Income taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income taxes

(20)Income taxes

Liabilities for income taxes reflected in our Consolidated Balance Sheets are as follows (in millions).

	December 31,
	2023		2022
Currently payable	$	185	$	511
Deferred		92,344		76,417
Other		480		440
	$	93,009	$	77,368

The tax effects of temporary differences that pertain to our deferred income tax assets and liabilities are shown below (in millions).

	December 31,
	2023			2022
Deferred income tax liabilities:
Investments, including unrealized appreciation	$	56,766		$	41,150
Deferred charges reinsurance assumed		1,994			2,073
Property, plant and equipment and equipment held for lease		32,991			32,080
Goodwill and other intangible assets		7,546			7,010
Other		4,452			5,162
		103,749			87,475
Deferred income tax assets:
Unpaid losses and loss adjustment expenses		(1,255	)		(1,290	)
Unearned premiums		(1,285	)		(1,196	)
Accrued liabilities		(2,626	)		(1,790	)
Regulatory liabilities		(1,248	)		(1,323	)
Deferred revenue		(2,282	)		(1,880	)
Other		(2,709	)		(3,579	)
		(11,405	)		(11,058	)
Net deferred income tax liability	$	92,344		$	76,417

We have not established deferred income taxes on accumulated undistributed earnings of certain foreign subsidiaries, which are expected to be reinvested indefinitely. Repatriation of all accumulated earnings of foreign subsidiaries would be impracticable to the extent that such earnings represent capital to support ongoing business operations. Generally, no U.S. federal income taxes will be imposed on future distributions of foreign earnings under current law. However, distributions to the U.S. or other foreign jurisdictions could be subject to withholding and other local taxes.

Income tax expense (benefit) reflected in our Consolidated Statements of Earnings for each of the three years ending December 31, 2023 was as follows (in millions).

	2023		2022			2021
U.S. Federal	$	20,764	$	(10,316	)	$	20,384
U.S. State		763		762			(527	)
Foreign		1,492		1,052			1,055
	$	23,019	$	(8,502	)	$	20,912
Current	$	7,642	$	4,815		$	5,326
Deferred		15,377		(13,317	)		15,586
	$	23,019	$	(8,502	)	$	20,912

Notes to Consolidated Financial Statements

(20)Income taxes

Income tax expense (benefit) is reconciled to hypothetical amounts computed at the U.S. federal statutory rate for each of the three years ending December 31, 2023 in the table below (dollars in millions).

	2023			2022			2021
Earnings (loss) before income taxes	$	120,166		$	(30,500	)	$	111,861
Hypothetical income tax expense (benefit) at the U.S. federal statutory rate	$	25,235		$	(6,405	)	$	23,491
Dividends received deduction and tax-exempt interest		(678	)		(512	)		(457	)
State income taxes, less U.S. federal income tax effect		603			602			(417	)
U.S. income tax credits*		(2,186	)		(2,187	)		(1,860	)
Other differences, net		45			—			155
	$	23,019		$	(8,502	)	$	20,912
Effective income tax rate		19.2	%		27.9	%		18.7	%

* U.S. income tax credits derive primarily from production tax credits associated with wind-energy generation of BHE and tax credits arising from affordable housing investments.

We file income tax returns in the U.S. and in state, local and foreign jurisdictions. We have settled income tax liabilities with the U.S. federal taxing authority (“IRS”) for tax years through 2011. The 2012 and 2013 tax years are under review by the IRS’s Independent Office of Appeals, and the IRS is currently auditing tax years 2014 through 2019. We are also under audit or subject to audit with respect to income taxes in state and foreign jurisdictions. It is reasonably possible that certain of these income tax examinations will be settled in 2024. We currently do not believe that the outcome of unresolved issues or claims will be material to our Consolidated Financial Statements.

At December 31, 2023 and 2022, net unrecognized tax benefits were $480 million and $440 million, respectively. Included in the balance at December 31, 2023, were $420 million of tax positions that, if recognized, would impact the effective tax rate. We do not expect material increases to the estimated amount of unrecognized tax benefits during 2024.

On August 16, 2022, the Inflation Reduction Act of 2022 (“the 2022 Act”) was signed into law. The 2022 Act contains numerous provisions, including a 15% corporate alternative minimum income tax (“CAMT”) on “adjusted financial statement income”, expanded tax credits for clean energy incentives and a 1% excise tax on corporate stock repurchases. The provisions of the 2022 Act are effective for tax years beginning after December 31, 2022. The extent to which the Company incurs CAMT will depend on the facts and circumstances of the given tax year. We do not expect to incur a CAMT liability in 2023. The Internal Revenue Service and the U.S. Department of Treasury may release additional guidance in the future. We will continue to evaluate the impact of the 2022 Act as more guidance becomes available.

The Organization for Economic Co-operation and Development has issued Pillar Two model rules introducing a new global minimum tax of 15% intended to be effective on January 1, 2024. While the U.S. has not yet adopted the Pillar Two rules, various other governments around the world are enacting legislation. As currently designed, Pillar Two will ultimately apply to our worldwide operations. Considering we do not have material operations in jurisdictions with tax rates lower than the Pillar Two minimum, these rules are not expected to materially increase our global tax costs. There remains uncertainty as to the final Pillar Two model rules. We will continue to monitor U.S. and global legislative action related to Pillar Two for potential impacts.