INCOME TAXES

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 20: INCOME TAXES

This note provides details about income taxes applicable to our operations, including the following:

	earnings before income taxes,
	provision for income taxes,
	effective income tax rate,
	deferred tax assets and liabilities and
	unrecognized tax benefits.

The “Income Taxes” section of Note 1: Summary of Significant Accounting Policies provides details about how we account for our income taxes.

EARNINGS BEFORE INCOME TAXES

Domestic and Foreign Earnings Before Income Taxes

DOLLAR AMOUNTS IN MILLIONS
	2022		2021		2020
Domestic earnings	$	1,982	$	2,499	$	723
Foreign earnings		323		817		259
Total earnings before income taxes	$	2,305	$	3,316	$	982

PROVISION FOR INCOME TAXES

DOLLAR AMOUNTS IN MILLIONS
	2022			2021			2020
Current:
Federal	$	252		$	378		$	147
State		45			74			30
Foreign		158			243			64
Total current		455			695			241
Deferred:
Federal		28			27			(66	)
State		6			(2	)		(1	)
Foreign		(64	)		(11	)		11
Total deferred		(30	)		14			(56	)
Total income tax provision	$	425		$	709		$	185

EFFECTIVE INCOME TAX RATE

DOLLAR AMOUNTS IN MILLIONS
	2022			2021			2020
U.S. federal statutory income tax	$	484		$	696		$	207
State income taxes, net of federal tax benefit		41			57			23
REIT income not subject to federal income tax		(125	)		(102	)		(51	)
Return to provision adjustment		—			—			(3	)
Foreign taxes		27			62			19
Other, net		(2	)		(4	)		(10	)
Total income tax provision	$	425		$	709		$	185
Effective income tax rate		18.4	%		21.4	%		18.8	%

DEFERRED TAX ASSETS AND LIABILITIES

Deferred tax assets and liabilities reflect the future tax effect created by differences between the timing of when income or deductions are recognized for pretax financial book reporting purposes versus income tax purposes. Deferred tax assets represent a future tax benefit (or reduction to income taxes in a future period), while deferred tax liabilities represent a future tax obligation (or increase to income taxes in a future period).

Balance Sheet Classification of Deferred Income Tax Assets (Liabilities)

DOLLAR AMOUNTS IN MILLIONS
	DECEMBER 31,  2022			DECEMBER 31,  2021
Net noncurrent deferred tax asset	$	8		$	17
Net noncurrent deferred tax liability		(96	)		(46	)
Net deferred tax liability	$	(88	)	$	(29	)

Items Included in Our Deferred Income Tax Assets (Liabilities)

DOLLAR AMOUNTS IN MILLIONS
	DECEMBER 31,  2022			DECEMBER 31,  2021
Deferred tax assets:
Pension and post-employment benefits	$	75		$	96
State tax credits		42			42
Depletion		14			13
Environmental reserves		13			14
Incentive compensation		17			19
Intercompany land sales		16			15
Workers compensation		14			17
Minerals		11			10
Other reserves		10			14
Other		57			60
Gross deferred tax assets		269			300
Valuation allowance		(54	)		(50	)
Net deferred tax assets		215			250
Deferred tax liabilities:
Property, plant and equipment		(284	)		(258	)
Other		(19	)		(21	)
Net deferred tax liabilities		(303	)		(279	)
Net deferred tax liability	$	(88	)	$	(29	)

Net Operating Loss and Credit Carryforwards

Our gross federal, state and foreign net operating loss carryforwards as of December 31, 2022 totaled $469 million as follows:

	Federal - U.S. REIT - $205 million that will begin to expire in 2034 and $168 million that do not expire;
	State - $96 million, which will begin to expire in 2028; and
	Foreign - none currently recorded.

Our gross state credit carryforwards as of December 31, 2022 totaled $53 million, which includes $4 million that expire from 2026 through 2036 and $49 million that do not expire. Our U.S. TRSs have $9 million in foreign tax credit carryforwards that expire from 2027 through 2032.

Valuation Allowances

With the exception of the valuation allowance discussed below, we believe it is more likely than not that we will have sufficient future taxable income to realize our deferred tax assets.

Our valuation allowance on our deferred tax assets was $54 million as of December 31, 2022, which related to state credits, state net operating losses and foreign tax credits.

UNRECOGNIZED TAX BENEFITS

Unrecognized tax benefits represent potential future obligations to taxing authorities if uncertain tax positions we have taken on previously filed tax returns are not sustained. In accordance with our accounting policy, we accrue interest and penalties related to unrecognized tax benefits as a component of income tax expense (see Note 1: Summary of Significant Accounting Policies). The total gross amount of unrecognized tax benefits as of December 31, 2022 and 2021, as well as the activity during those years, were immaterial.

As of December 31, 2022, none of our U.S. federal income tax returns or foreign jurisdiction income tax returns are under examination. Our U.S. federal income tax returns are open to examination for years 2019 forward and foreign jurisdiction income tax returns are open to examination for years 2015 forward. We are undergoing examinations in state jurisdictions for tax years 2016 through 2018, with tax years 2009 forward open to examination. We do not expect that the outcome of any examination will have a material effect on our consolidated financial statements; however, audit outcomes and the timing of audit settlements are subject to significant uncertainty.