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EIDP Income Taxes (Tables)

12 Months Ended

Dec. 31, 2022

Geographic Allocation of Income and Provision for Income Taxes

Geographic Allocation of Income (Loss) and Provision for (Benefit from) Income Taxes			For the Year Ended December 31,
(In millions)			2022			2021			2020
Income (loss) from continuing operations before income taxes
Domestic			$	(1)		$	941		$	(83)
Foreign			1,427			1,405			758
Income (loss) from continuing operations before income taxes			$	1,426		$	2,346		$	675
Current tax expense (benefit)
Federal			$	65		$	(13)		$	28
State and local			21			6			9
Foreign			403			329			222
Total current tax expense (benefit)			$	489		$	322		$	259
Deferred tax expense (benefit)
Federal			$	(170)		$	164		$	(116)
State and local			(39)			55			27
Foreign			(70)			(17)			(251)
Total deferred tax expense (benefit)			$	(279)		$	202		$	(340)
Provision for (benefit from) income taxes on continuing operations			210			524			(81)
Net income (loss) from continuing operations after taxes			$	1,216		$	1,822		$	756

Reconciliation to US Statutory Rate

Reconciliation to U.S. Statutory Rate			For the Year Ended December 31,
			2022			2021			2020
Statutory U.S. federal income tax rate			21.0		%	21.0		%	21.0		%
Effective tax rates on international operations - net1			(3.5)			(2.5)			(13.9)
Acquisitions, divestitures and ownership restructuring activities2			(5.4)			(0.1)			(0.3)
U.S. research and development credit			(2.2)			(2.4)			(2.9)
Exchange gains/losses3			3.7			1.9			3.5
State and local incomes taxes - net			0.3			2.1			4.0
Impact of Swiss Tax Reform4			—			0.2			(27.0)
Excess tax benefits/deficiencies from stock compensation			(0.7)			(0.2)			1.0
Tax settlements and expiration of statute of limitations			0.1			—			0.4
Repatriation of foreign earnings5,6			1.7			1.0			1.0
Other – net5			(0.3)			1.3			1.2
Effective tax rate on income from continuing operations			14.7		%	22.3		%	(12.0)		%

1.    Includes the effects of local and U.S. taxes related to earnings of non-U.S. subsidiaries, changes in the amount of unrecognized tax benefits associated with these earnings, losses at non-U.S. subsidiaries without local tax benefits due to valuation allowances, and other permanent differences between tax and U.S. GAAP results. Includes a tax benefit of $(36) million for the year ended December 31, 2022, relating to the release of a valuation allowance recorded against the net deferred tax asset position of a legal entity in Brazil. Includes a tax benefit of $(51) million for the year ended December 31, 2020, related to a return to accrual adjustment associated with an elective change in accounting method for the 2019 tax year impact of foreign tax provisions.

2.     Includes net tax benefit of $(55) million for the year ended December 31, 2022, related to deferred tax assets established upon change in a U.S. entity's tax characterization, as well as a net tax benefit of $(42) million for the year ended December 31, 2022, related to worthless stock deduction on Company's investment in a subsidiary after a change in the entity's legal structure.

3.    Principally reflects the impact of foreign exchange gains and losses on net monetary assets for which no corresponding tax impact is realized. Further information about the company's foreign currency hedging program is included in Note 6 - Supplementary Information, and Note 19 - Financial Instruments, under the heading Foreign Currency Risk.

4.    Reflects tax benefits of $(182) million primarily driven by the recognition of an elective cantonal component of the enactment of the Federal Act on Tax Reform and AHV Financing ("Swiss Tax Reform") for the year ended December 31, 2020.

5.     Prior year amounts in "other - net" and "repatriation of foreign earnings" for the years ended December 31, 2021 and 2020 have been reclassified from their previous presentation to conform to the current year's presentation. 6.     Includes the effect of withholding tax on distribution of foreign earnings to the U.S., net of U.S. foreign tax credits.

