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Income Taxes | 12 Months Ended
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Dec. 31, 2022
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Loss before income taxes (pre-tax income (loss)) was as follows:
|  | Year Ended December 31,
(in millions) |  | 2022 |  | 2021 |  | 2020
Domestic loss |  | $ | (149) |  |  | $ | (68) |  |  | $ | (186) |
Foreign income |  | 22 |  |  | 43 |  |  | 47 |
Loss Before Income Taxes |  | $ | (127) |  |  | $ | (25) |  |  | $ | (139) |
Provision (benefit) for income taxes were as follows:
|  | Year Ended December 31,
(in millions) |  | 2022 |  | 2021 |  | 2020
Federal Income Taxes |  |  |  |  |  |
Current |  | $ | 30 |  |  | $ | 6 |  |  | $ | (22) |
Deferred |  | 14 |  |  | (23) |  |  | (17) |
Foreign Income Taxes |  |  |  |  |  |
Current |  | 9 |  |  | 15 |  |  | 18 |
Deferred |  | (2) |  |  | 2 |  |  | (4) |
State Income Taxes |  |  |  |  |  |
Current |  | 8 |  |  | 3 |  |  | 5 |
Deferred |  | (4) |  |  | — |  |  | (1) |
Total Provision (Benefit) |  | $ | 55 |  |  | $ | 3 |  |  | $ | (21) |
A reconciliation of the U.S. federal statutory income tax rate to the consolidated effective income tax rate was as follows:
|  | Year Ended December 31,
|  | 2022 |  | 2021 |  | 2020
U.S. federal statutory income tax rate |  | 21.0 | % |  | 21.0 | % |  | 21.0 | %
Nondeductible expenses |  | (3.5) | % |  | (15.5) | % |  | (2.1) | %
Change in valuation allowance for deferred tax assets |  | (8.0) | % |  | (20.4) | % |  | 0.6 | %
State taxes, net of federal benefit |  | (2.4) | % |  | (8.6) | % |  | (2.1) | %
Tax-exempt income, credits and incentives |  | 3.0 | % |  | 38.4 | % |  | 5.1 | %
Foreign rate differential adjusted for U.S. taxation of foreign profits(1) |  | (1.9) | % |  | (11.1) | % |  | (0.9) | %
Divestitures |  | (17.9) | % |  | 2.1 | % |  | — | %
Impairments(2) |  | (39.8) | % |  | (3.1) | % |  | — | %
Unrecognized tax benefits |  | 6.6 | % |  | 0.8 | % |  | (1.2) | %
Audit and other tax adjustments |  | (1.2) | % |  | (22.9) | % |  | (5.3) | %
Excess tax benefits |  | 0.6 | % |  | 7.5 | % |  | — | %
Other(3) |  | (0.4) | % |  | 2.1 | % |  | — | %
Effective Income Tax Rate |  | (43.9) | % |  | (9.7) | % |  | 15.1 | %
_______________ (1) The “Foreign rate differential adjusted for U.S. taxation of foreign profits” includes the U.S. tax, net of foreign tax credits, associated with actual and deemed repatriations of earnings from our non-U.S. subsidiaries. (2) Impairment represents adjustments for the non-deductible component of goodwill in 2022 and impairment of an equity investment in 2021. (3) In 2022, the "Other" line includes immaterial reconciling items. In 2021, the "Other" line includes two reconciling items above 5% of the federal statutory rate. The impact to the effective rate is driven by the low pretax book income in 2021, and these items are otherwise immaterial. On a consolidated basis, the Company paid $53 million and $25 million and received a refund of $1 million in combined income taxes to federal, foreign and state jurisdictions during the three years ended December 31, 2022, 2021 and 2020, respectively. Unrecognized Tax Benefits and Audit Resolutions The Company recognizes tax liabilities when, despite its belief that its tax return positions are supportable, the Company believes that certain positions may not be fully sustained upon review by tax authorities. Each period the Company assesses uncertain tax positions for recognition, measurement and effective settlement. Benefits from uncertain tax positions are measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon settlement. Where the Company has determined that its tax return filing position does not satisfy the more-likely-than-not recognition threshold, the Company has recorded no tax benefits. The Company is also subject to ongoing tax examinations in numerous jurisdictions due to the extensive geographical scope of its operations. Ongoing assessments of the more-likely-than-not outcomes of the examinations and related tax positions require judgment and can increase or decrease the Company's effective tax rate, as well as impact its operating results. The specific timing of when the resolution of each tax position will be reached is uncertain. As of December 31, 2022, the Company had $12 million of unrecognized tax benefits that, if recognized, would impact the Company's effective tax rate. A reconciliation of the beginning and ending amount of unrecognized tax benefits was as follows:
(in millions) |  | 2022 |  | 2021 |  | 2020
Balance at January 1 |  | $ | 23 |  |  | $ | 23 |  |  | $ | 24 |
Additions related to prior years positions |  | 1 |  |  | 3 |  |  | 3 |
Reductions related to prior years positions |  | (2) |  |  | (3) |  |  | — |
Settlements with taxing authorities |  | (5) |  |  | — |  |  | (4) |
Lapse of Statute of limitations |  | (5) |  |  | — |  |  | — |
Balance at December 31 |  | $ | 12 |  |  | $ | 23 |  |  | $ | 23 |
