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Income Taxes | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The components of income (loss) before income taxes for the years ended December 31, (in millions):
|  | 2024 |  | 2023 |  | 2022
Domestic |  | $ | (708) |  |  | $ | (995) |  |  | $ | (698) |
Foreign |  | 448 |  |  | 452 |  |  | 855 |
Total |  | $ | (260) |  |  | $ | (543) |  |  | $ | 157 |
The provision for income taxes consists of the following for the years ended December 31, (in millions):
| 2024 |  | 2023 |  | 2022
Current: |  |  |  |  |
Federal | $ | (52) |  |  | $ | 56 |  |  | $ | (245) |
State | 10 |  |  | 1 |  |  | 6 |
Foreign | 112 |  |  | 71 |  |  | 102 |
Total current | 70 |  |  | 128 |  |  | (137) |
Deferred: |  |  |  |  |
Federal | (101) |  |  | (232) |  |  | 163 |
State | (15) |  |  | (40) |  |  | (34) |
Foreign | 2 |  |  | (11) |  |  | (32) |
Total deferred | (114) |  |  | (283) |  |  | 97 |
Total income tax provision (benefit) | $ | (44) |  |  | $ | (155) |  |  | $ | (40) |
A reconciliation of the U.S. statutory rate to the effective income tax rate on a continuing basis is as follows for the years ended December 31:
| 2024 |  | 2023 |  | 2022
Statutory rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
Add (deduct) effect of: |  |  |  |  |
State income taxes, net of federal income tax effect | 1.4 |  |  | 5.7 |  |  | (14.8) |
U.S. foreign inclusions and foreign tax credit (1) | (6.3) |  |  | (2.4) |  |  | (43.5) |
Foreign rate differential | 9.5 |  |  | 12.3 |  |  | (47.2) |
Change in uncertain tax positions (2) | 34.6 |  |  | — |  |  | 16.7 |
Change in valuation allowance reserve | (1.5) |  |  | (9.2) |  |  | (13.8) |
Impairments | — |  |  | 1.0 |  |  | 20.7 |
Sale of businesses | — |  |  | (0.9) |  |  | (21.2) |
Capital loss | 1.0 |  |  | 1.4 |  |  | — |
Reversal of outside basis difference | (0.3) |  |  | 11.2 |  |  | 1.6 |
Non-deductible compensation | (5.4) |  |  | (1.1) |  |  | 1.9 |
Return to provision | 0.6 |  |  | 1.5 |  |  | (11.3) |
Other taxes | (7.4) |  |  | (1.8) |  |  | 4.5 |
U.S. income inclusions on asset transfers | (28.4) |  |  | (10.1) |  |  | 50.3 |
Foreign exchange | 0.2 |  |  | — |  |  | 2.0 |
Other tax credits | 2.9 |  |  | 1.8 |  |  | 1.0 |
Other | (5.0) |  |  | (1.9) |  |  | 6.6 |
Effective rate | 16.9 | % |  | 28.5 | % |  | (25.5) | %
(1)The Company accounts for tax on global intangible low-taxed income (“GILTI”) as a period cost and the effects are included herein. (2)Includes $64 million, or 24.6%, income tax benefit as a result of the completion of tax authorities’ examination in the U.S. for the years 2011 to 2015 and Brazil for years 2015 to 2017. At December 31, 2024, the Company has accumulated unremitted earnings generated by our foreign subsidiaries of approximately $4.6 billion. A portion of these earnings were previously subject to U.S. federal taxation via various U.S. foreign inclusion provisions. The Company does not assert indefinite reinvestment on a portion of its unremitted earnings of certain foreign subsidiaries as of December 31, 2024 and recognized deferred income taxes of approximately $13 million, primarily related to the future withholding tax effects of those unremitted foreign earnings. With respect to unremitted earnings of $4.6 billion and any other additional outside basis differences where the Company is continuing to assert indefinite reinvestment, any future reversals could be subject to additional foreign withholding taxes, U.S. state taxes and certain tax impacts relating to foreign currency exchange effects on any future repatriations of the unremitted earnings. The determination of any unrecognized deferred tax liabilities on the amount of unremitted earnings and other outside basis differences where the Company is asserting indefinite reinvestment is not practicable. Deferred tax assets (liabilities) consist of the following at December 31, (in millions):
| 2024 |  | 2023
Deferred tax assets: |  |  |
Accruals | $ | 180 |  |  | $ | 190 |
Inventory | 73 |  |  | 74 |
Pension and postretirement benefits | 34 |  |  | 38 |
Net operating losses | 302 |  |  | 322 |
Foreign tax credits | 16 |  |  | 16 |
Capital loss carryforward | 36 |  |  | 43 |
Operating lease liabilities | 139 |  |  | 153 |
Capitalized research and development expenses | 79 |  |  | 68 |
Interest expense carryforward | 134 |  |  | 91 |
Amortizable intangibles | 16 |  |  | — |
Financial instruments | — |  |  | 35 |
