INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2022

Schedule of Effective Income Tax Rate Reconciliation

The following table summarizes the difference between an income tax benefit and tax expense at the United States statutory rate of 21% in 2022, 2021, and 2020, respectively, and the income tax expense at effective worldwide tax rates for the respective periods:


Millions of dollars	2022		2021		2020
Earnings (loss) before income taxes
United States	$	(158)	$	1,287	$	1,020
Foreign	(1,069)		1,045		427
Earnings (loss) before income taxes	$	(1,227)	$	2,332	$	1,447

Income tax (benefit) expense computed at United States statutory rate	$	(258)	$	490	$	304
U.S. government tax incentives	(19)		(19)		(17)
Foreign government tax incentives	(23)		(23)		(20)
Foreign tax rate differential	(3)		66		30
U.S. foreign tax credits	11		(29)		(25)
Valuation allowances	222		1		15
State and local taxes, net of federal tax benefit	(21)		57		40
Foreign withholding taxes	52		19		8
U.S. tax on foreign dividends and subpart F income	22		9		34
Settlements and changes in unrecognized tax benefits	3		100		50
Changes in enacted tax rates	(2)		(14)		(6)
Nondeductible loss on sale and disposal of businesses	421		—		—
Nondeductible goodwill impairments	59		—		—
Legal Entity Debt Restructuring	(159)		—		—
Divestiture tax impact	—		(35)		—
Legal entity restructuring tax impact	—		(98)		(82)
Other items, net	(40)		(6)		51
Income tax computed at effective worldwide tax rates	$	265	$	518	$	382

Schedule of Components of Income Tax Expense (Benefit)

The following table summarizes our income tax (benefit) provision for 2022, 2021 and 2020:


	2022				2021				2020
Millions of dollars	Current		Deferred		Current		Deferred		Current		Deferred
United States	$	(40)	$	65	$	132	$	251	$	90	$	81
Foreign	180		85		184		(126)		182		(24)
State and local	(9)		(16)		80		(3)		42		11
	$	131	$	134	$	396	$	122	$	314	$	68
Total income tax expense			$	265			$	518			$	382

Schedule of Deferred Tax Assets and Liabilities

The following table summarizes the significant components of our deferred tax liabilities and assets at December 31, 2022 and 2021:


Millions of dollars	2022		2021
Deferred tax liabilities
Intangibles	$	329	$	404
Property, net	185		181
Right of use assets	220		245
Inventory Reserves	20		41
Other	168		207
Total deferred tax liabilities	$	922	$	1,078
Deferred tax assets
U.S. general business credit carryforwards, including Energy Tax Credits	$	421	$	386
Lease liabilities	231		255
Pensions	40		70
Loss carryforwards	1,300		1,347
Postretirement obligations	30		41
Foreign tax credit carryforwards	9		33
Research and development capitalization	194		130
Employee payroll and benefits	46		104
Accrued expenses	52		80
Product warranty accrual	48		54
Receivable and inventory allowances	61		61
Other	552		597
Total deferred tax assets	2,984		3,158
Valuation allowances for deferred tax assets	(412)		(195)
Deferred tax assets, net of valuation allowances	2,572		2,963
Reclassification of net deferred tax assets to held for sale	$	(602)	$	—
Net deferred tax assets	$	1,048	$	1,885

Schedule of Unrecognized Tax Benefits

The following table represents a reconciliation of the beginning and ending amount of unrecognized tax benefits that if recognized would impact the effective tax rate, excluding federal benefits of state and local tax positions, and interest and penalties:


Millions of dollars	2022		2021		2020
Balance, January 1	$	580	$	427	$	394
Additions for tax positions of the current year	24		17		17
Additions for tax positions of prior years	32		179		21
Reductions for tax positions of prior years	(45)		(34)		(2)
Settlements during the period	(1)		(7)		—
Lapses of applicable statute of limitation	(1)		(2)		(3)
Balance, December 31	$	589	$	580	$	427