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Income Taxes
 12 Months Ended
Dec. 31, 2024
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, 2024, 2023 and 2022.

 

 

 

Year Ended December 31,

 

 

 

2024

 

 

2023

 

 

2022

 

Current tax expense (benefit):

 

 

 

 

 

 

 

 

 

U.S. federal

 

$

6

 

 

$

25

 

 

$

83

 

U.S. state and local

 

 

—

 

 

 

(5

)

 

 

13

 

International

 

 

62

 

 

 

57

 

 

 

47

 

Total current tax expense

 

 

68

 

 

 

77

 

 

 

143

 

Deferred tax (benefit) expense:

 

 

 

 

 

 

 

 

 

U.S. federal

 

 

(11

)

 

 

(112

)

 

 

8

 

U.S. state and local

 

 

(10

)

 

 

(24

)

 

 

(2

)

International

 

 

(6

)

 

 

(22

)

 

 

14

 

Total deferred tax (benefit) expense

 

 

(27

)

 

 

(158

)

 

 

20

 

Total provision for (benefit from) income taxes

 

$

41

 

 

$

(81

)

 

$

163

 

 

The following table sets forth the components of the Company’s deferred tax assets and liabilities at December 31, 2024 and 2023.

 

 

 

December 31,

 

 

 

2024

 

 

2023

 

Deferred tax assets:

 

 

 

 

 

 

Environmental and other liabilities

 

$

188

 

 

$

196

 

Employee related and benefit items

 

 

48

 

 

 

41

 

Other assets and accrual liabilities

 

 

140

 

 

 

133

 

Intangible Assets

 

 

124

 

 

 

155

 

Tax attribute carryforwards

 

 

234

 

 

 

200

 

Operating lease liability

 

 

60

 

 

 

63

 

Total deferred tax assets

 

 

794

 

 

 

788

 

Less: Valuation allowance

 

 

(134

)

 

 

(165

)

Total deferred tax assets, net

 

 

660

 

 

 

623

 

Deferred tax liabilities:

 

 

 

 

 

 

Property, plant, and equipment and intangible assets

 

 

(279

)

 

 

(240

)

LIFO inventories

 

 

(14

)

 

 

(8

)

Operating lease asset

 

 

(63

)

 

 

(63

)

Other liabilities

 

 

(48

)

 

 

(53

)

Total deferred tax liabilities

 

 

(404

)

 

 

(364

)

Deferred tax assets, net

 

$

256

 

 

$

259

 

 

The following table sets forth an analysis of the Company’s effective tax rates for the years ended December 31, 2024, 2023 and 2022.

 

 

 

Year Ended December 31,

 

 

 

2024

 

 

2023

 

 

2022

 

 

 

$

 

 

%

 

 

$

 

 

%

 

 

$

 

 

%

 

Statutory U.S. federal income tax rate

 

$

27

 

 

 

21.0

%

 

$

(67

)

 

 

21.0

%

 

$

156

 

 

 

21.0

%

State income taxes, net of federal benefit

 

 

(10

)

 

 

(7.9

)%

 

 

(28

)

 

 

8.8

%

 

 

7

 

 

 

1.0

%

Lower effective tax rate on international operations, net

 

 

(6

)

 

 

(4.7

)%

 

 

55

 

 

 

(17.3

)%

 

 

(16

)

 

 

(2.2

)%

Basis difference in intangible assets, net

 

 

(1

)

 

 

(0.8

)%

 

 

(12

)

 

 

3.8

%

 

 

—

 

 

 

—

%

Tax exempt income

 

 

—

 

 

 

—

%

 

 

(24

)

 

 

7.5

%

 

 

—

 

 

 

—

%

Non - deductible expenses

 

 

13

 

 

 

10.3

%

 

 

11

 

 

 

(3.4

)%

 

 

1

 

 

 

0.1

%

Goodwill

 

 

12

 

 

 

9.5

%

 

 

—

 

 

 

—

%

 

 

—

 

 

 

—

%

Depletion

 

 

(4

)