EIDP

Geographic Allocation of Income and Provision for Income Taxes

Geographic Allocation of Income (Loss) and Provision for (Benefit from) Income Taxes			For the Year Ended December 31,
(In millions)			2022			2021			2020
Income (loss) from continuing operations before income taxes
Domestic			$	(46)		$	892		$	(183)
Foreign			1,427			1,404			758
Income (loss) from continuing operations before income taxes			$	1,381		$	2,296		$	575
Current tax expense (benefit)
Federal			$	56		$	(23)		$	8
State and local			19			4			5
Foreign			403			329			222
Total current tax expense (benefit)			$	478		$	310		$	235
Deferred tax expense (benefit)
Federal			$	(170)		$	164		$	(116)
State and local			(39)			55			27
Foreign			(70)			(17)			(251)
Total deferred tax expense (benefit)			$	(279)		$	202		$	(340)
Provision for (benefit from) income taxes on continuing operations			199			512			(105)
Net income (loss) from continuing operations			$	1,182		$	1,784		$	680

Reconciliation to US Statutory Rate

Reconciliation to U.S. Statutory Rate			For the Year Ended December 31,
			2022			2021			2020
Statutory U.S. federal income tax rate			21.0		%	21.0		%	21.0		%
Effective tax rates on international operations - net1			(3.6)			(2.6)			(16.4)
Acquisitions, divestitures and ownership restructuring activities2			(5.5)			(0.1)			(0.3)
U.S. research and development credit			(2.3)			(2.5)			(3.4)
Exchange gains/losses3			3.8			1.9			4.1
State and local income taxes - net			0.2			2.2			4.2
Impact of Swiss Tax Reform4			—			0.2			(31.7)
Excess tax benefits/deficiencies from stock compensation			(0.7)			(0.2)			1.2
Tax settlements and expiration of statute of limitations			0.1			—			0.4
Repatriation of foreign earnings5,6			1.7			1.0			1.2
Other – net5			(0.3)			1.3			1.4
Effective tax rate			14.4		%	22.2		%	(18.3)		%

1.    Includes the effects of local and U.S. taxes related to earnings of non-U.S. subsidiaries, changes in the amount of unrecognized tax benefits associated with these earnings, losses at non-U.S. subsidiaries without local tax benefits due to valuation allowances, and other permanent differences between tax and U.S. GAAP results. Includes a tax benefit of $(36) million for the year ended December 31, 2022, relating to the release of a valuation allowance recorded against the net deferred tax asset position of a legal entity in Brazil. Includes a tax benefit of $(51) million for the year ended December 31, 2020, related to a return to accrual adjustment associated with an elective change in accounting method that alters the 2019 impact of foreign tax provisions.

2.     Includes net tax benefit of $(55) million for the year ended December 31, 2022, related to deferred tax assets established upon change in a U.S. entity's tax characterization, as well as a net tax benefit of $(42) million for the year ended December 31, 2022, related to worthless stock deduction on Company's investment in a subsidiary after a change in the entity's legal structure.

3.    Principally reflects the impact of foreign exchange gains and losses on net monetary assets for which no corresponding tax impact is realized. Further information about the company's foreign currency hedging program is included in Note 6 - Supplementary Information, and Note 19 - Financial Instruments, under the heading Foreign Currency Risk.

4.    Reflects tax benefits of $(182) million primarily driven by the recognition of an elective cantonal component of the recent enactment of the Federal Act on Tax Reform and AHV Financing ("Swiss Tax Reform") for the year ended December 31, 2020.

5.     Prior year amounts in "other - net" and "repatriation of foreign earnings" for the years ended December 31, 2021 and 2020 have been reclassified from their previous presentation to conform to the current year's presentation.

6.     Includes the effect of withholding tax on distribution of foreign earnings to the U.S., net of U.S. foreign tax credits.

X

- Definition

Tabular disclosure of the reconciliation using percentage or dollar amounts of the reported amount of income tax expense attributable to continuing operations for the year to the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income from continuing operations.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 12
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32687-109319

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- Definition

Tabular disclosure of income before income tax between domestic and foreign jurisdictions.

+ References

Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(h)(1)(Note 1))
-URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

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