XML 22 R13.htm IDEA: XBRL DOCUMENT v3.23.2
Income Taxes
 6 Months Ended
Jun. 30, 2023
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Income tax provisions for interim periods are based on estimated annual income tax rates, adjusted to reflect the effects of any significant infrequent or unusual items which are required to be discretely recognized within the current interim period. The Company expects that a majority of its foreign earnings will be repatriated back to the United States ("U.S."). As a result, the effective tax rates in the periods presented are largely based upon the forecasted pre-tax earnings mix and allocation of certain expenses in various taxing jurisdictions where the Company conducts its business.

The effective tax rate is as follows:
 Three Months Ended June 30,Six Months Ended June 30,
In millions2023202220232022
Effective tax rate29.2 %972.0 %30.5 %41.8 %

For the three months ended June 30, 2023, the Company had no material discrete tax adjustments.
For the six months ended June 30, 2023, the Company recorded $2 million of net discrete tax benefits, a majority of which related to the excess tax benefit derived from stock-based compensation vesting.
For the three months ended June 30, 2022, the Company recorded $4 million of net discrete tax expense, a majority of which related to the recording of a valuation allowance against the current tax receivable and deferred tax asset balance that is not expected to be realized as a result of the discontinuation of the Company’s business in Russia in the first quarter of 2022. As a result of this tax expense, the Company’s effective tax rate for the quarter was 972%.
For the six months ended June 30, 2022, the Company recorded $1 million of net discrete tax benefits, a majority of which related to the excess tax benefit derived from $6 million of stock compensation vesting, offset by $5 million of discrete tax expense associated with valuation allowances against the current tax receivable and deferred tax asset balance that is not expected to be realized as a result of the discontinuation of the Company’s business in Russia in the first quarter of 2022.
The Company estimates its annual effective tax rate for 2023 to be approximately 34.0%, which takes into consideration, among other things, the forecasted earnings mix by jurisdiction and the impact of discrete tax items to be recognized in 2023. Under U.S. tax law, U.S. shareholders are subject to a tax on global intangible low-taxed income ("GILTI") earned by certain foreign subsidiaries. The Company has elected to provide for the tax expense related to GILTI in the year in which the tax is incurred. Effective on January 1, 2022, the U.S. tax law changed and now requires R&D expenses to be capitalized and amortized for tax purposes under Internal Revenue Code Section 174; as a result of this law change, the Company is currently forecasting approximately $2 million of tax expense related to GILTI in our marginal effective tax rate for 2023.