INCOME TAXES (Notes)

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

Geographic Allocation of Income and Provision for Income Taxes
In millions	2021		2020		2019
Income (loss) before income taxes
Domestic	$	531	$	558	$	696
Foreign	(2)		(1)		(5)
Income before income taxes	$	529	$	557	$	691
Current tax expense (benefit)
Federal	$	(11)	$	82	$	70
State and local	5		2		4
Foreign	20		—		—
Total current tax expense	$	14	$	84	$	74
Deferred tax expense (benefit)
Federal	$	122	$	42	$	(9)
State and local	23		4		(1)
Foreign	(5)		—		—
Total deferred tax expense (benefit)	$	140	$	46	$	(10)
Provision for income taxes	$	154	$	130	$	64
Net income	$	375	$	427	$	627

Reconciliation to U.S. Statutory Rate	2021		2020		2019
Statutory U.S. federal income tax rate	21.0	%	21.0	%	21.0	%
Unrecognized tax benefits	3.0		(0.9)		(1.0)
Federal tax accrual adjustments	—		3.0		1.7
Restoration of tax basis	—		—		(12.2)
State and local tax impact	5.3		0.2		0.9
Other - net	(0.2)		—		(1.1)
Effective Tax Rate 1	29.1	%	23.3	%	9.3	%

1.In 2021, the Corporation recognized additional charges related to state and local jurisdictions and an uncertain tax position related to litigation in a foreign jurisdiction which negatively impacted the effective tax rate. The tax rate for 2020 was unfavorably impacted by an accrual to return adjustment. The tax rate for 2019 was favorably impacted by the restoration of tax basis in assets, driven by a court judgment that did not involve the Corporation.

Deferred Tax Balances at Dec 31	2021				2020 1
In millions	Assets		Liabilities		Assets		Liabilities
Property	$	—	$	167	$	—	$	172
Tax loss and credit carryforwards	23		—		34		—
Postretirement benefit obligations	119		—		318		—
Other accruals and reserves	313		6		313		4
Inventory	—		—		4		—
Other - net	18		—		19		—
Subtotal	$	473	$	173	$	688	$	176
Valuation allowances 2	(12)		—		(18)		—
Total	$	461	$	173	$	670	$	176

1.Certain prior year balances have been adjusted to conform with the current year presentation.

2.Primarily related to the realization of recorded tax benefits on state tax loss carryforwards from operations in the United States.

Operating Loss and Tax Credit Carryforwards at Dec 31	2021		2020
In millions	Assets		Assets
Operating loss carryforwards
Expire within 5 years	$	11	$	21
Expire after 5 years or indefinite expiration	7		7
Total operating loss carryforwards	$	18	$	28
Tax credit carryforwards
Expire within 5 years	$	5	$	—
Expire after 5 years or indefinite expiration	—		6
Total tax credit carryforwards	$	5	$	6
Total tax loss and tax credit carryforwards	$	23	$	34

Undistributed earnings of foreign subsidiaries and related companies that are deemed to be permanently invested amounted to $7 million at December 31, 2021 ($7 million at December 31, 2020). The unrecognized deferred tax liability on those earnings is not material.

The following table provides a reconciliation of the Corporation's unrecognized tax benefits:

Total Gross Unrecognized Tax Benefits
In millions	2021		2020		2019
Total unrecognized tax benefits at Jan 1	$	1	$	1	$	1
Decreases related to positions taken on items from prior years	(1)		—		—
Increases related to positions taken on items from prior years	8		—		—
Total unrecognized tax benefits at Dec 31	$	8	$	1	$	1
Total unrecognized tax benefits that, if recognized, would impact the effective tax rate	$	8	$	1	$	1
Total amount of interest and penalties (benefit) recognized in "Provision for income taxes"	$	11	$	(5)	$	(7)
Total accrual for interest and penalties recognized in the consolidated balance sheets	$	12	$	—	$	—

During 2021, the Corporation recorded an uncertain tax position related to a foreign jurisdiction.

The Corporation is included in TDCC's consolidated federal income tax group and was included in DowDuPont's consolidated tax return through March 31, 2019. Current and deferred tax expenses are calculated for the Corporation as a stand-alone group and are allocated to the group from the consolidated totals, consistent with the TDCC-UCC Tax Sharing Agreement. The Corporation is currently under examination in a number of tax jurisdictions, including the U.S. federal and various state jurisdictions. It is reasonably possible that these examinations may be resolved in the next twelve months. The impact on the Corporation’s results of operations is not expected to be material.

Tax Years Subject to Examination by Major Tax Jurisdiction at Dec 31, 2021	Earliest Open Year
Jurisdiction
United States:
Federal income tax	2007
State and local income tax	2004

Inherent uncertainties exist in estimates of tax contingencies due to changes in tax law, both legislated and concluded through the various jurisdictions' tax court systems. It is the opinion of the Corporation's management that the possibility is remote that costs in excess of those accrued will have a material impact on the Corporation's consolidated financial statements.