Other | 82 |  |  | 87 |
Total gross deferred tax assets | 1,091 |  |  | 1,117 |
Less valuation allowance | (171) |  |  | (184) |
Net deferred tax assets after valuation allowance | 920 |  |  | 933 |
Deferred tax liabilities: |  |  |
Accelerated depreciation | (110) |  |  | (112) |
Amortizable intangibles | — |  |  | (69) |
Operating lease assets | (122) |  |  | (140) |
Financial instruments | (10) |  |  | — |
Other | (50) |  |  | (47) |
Total gross deferred tax liabilities | (292) |  |  | (368) |
Net deferred tax assets | $ | 628 |  |  | $ | 565 |
The net deferred tax amounts have been classified in the balance sheet at December 31, (in millions):
|  | 2024 |  | 2023
Noncurrent deferred tax assets |  | $ | 806 |  |  | $ | 806 |
Noncurrent deferred tax liabilities |  | (178) |  |  | (241) |
Net deferred tax assets |  | $ | 628 |  |  | $ | 565 |
At December 31, 2024, the Company has net operating losses (“NOLs”) of approximately $1.2 billion, which comprise of $150 million in the U.S. and $1.0 billion outside of the U.S. Approximately $794 million of these NOLs do not expire and approximately $395 million expire between 2025 and 2044. At December 31, 2024, the Company has approximately $1.7 billion of post-apportioned state NOLs of which $782 million do not expire and $964 million expire between 2025 and 2044. The Company has U.S. foreign tax credits of $16 million which expire between 2028 and 2033. The Company has approximately $139 million of U.S. capital loss carryforwards of which approximately $84 million were generated at December 31, 2020, $42 million were generated at December 31, 2021 and $13 million were generated at December 31, 2024. These U.S. capital loss carryforwards can be carried back three years and carried forward five years. The Company has approximately $192 million of post-apportioned state capital loss carryforwards of which $27 million was generated at December 31, 2018, $148 million was generated at December 31, 2020, $13 million was generated at December 31, 2021 and $4 million was generated at December 31, 2022. Of these post-apportioned state capital loss carryforwards, $134 million can be carried back three years and carried forward five years, and $58 million can be carried forward five years. The Company had a noncurrent income tax receivable of $311 million and $290 million as of December 31, 2024 and 2023, respectively. In 2024, the Company paid $25 million of tax for the one-time toll charge incurred in 2017 related to the Tax Credits and Jobs Act as the Internal Revenue Service (“IRS”) has not yet processed the amended 2017 tax return, which the Company filed during the year ended December 31, 2022. The 2017 U.S. federal income tax return was amended to carry back foreign tax credits generated in 2018 and capital losses generated in 2018 and 2020. The Company routinely reviews valuation allowances recorded against deferred tax assets on a more likely than not basis as to whether the Company will realize the deferred tax assets. In making such a determination, the Company takes into consideration all available and appropriate positive and negative evidence, including projected future taxable income, future reversals of existing taxable temporary differences, the ability to carryback net operating losses, and available tax planning strategies. Although realization is not assured, based on this existing evidence, the Company believes it is more likely than not that the Company will realize the benefit of existing deferred tax assets, net of the valuation allowances. At December 31, 2024, the Company has a valuation allowance recorded against certain deferred tax assets, primarily state and foreign NOLs, foreign capital losses and U.S. foreign tax credits, which the Company believes do not meet the more likely than not threshold to be realized due to uncertainty of future taxable income within the applicable tax jurisdictions. A valuation allowance of $171 million and $184 million was recorded against certain deferred tax asset balances at December 31, 2024 and 2023, respectively. For 2024, the Company recorded a net valuation allowance decrease of $13 million, primarily related to the utilization of NOLs in Argentina due to improved ongoing operations, the write-off of NOLs, capital losses and corresponding valuation allowances due to liquidation of various subsidiaries in Canada, Luxembourg and Hong Kong, netted