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10-K Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The components of deferred income taxes at December 31, 2023 and 2022 are as follows:
20232022
Deferred income tax assets:
Accrued expenses$553 $379 
Bad debt reserves415 301 
Insurance reserves178 166 
Lease liabilities172 200 
Retirement liabilities132 173 
Deferred compensation44 34 
Federal and state carryforwards
455 328 
Investment basis31 340 
Other166 131 
Subtotal2,146 2,052 
Less: valuation allowance(271)(187)
Total deferred income tax assets1,875 1,865 
U.S. federal and state intangible assets2,070 2,059 
Foreign (including Puerto Rico) intangible assets330 380 
Capitalized software485 601 
Depreciation and amortization54 62 
Retirement assets319 317 
Lease right-of-use assets
110 123 
Prepaid expenses249 201 
Total deferred income tax liabilities3,617 3,743 
Net deferred income tax liabilities$1,742 $1,878 
We recognized $228 and $137 of deferred tax asset under the caption “Other noncurrent assets” at December 31, 2023 and 2022, respectively. We recognized $1,970 and $2,015 of deferred tax liability under the caption “Deferred tax liabilities, net” at December 31, 2023 and 2022.
As of December 31, 2023, we have established U.S. deferred taxes for undistributed earnings from certain non-U.S. subsidiaries, which are included in the Investment basis component above, consistent with prior years.
Significant components of the provision for income taxes for the years ended December 31, 2023, 2022 and 2021 consist of the following:
202320222021
Current tax expense:
Federal$1,899 $1,455 $1,468 
Foreign (including Puerto Rico)95 98 47 
State and local420 244 165 
Total current tax expense2,414 1,797 1,680 
Deferred tax expense (benefit)(690)(85)166 
Total income tax expense$1,724 $1,712 $1,846 
State and local current tax expense is reported gross of federal benefit in the preceding table, and includes amounts related to audit settlements, uncertain tax positions, state tax credits and true up of prior years’ tax. Such items are included on a net of federal tax basis in multiple lines in the following rate reconciliation table.
A reconciliation of income tax expense recorded in the consolidated statements of income and amounts computed at the statutory federal income tax rate for the years ended December 31, 2023, 2022 and 2021 is as follows:
 202320222021
 AmountPercentAmountPercentAmountPercent
Amount at statutory rate$1,620 21.0 %$1,596 21.0 %$1,679 21.0 %
State and local income taxes net of federal tax expense/benefit
124 1.6 190 2.5 201 2.5 
Tax exempt interest and dividends received deduction
(15)(0.2)(19)(0.3)(22)(0.3)
Change in valuation allowance
84 1.1 51 0.7 81 1.0 
Other, net(89)(1.2)(106)(1.4)(93)(1.1)
Total income tax expense$1,724 22.3 %$1,712 22.5 %$1,846 23.1 %
During the year ended December 31, 2023, we recognized income tax expense of $1,724, or $7.26 per diluted share. The decrease in effective income tax rate for 2023 compared to 2022 was primarily due to the impact of geographic changes in the mix of 2023 earnings.
During the year ended December 31, 2022, we recognized income tax expense of $1,712, or $7.05 per diluted share. The decrease in effective income tax rate for 2022 compared to 2021 was primarily due to the impact of geographic changes in the mix of 2022 earnings.
During the year ended December 31, 2021, we recognized income tax expense of $1,846, or $7.48 per diluted share.
The change in the carrying amount of gross unrecognized tax benefits from uncertain tax positions for the years ended December 31, 2023 and 2022 is as follows:
20232022
Balance at January 1$349 $271 
Additions based on:
Tax positions related to current year19 22 
Tax positions related to prior years119 57 
Reductions based on:
Tax positions related to prior years(19)(1)
Balance at December 31$468 $349 
The table above excludes interest, net of related tax benefits, which is treated as income tax expense (benefit) under our accounting policy. The interest is included in the amounts described in the following paragraph.
The amount of unrecognized tax benefits that would impact our effective tax rate in future periods, if recognized, was $450 and $328 at December 31, 2023 and 2022, respectively. Also included in the table above, at December 31, 2023, is $2 that would be recognized as an adjustment to additional paid-in capital, which would not affect our effective tax rate.
For the years ended December 31, 2023, 2022 and 2021 we recognized net interest expense of $24, $13 and $9, respectively. We had accrued approximately $79 and $55 for the payment of interest at December 31, 2023 and 2022, respectively.
As of December 31, 2023, as further described below, certain tax years remain open to examination by the Internal Revenue Service (“IRS”) and various state, local and foreign authorities. As a result of these examinations and discussions
with taxing agencies, we have recorded amounts for uncertain tax positions. It is anticipated that the amount of unrecognized tax benefits will change in the next twelve months due to possible settlements of audits and changes in temporary items. However, the ultimate resolution of these items is dependent on the completion of negotiations with various taxing authorities. While it is difficult to determine when other tax settlements will actually occur, it is reasonably possible that one could occur in the next twelve months and our unrecognized tax benefits could be reduced within a range of approximately $111 to $217.
We are a member of the IRS Compliance Assurance Process (“CAP”). The objective of CAP is to reduce taxpayer burden and uncertainty while assuring the IRS of the accuracy of tax returns prior to filing, thereby reducing or eliminating the need for post-filing examinations.
As of December 31, 2023, the IRS examination of our 2023 and 2022 tax years continues to be in process.
In certain states, we pay premium taxes in lieu of state income taxes. Premium taxes are reported in operating expense.
At December 31, 2023, we had federal net operating loss carryforwards of $192, of which $69 will expire beginning 2032 through 2043 and $123 have an indefinite carryforward period. State and foreign net operating loss carryforwards expire beginning 2024 through 2042, with some having an indefinite carryforward period.
Income taxes receivable totaled $543 and $440 at December 31, 2023 and 2022, respectively. We recognize the income tax receivable as an asset under the caption “Other current assets” in our consolidated balance sheets.
During 2023, 2022 and 2021, federal income taxes paid totaled $1,936, $1,594 and $1,299, respectively.