 

 

(3.1

)%

 

 

(4

)

 

 

1.3

%

 

 

(6

)

 

 

(0.8

)%

Exchange gains

 

 

(6

)

 

 

(4.7

)%

 

 

(16

)

 

 

5.0

%

 

 

(8

)

 

 

(1.1

)%

Provision to return and other adjustments

 

 

16

 

 

 

12.7

%

 

 

(6

)

 

 

1.9

%

 

 

(2

)

 

 

(0.3

)%

Valuation allowance

 

 

—

 

 

 

—

%

 

 

15

 

 

 

(4.7

)%

 

 

4

 

 

 

0.5

%

Executive compensation limitation

 

 

1

 

 

 

0.8

%

 

 

9

 

 

 

(2.8

)%

 

 

3

 

 

 

0.5

%

Stock-based compensation

 

 

(1

)

 

 

(0.8

)%

 

 

(13

)

 

 

4.1

%

 

 

(9

)

 

 

(1.2

)%

R&D credit

 

 

(7

)

 

 

(5.5

)%

 

 

(8

)

 

 

2.5

%

 

 

(7

)

 

 

(0.9

)%

Uncertain tax positions

 

 

5

 

 

 

3.9

%

 

 

7

 

 

 

(2.2

)%

 

 

36

 

 

 

4.9

%

Other, net

 

 

2

 

 

 

1.6

%

 

 

—

 

 

 

—

%

 

 

4

 

 

 

0.5

%

Total effective tax rate

 

$

41

 

 

 

32.3

%

 

$

(81

)

 

 

25.5

%

 

$

163

 

 

 

22.0

%

 

In 2023, the Company received a ruling from the Swiss tax authorities which resulted in the recognition of a deferred tax asset related to intangibles and an accompanying valuation allowance. The current year movement of this ruling continues to be presented net of the valuation allowance in the effective tax rate reconciliation above.

 

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, 2024, 2023 and 2022.

 

 

 

Year Ended December 31,

 

 

 

2024

 

 

2023

 

 

2022

 

U.S. operations (including exports)

 

$

(199

)

 

$

(638

)

 

$

217

 

International operations

 

 

326

 

 

 

320

 

 

 

524

 

Income (loss) before income taxes

 

$

127

 

 

$

(318

)

 

$

741

 

 

Management asserts that it is indefinitely reinvested with respect to all undistributed earnings prior to 2018 and, therefore, has not recorded deferred tax liabilities with respect to those earnings. Beginning in 2018, management determined that the Company’s earnings from certain foreign subsidiaries are not indefinitely reinvested and presumed such earnings will be distributed to the U.S. At December 31, 2024 and 2023, deferred tax liabilities for the foreign subsidiaries that are not indefinitely reinvested were not material to the Company’s consolidated financial statements. At December 31, 2024, the amount of indefinitely reinvested unremitted earnings was approximately $522. The potential tax implications of the repatriation of unremitted earnings are driven by the facts at the time of distribution; however, the incremental cost to repatriate earnings is expected to be primarily related to withholding taxes and is not expected to be material.

 

The Company reviews its tax return positions, taking into account the progress of audits by various taxing jurisdictions and other changes in relevant facts and circumstances evident at each balance sheet date. At December 31, 2024, the Company recognized net tax expense of $6 related to uncertain tax positions specific to transfer pricing and the treatment of discrete intercompany transactions. The Company maintains its as filed tax positions are appropriate and supportable.

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, 2024, the Company’s state net operating losses amounted to $22, which substantially expire between 2027 and 2043. The Company has foreign net operating losses of $41, which have various expiration dates between 2029 through 2044, as well as unlimited carryforward periods, and $19 of certain foreign tax credits, which expire between 2029 and 2034.

 

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

 

2019 through 2024

India

 

2016 through 2024

Mexico

 

2019 through 2024

Netherlands

 

2023 through 2024

Singapore

 

2019 through 2024

Switzerland

 

2019 through 2024

Taiwan

 

2023 through 2024

U.S.