with recording additional valuation allowances due to excess interest expense in Luxembourg, as well as other miscellaneous changes in the U.S., state and non-U.S. valuation allowances related to ongoing operations. For 2023, the Company recorded a net valuation allowance increase of $36 million, primarily related to NOLs in Switzerland, Luxembourg and Argentina and capital losses in Hong Kong, netted with a write-off of NOLs and the related valuation allowance resulting from the liquidation of various subsidiaries in Luxembourg, Netherlands and China, as well as other miscellaneous changes in the U.S., state and non-U.S. valuation allowances related to ongoing operations. The following table summarizes the changes in gross unrecognized tax benefits periods indicated are as follows (in millions):
| 2024 |  | 2023 |  | 2022
Unrecognized tax benefits, January 1, | $ | 463 |  |  | $ | 476 |  |  | $ | 457 |
Increases (decreases): |  |  |  |  |
Increases in tax positions for prior years | 5 |  |  | — |  |  | 1 |
Decreases in tax positions for prior years | (90) |  |  | (19) |  |  | (3) |
Increase in tax positions for the current period | 5 |  |  | 12 |  |  | 44 |
Settlements with taxing authorities | (24) |  |  | — |  |  | (13) |
Lapse of statute of limitations | (4) |  |  | (6) |  |  | (10) |
Unrecognized tax benefits, December 31, | $ | 355 |  |  | $ | 463 |  |  | $ | 476 |
If recognized, $316 million, $387 million and $412 million of unrecognized tax benefits at December 31, 2024, 2023 and 2022, respectively, would affect the effective tax rate. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits as a component of income tax expense. During 2024, the Company recognized an income tax benefit on interest and penalties of $12 million, due to the effective settlement of various tax positions under examination by the IRS further described hereafter, and offset by the accrual of current year interest on existing positions. During 2023 and 2022, the Company recognized income tax expense on interest and penalties of $9 million and $5 million, respectively, due to the accrual of current year interest on existing positions offset by the resolution of certain tax contingencies. The Company does not anticipate any material unrecognized tax benefits will reverse within the next 12 months. It is reasonably possible due to statutes of limitation expiration, as well as activities of various worldwide taxing authorities, including proposed assessments of additional tax and possible settlement of audit issues, that additional changes to the Company’s unrecognized tax benefits could occur. In the normal course of business, the Company is subject to audits by worldwide taxing authorities regarding various tax liabilities. The Company’s U.S. federal income tax returns for 2017 to 2020, as well as certain state and non-U.S. income tax returns for various years, are under examination. On May 14, 2024, the Company received a Statutory Notice of Deficiency (“Notice”) from the IRS for the tax years 2011 to 2015. The Company agreed to certain adjustments raised by the IRS in the Notice. Accordingly, the Company has concluded that various income tax positions taken by the Company have been effectively settled, with the exception of the matter the Company intends to dispute as further described hereafter. On July 19, 2024, the Company filed a petition in the U.S. Tax Court disputing the proposed assessment of $80 million in additional taxes plus $34 million in penalties plus the additional interest calculated upon final settlement related to the transfer pricing of services performed by certain of the Company’s foreign affiliates for the tax years 2011 to 2015. The Company believes that adequate amounts have been reserved for any adjustments that may ultimately result. If the IRS prevails in the assessment of additional tax, interest and penalties in excess of the Company’s current reserves, such outcome could have a material adverse effect on the Company’s financial position and results. The Company files numerous consolidated and separate income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. The statute of limitations for the Company’s U.S. federal income tax returns has expired for years prior to 2011 and for 2016. With few exceptions, the Company is no longer subject to other income tax examinations for years before 2016.

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