
Net impact of U.S. tax reform |  |  | — |  |  |  | — | % |  |  | (10 | ) |  |  | (0.9 | )% |  |  | 39 |  |  |  | 4.3 | %
Stock-based compensation |  |  | (14 | ) |  |  | 11.4 | % |  |  | (14 | ) |  |  | (1.2 | )% |  |  | (20 | ) |  |  | (2.2 | )%
Executive compensation limitation |  |  | 9 |  |  |  | (7.3 | )% |  |  | 4 |  |  |  | 0.3 | % |  |  | 6 |  |  |  | 0.7 | %
R&D credit |  |  | (6 | ) |  |  | 4.8 | % |  |  | (5 | ) |  |  | (0.4 | )% |  |  | (1 | ) |  |  | (0.1 | )%
Uncertain tax positions |  |  | 7 |  |  |  | (5.6 | )% |  |  | 2 |  |  |  | 0.2 | % |  |  | (6 | ) |  |  | (0.7 | )%
Other, net |  |  | 1 |  |  |  | (0.8 | )% |  |  | 10 |  |  |  | 0.9 | % |  |  | — |  |  |  | — | %
Total effective tax rate |  | $ | (72 | ) |  |  | 58.1 | % |  | $ | 159 |  |  |  | 13.8 | % |  | $ | 165 |  |  |  | 18.1 | %
The following table sets forth the Company’s income (loss) before income taxes for its U.S. and international operations for the years ended December 31, 2019, 2018, and 2017.
|  | Year Ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
U.S. operations (including exports) |  | $ | (375 | ) |  | $ | 114 |  |  | $ | (306 | )
International operations |  |  | 251 |  |  |  | 1,041 |  |  |  | 1,218 |
Total (loss) income before income taxes |  | $ | (124 | ) |  | $ | 1,155 |  |  | $ | 912 |
U.S. Tax Reform With respect to U.S. tax reform, while management has completed its analysis within the applicable measurement period, pursuant to Staff Accounting Bulletin No. 118 as issued by the SEC, the Company accounts for the tax impacts of new provisions based on interpretation of existing statutory law, including proposed regulations issued by the U.S. Treasury and the Internal Revenue Service (“IRS”). While there can be no assurances as to the effect of any final regulations on the Company’s provision for (benefit from) income taxes, management will continue to evaluate the impacts as any issued regulations become final and adjust our estimates, as appropriate. At December 31, 2019, management believed that sufficient liquidity was available in the U.S. As a result, the Company is indefinitely reinvested with respect to the historical unremitted pre-2018 Earnings and Profits (“E&P”) of its foreign subsidiaries, which was approximately $440 at December 31, 2019. Management asserts that it is indefinitely reinvested with respect to current year earnings from certain foreign subsidiaries, and therefore, has not recorded deferred tax liabilities with respect to those earnings. At December 31, 2019, deferred tax liabilities for foreign subsidiaries that are not indefinitely reinvested were not material to the Company’s consolidated financial statements. The potential tax implications of the repatriation of unremitted earnings are driven by the facts at the time of distribution; however, due to U.S. tax reform and the U.S. Transition Tax, the incremental cost to repatriate earnings is not expected to be material if a distribution is made in the future as there are minimal foreign withholding taxes in the applicable foreign jurisdictions. Other Matters For the year ended December 31, 2019, the Company recorded $5 of valuation allowance on certain foreign subsidiary earnings and $3 of valuation allowance on certain foreign tax credits. Under the tax laws of various jurisdictions in which the Company operates, deductions or credits that cannot be fully utilized for tax purposes during the current year may be carried forward or back, subject to statutory limitations, to reduce taxable income or taxes payable in future or prior years. At December 31, 2019, the Company’s U.S federal and state tax losses amounted to $13, which substantially expire between 2036 and 2038. The Company also had U.S. foreign tax credit carryforwards of $18, which expire in 2026, and $24 in R&D tax credits, which expire between 2035 and 2039. Lastly, the Company had foreign net operating losses of $3, which expire between 2026 and 2029. Each year, Chemours and/or its subsidiaries file income tax returns in the U.S. federal jurisdiction and various states and non-U.S. jurisdictions. The following table sets forth the Company’s significant jurisdictions’ tax returns that are subject to examination by their respective taxing authorities for the open years listed.
Jurisdiction |  | Open Years
China |  | 2015 through 2019
India |  | 2015 through 2019
Mexico |  | 2013 through 2019
Netherlands |  | 2015 through 2019
Singapore |  | 2015 through 2019
Switzerland |  | 2015 through 2019
Taiwan |  | 2015 through 2019
U.S. |  | 2015 through 2019
Positions challenged by the taxing authorities may be settled or appealed by Chemours and/or DuPont in accordance with the tax matters agreement. As a result, income tax uncertainties are recognized in the Company’s consolidated financial statements in accordance with accounting for income taxes, when applicable. The following table sets forth the change in the Company’s unrecognized tax benefits for the years ended December 31, 2019, 2018, and 2017.
|  | Year Ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Balance at January 1, |  | $ | 2 |  |  | $ | — |  |  | $ | 6 |
Gross amounts of decreases in unrecognized tax benefits as a result of adjustments to tax provisions taken during the prior period |  |  | — |  |  |  | — |  |  |  | (6 | )
Gross amounts of increases in unrecognized tax benefits as a result of tax positions taken during the current period |  |  | 7 |  |  |  | 2 |  |  |  | — |
Reduction to unrecognized tax benefits as a result of a lapse of the applicable statute of limitations |  |  | — |  |  |  | — |  |  |  | — |
Balance at December 31, |  | $ | 9 |  |  | $ | 2 |  |  | $ | — |
Total unrecognized tax benefits, if recognized, that would impact the effective tax rate |  | $ | 9 |  |  | $ | 2 |  |  | $ | — |
Total amount of interest and penalties recognized in the consolidated statements of operations |  |  | — |  |  |  | — |  |  |  | — |
Total amount of interest and penalties recognized in the consolidated balance sheets |  |  | — |  |  |  | — |  |  |  | — |
The following table sets forth a rollforward of the Company’s deferred tax asset valuation allowance for the years ended December 31, 2019, 2018, and 2017.
|  | Year Ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Balance at January 1, |  | $ | 2 |  |  | $ | 17 |  |  | $ | 50 |
Net charges to income tax expense |  |  | 8 |  |  |  | — |  |  |  | — |
Release of valuation allowance |  |  | — |  |  |  | (15 | ) |  |  | (33 | )
Balance at December 31, |  | $ | 10 |  |  | $ | 2 |  |  | $ | 17 |

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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