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Note 17 - Income Taxes | 12 Months Ended
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Dec. 31, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | NOTE 17: INCOME TAXES The components of earnings (loss) from continuing operations before income taxes and the related provision for U.S. and other income taxes were as follows (in millions):
|  | Year Ended December 31, |
|  | 2021 |  |  | 2020 |  |  | 2019 |
Earnings (Loss) earnings from continuing operations before income taxes: |  |  |  |  |  |  |  |  |  |  |  |
U.S. |  | $ | (12 | ) |  | $ | (388 | ) |  | $ | (68 | )
Outside the U.S. |  |  | 40 |  |  |  | 12 |  |  |  | 8 |
Total |  | $ | 28 |  |  | $ | (376 | ) |  | $ | (60 | )
U.S. income taxes: |  |  |  |  |  |  |  |  |  |  |  |
Current benefit |  | $ | — |  |  | $ | — |  |  | $ | — |
Deferred (benefit) provision |  |  | (1 | ) |  |  | 2 |  |  |  | — |
Income taxes outside the U.S.: |  |  |  |  |  |  |  |  |  |  |  |
Current provision (benefit) |  |  | 4 |  |  |  | (3 | ) |  |  | 7 |
Deferred provision |  |  | 1 |  |  |  | 169 |  |  |  | 24 |
Total provision |  | $ | 4 |  |  | $ | 168 |  |  | $ | 31 |
The differences between income taxes computed using the U.S. federal income tax rate and the provision for income taxes for continuing operations were as follows (in millions):
|  | Year Ended December 31, |
|  | 2021 |  |  | 2020 |  |  | 2019 |
Amount computed using the statutory rate |  | $ | 6 |  |  | $ | (79 | ) |  | $ | (13 | )
Increase (reduction) in taxes resulting from: |  |  |  |  |  |  |  |  |  |  |  |
Unremitted foreign earnings |  |  | (1 | ) |  |  | 2 |  |  |  | (1 | )
Operations outside the U.S. |  |  | 8 |  |  |  | 3 |  |  |  | 22 |
Legislative tax law and rate changes |  |  | (28 | ) |  |  | (11 | ) |  |  | 1 |
Valuation allowance |  |  | 20 |  |  |  | 220 |  |  |  | 11 |
Tax settlements and adjustments, including interest |  |  | (1 | ) |  |  | (43 | ) |  |  | 2 |
Embedded derivative liability |  |  | (1 | ) |  |  | 81 |  |  |  | 9 |
Other, net |  |  | 1 |  |  |  | (5 | ) |  |  | — |
Provision from income taxes |  | $ | 4 |  |  | $ | 168 |  |  | $ | 31 |
The significant components of deferred tax assets and liabilities were as follows (in millions):
|  | As of December 31, |
|  | 2021 |  |  | 2020 |
Deferred tax assets |  |  |  |  |  |  |  |
Pension and postretirement obligations |  | $ | — |  |  | $ | 25 |
Restructuring programs |  |  | 1 |  |  |  | 2 |
Leasing |  |  | 3 |  |  |  | 4 |
Foreign tax credit |  |  | 358 |  |  |  | 358 |
Inventories |  |  | 10 |  |  |  | 9 |
Investment tax credit |  |  | 33 |  |  |  | 42 |
Employee deferred compensation |  |  | 26 |  |  |  | 26 |
Depreciation |  |  | 37 |  |  |  | 36 |
Research and development costs |  |  | 42 |  |  |  | 40 |
Tax loss carryforwards |  |  | 499 |  |  |  | 480 |
Other deferred revenue |  |  | 2 |  |  |  | 2 |
Other |  |  | 85 |  |  |  | 89 |
Total deferred tax assets before valuation allowances |  | $ | 1,096 |  |  | $ | 1,113 |
Valuation allowances |  |  | (934 | ) |  |  | (1,112 | )
Total net deferred tax assets |  | $ | 162 |  |  | $ | 1 |
Deferred tax liabilities |  |  |  |  |  |  |  |
Pension and postretirement obligations |  | $ | (162 | ) |  | $ | — |
Goodwill/intangibles |  |  | (9 | ) |  |  | (10 | )
Unremitted foreign earnings |  |  | (20 | ) |  |  | (22 | )
Total deferred tax liabilities |  |  | (191 | ) |  |  | (32 | )
Net deferred tax liabilities |  | $ | (29 | ) |  | $ | (31 | )
Deferred tax liabilities are reported in the following component within the Consolidated Statement of Financial Position (in millions):
|  | As of December 31, |
|  | 2021 |  |  | 2020 |
Other long-term liabilities |  |  | (29 | ) |  |  | (31 | )
Net deferred tax liabilities |  | $ | (29 | ) |  | $ | (31 | )
As of December 31, 2021, Kodak had available domestic and foreign NOL carry-forwards for income tax purposes of approximately $2,058 million, of which approximately $866 million have an indefinite carry-forward period. The remaining $1,192 million expire between the years 2022 and 2038. As of December 31, 2021, Kodak had unused foreign tax credits and investment tax credits of $358 million and $33 million, respectively, with various expiration dates through 2035. Utilization of NOL carry-forwards and tax credits may be subject to limitations in the event of significant changes in stock ownership of the Company in the future. Section 382 of the Internal Revenue Code of 1986, as amended, imposes annual limitations on the utilization of NOL carryforwards, other tax carryforwards, and certain built-in losses as defined under that Section, upon an ownership change. In general terms, an ownership change may result from transactions that increase the aggregate ownership of certain stockholders in Kodak’s stock by more than 50 percentage points over a three-year testing period. Kodak had deferred tax liabilities of $20 million and $22 million for potential taxes on the undistributed earnings, including foreign withholding taxes, as of December 31, 2021 and 2020, respectively. Kodak’s valuation allowance as of December 31, 2021 was $934 million. Of this amount, $360 million was attributable to Kodak’s net deferred tax assets outside the