 

2017 through 2024

 

Positions challenged by the taxing authorities may be settled or appealed by Chemours and/or EID 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, 2024, 2023 and 2022.

 

 

Year Ended December 31,

 

 

 

2024

 

 

2023

 

 

2022

 

Balance at January 1,

 

$

73

 

 

$

65

 

 

$

5

 

Gross amounts of increases and decreases in unrecognized tax benefits as a result of adjustments to tax provisions taken during the prior period

 

 

—

 

 

 

2

 

 

 

54

 

Gross amounts of increases and decreases in unrecognized tax benefits as a result of tax positions taken during the current period

 

 

9

 

 

 

6

 

 

 

6

 

Reduction to unrecognized tax benefits as a result of a lapse of the applicable statute of limitations

 

 

—

 

 

 

—

 

 

 

—

 

Balance at December 31,

 

$

82

 

 

$

73

 

 

$

65

 

 

 

 

 

 

 

 

 

 

 

Total unrecognized tax benefits, if recognized, that would impact the effective tax rate

 

$

54

 

 

$

48

 

 

$

42

 

Total amount of interest and penalties recognized in the consolidated statements of operations

 

 

5

 

 

 

4

 

 

 

4

 

Total amount of interest and penalties recognized in the consolidated balance sheets

 

 

13

 

 

 

8

 

 

 

4

 

 

As of December 31, 2024, the total amount of unrecognized tax benefits was $82, of which $54 was recorded in other liabilities and $28 was recorded as an offset to deferred tax assets. These unrecognized tax benefits primarily relate to transfer pricing matters and the treatment of discrete intercompany transactions. In addition, accruals of $13 have been recorded for penalties and interest, as of December 31, 2024, in other liabilities. These liabilities at December 31, 2024 were reduced by $38 for offsetting benefits from the corresponding effects of potential transfer pricing adjustments included in other assets.

The following table sets forth a rollforward of the Company’s deferred tax asset valuation allowance for the years ended December 31, 2024, 2023 and 2022.

 

 

 

Year Ended December 31,

 

 

 

2024

 

 

2023

 

 

2022

 

Balance at January 1,

 

$

165

 

 

$

12

 

 

$

8

 

Charges to income tax expense

 

 

1

 

 

 

153

 

 

 

4

 

Reduction of valuation allowance

 

 

(32

)

 

 

—

 

 

 

—

 

Balance at December 31,

 

$

134

 

 

$

165

 

 

$

12

 

 

For the years ended December 31, 2024, 2023, and 2022 the Company recorded $(31), $153, and $4 of valuation allowance, respectively. For the year ended December 31, 2024, the net change in valuation allowance was a $31 decrease primarily related to deferred tax assets of its Taiwan and Switzerland subsidiaries, which are now considered realizable.

 

For the year ended December 31, 2023 there was a plant closure in Taiwan during the third quarter of 2023, the Company recorded an income tax expense of $13 related to the recognition of a valuation allowance on the deferred tax assets of one of its Taiwan subsidiaries. The Company has evaluated all available positive and negative evidence, including the reversal of certain deferred liabilities, as well as the future projections of profitability for the plant shutdown. As a result, the Company determined that a majority of its deferred tax assets related to the Taiwanese subsidiary are not more likely than not to be realized and accordingly recorded a valuation allowance against those deferred tax assets. In addition, the Company recorded income tax expense of $138 related to the valuation allowance on certain deferred tax assets in its Switzerland subsidiaries. This directly relates to a deferred tax asset recorded in 2023 in conjunction with a Swiss ruling received in the fourth quarter. The valuation allowance was recorded specifically due to the limitations in the realizability and deductibility of the new deferred tax asset related to intangible assets and has no further impact to the remaining deferred tax assets of Switzerland subsidiaries. The remaining valuation allowance recorded was related to certain foreign tax credits and state net operating losses. For the year ended December 31, 2022, the Company recorded a valuation allowance of $3 against certain foreign tax credits, as well as $1 of valuation allowance on state net operating losses.