The Company maintains offsetting benefits from other jurisdictions of $1 million, $12 million and $15 million, at December 31, 2022, 2021 and 2020, respectively. The Company recognized interest and penalties accrued on unrecognized tax benefits within income tax expense. The Company had $3 million, $12 million and $13 million accrued for the payment of interest and penalties associated with unrecognized tax benefits at December 31, 2022, 2021 and 2020, respectively. We are subject to federal income taxes in the U.S. and to income taxes in various states and foreign jurisdictions. In the U.S., the Company is no longer subject to U.S. federal income tax examinations for years before 2017. With limited exceptions, as of December 31, 2022, we are no longer subject to state, local or foreign examinations by tax authorities for years before 2017. Deferred Income Taxes The Company is indefinitely reinvested in the undistributed earnings of its foreign subsidiaries with respect to the U.S. These foreign subsidiaries have aggregate cumulative undistributed earnings of $326 million as of December 31, 2022. For years after 2017, the Tax Reform does allow for certain earnings to be repatriated free from U.S. Federal taxes. However, the repatriation of earnings could give rise to additional tax liabilities. The Company has also not provided for deferred taxes on outside basis differences in its investments in its foreign subsidiaries. A determination of the unrecognized deferred taxes related to these other components of the Company's outside basis differences is not practicable. The Company has provided for deferred taxes with respect to certain unremitted earnings of foreign subsidiaries that are not indefinitely reinvested between foreign subsidiaries outside of the U.S. The tax effects of temporary differences that give rise to significant portions of the deferred taxes were as follows:
|  | December 31,
(in millions) |  | 2022 |  | 2021
Deferred Tax Assets |  |  |  |
Net operating losses and capital loss carryforward |  | $ | 99 |  |  | $ | 84 |
Operating reserves, accruals and deferrals |  | 46 |  |  | 49 |
Deferred compensation |  | 6 |  |  | 5 |
Settlement reserves |  | 12 |  |  | 18 |
Operating lease liabilities |  | 54 |  |  | 63 |
Tax credits |  | 6 |  |  | 42 |
Capitalized research and experimentation costs |  | 13 |  |  | — |
Other |  | 3 |  |  | 4 |
Subtotal |  | 239 |  |  | 265 |
Valuation allowance |  | (102) |  |  | (82) |
Total |  | $ | 137 |  |  | $ | 183 |
Deferred Tax Liabilities |  |  |  |
Intangibles and goodwill |  | $ | 44 |  |  | $ | 79 |
Depreciation |  | 90 |  |  | 85 |
Operating lease right-of-use assets |  | 49 |  |  | 56 |
Other |  | 17 |  |  | 18 |
Total |  | $ | 200 |  |  | $ | 238 |
Total Deferred Tax Assets (Liabilities), Net |  | $ | (63) |  |  | $ | (55) |
The deferred tax assets for the respective periods were assessed for recoverability and, where applicable, a valuation allowance was recorded to reduce the total deferred tax asset to an amount that will, more-likely-than-not, be realized in the future. The net change in the total valuation allowance for the years ended December 31, 2022 and 2021 was an increase of $20 million and a decrease of $1 million, respectively. The valuation allowance relates primarily to certain net operating loss carryforwards, tax credit carryforwards and deductible temporary differences for which the Company has concluded it is more-likely-than-not that these items will not be realized in the ordinary course of operations. Although realization is not assured, the Company has concluded that it is more-likely-than-not that the deferred tax assets, for which a valuation allowance was determined to be unnecessary, will be realized in the ordinary course of operations based on the available positive and negative evidence, including scheduling of deferred tax liabilities and projected income from operating activities. The amount of the net deferred tax assets considered realizable, however, could be reduced in the near term if actual future income or income tax rates are lower than estimated, or if there are differences in the timing or amount of future reversals of existing taxable or deductible temporary differences. At December 31, 2022, the Company had tax credit carryforwards of $6 million available to offset future income taxes, which will expire between 2027 and 2042, if not utilized. The following table presents the Company's worldwide net operating loss carryforwards (NOLs) as of December 31, 2022 and 2021:
|  | December 31, 2022 |  | December 31, 2021
(in millions) |  | Gross |  | Tax Effected |  | Gross |  | Tax Effected
U.S Federal NOLs limited by Section 382 of the Tax Code |  | $ | 4 |  |  | $ | 1 |  |  | $ | 5 |  |  | $ | 1 |
U.S. State NOLs |  | 367 |  |  | 19 |  |  | 542 |  |  | 30 |
Foreign NOLs |  | 304 |  |  | 76 |  |  | 199 |  |  | 50 |
Total |  | $ | 675 |  |  | $ | 96 |  |  | $ | 746 |  |  | $ | 81 |
The Company has $675 million of gross net operating loss carryforwards for income tax purposes including $531 million that will expire between 2023 and 2042, if not utilized, and $144 million available to offset future taxable income indefinitely. The Company had $6 million of capital loss carryforwards for income tax purposes that will expire in 2024, if not utilized, and $11 million available to offset future capital gains income indefinitely. The Company does not expect to receive a tax benefit for the majority of the NOLs presented above, as valuation allowances have been recorded against most of the state and foreign NOLs and capital losses.

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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 https://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 https://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 https://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 https://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 https://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 https://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 https://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 https://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 https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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