U.S. of $351 million, and $574 million related to Kodak’s net deferred tax assets in the U.S. of $554 million, for which Kodak believes it is not more likely than not that the assets will be realized. Kodak’s valuation allowance as of December 31, 2020 was $1,112 million. Of this amount, $374 million was attributable to Kodak’s net deferred tax assets outside the U.S. of $364 million, and $738 million related to Kodak’s net deferred tax assets in the U.S. of $717 million, for which Kodak believes it is not more likely than not that the assets will be realized. As of March 31, 2020, Kodak determined that it was more likely than not that deferred tax assets outside the U.S. which were not offset with valuation allowances as of March 31, 2020 would not be realized due to reductions in estimates of future profitability as a result of the COVID-19 pandemic in locations outside the U.S. Accordingly, Kodak recorded a provision of $167 million associated with the establishment of a valuation allowance on those deferred tax assets. Accounting for Uncertainty in Income Taxes A reconciliation of the beginning and ending amount of Kodak’s liability for income taxes associated with unrecognized tax benefits is as follows (in millions):
|  | Year Ended December 31, |
|  | 2021 |  |  | 2020 |  |  | 2019 |
Balance as of January 1 |  | $ | 8 |  |  | $ | 54 |  |  | $ | 57 |
Tax positions related to the current year: |  |  |  |  |  |  |  |  |  |  |  |
Additions |  |  | — |  |  |  | — |  |  |  | — |
Tax positions related to prior years: |  |  |  |  |  |  |  |  |  |  |  |
Additions |  |  | — |  |  |  | 2 |  |  |  | 1 |
Reductions |  |  | (1 | ) |  |  | (42 | ) |  |  | (1 | )
Settlements with taxing jurisdictions |  |  | (3 | ) |  |  | (6 | ) |  |  | (3 | )
Balance as of December 31 |  | $ | 4 |  |  | $ | 8 |  |  | $ | 54 |
Kodak’s policy regarding interest and/or penalties related to income tax matters is to recognize such items as a component of provision for income taxes. Kodak had approximately $11 million and $14 million of interest and penalties associated with uncertain tax benefits accrued as of December 31, 2021 and 2020, respectively. Kodak had uncertain tax benefits of approximately $15 million and $22 million as of December 31, 2021 and 2020, respectively, that, if recognized, would affect the effective income tax rate. Kodak has classified certain income tax liabilities as current or noncurrent based on management’s estimate of when these liabilities will be settled. The current liabilities are recorded in Other current liabilities in the Consolidated Statement of Financial Position. Noncurrent income tax liabilities are recorded in Other long-term liabilities in the Consolidated Statement of Financial Position. It is reasonably possible that the liability associated with Kodak’s unrecognized tax benefits will increase or decrease within the next twelve months. These changes may be the result of settling ongoing audits or the expiration of statutes of limitations. Audit outcomes and the timing of audit settlements are subject to significant uncertainty. Although management believes that adequate provision has been made for such issues, there is the possibility that the ultimate resolution of such issues could have an adverse effect on the earnings of Kodak. Conversely, if these issues are resolved favorably in the future, the related provision would be reduced, thus having a positive impact on earnings. During 2021 Kodak agreed to terms with a taxing authority outside the U.S. and settled open tax audits for years through 2014. For these years Kodak originally recorded liabilities for unrecognized tax positions (“UTPs”) totaling $3 million (plus interest of approximately $4 million) which were substantially offset by prepaid assets. During 2020, Kodak agreed to terms with the IRS and settled the federal audit for calendar years 2013 and 2014. For these years, Kodak originally recorded a federal UTP totaling $41 million, which was fully offset by tax attributes. This settlement resulted in an increase in net deferred tax assets and was fully offset by a corresponding increase in Kodak’s U.S. valuation allowance, resulting in no net tax benefit. During 2019, Kodak reached a settlement outside of the U.S. and settled an audit for calendar years 2005-2008. Kodak originally recorded liabilities for UTPs totaling $3 million (plus interest of approximately $3 million). Kodak paid $2 million in 2019 as result of this settlement and paid the remaining $4 million in April 2020. Kodak is subject to taxation and files income tax returns in the U.S. federal jurisdiction and in many state and foreign jurisdictions. Kodak has substantially concluded all U.S. federal income tax matters for years through 2017 and state income tax matters for years through 2015 with the respective tax authorities. With respect to countries outside the U.S., Kodak has substantially concluded all material foreign income tax matters through 2013 with respective foreign tax jurisdiction authorities.

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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://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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