Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The components of income before income taxes are as follows:

	Year Ended December 31,
	2022		2021		2020
Domestic	$	2,523	$	2,298	$	233
Foreign	423		379		98
	$	2,946	$	2,677	$	331

The Company's provision for (benefit from) income taxes consist of the following:

	Year Ended December 31,
	2022		2021		2020
Current
Federal	$	473	$	434	$	(208)
State	74		57		6
Foreign	123		93		14
Total current	670		584		(188)
Deferred
Federal	(1)		19		154
State	(14)		13		(13)
Foreign	(6)		(9)		5
Total deferred	(21)		23		146
Total provision for (benefit from) income taxes	$	649	$	607	$	(42)

A reconciliation of taxes computed at the statutory rate to the Company's income tax expense is as follows:

	Year Ended December 31,
	2022		2021		2020
Provision for federal income tax, at statutory rate	$	619	$	563	$	70
State income tax provision, net of federal income tax effect	59		56		2
Foreign income tax rate differential	30		22		2
CARES Act net operating loss carryback tax benefit	—		—		(95)
Noncontrolling interests	(8)		(11)		(9)
Change in valuation allowance	—		(29)		3
U.S. federal research and development credits	(27)		(1)		(2)
Other, net	(24)		7		(13)
Total income tax expense (benefit)	$	649	$	607	$	(42)

The tax effects of the principal temporary differences between financial reporting and income tax reporting at December 31 are as follows:

	2022		2021
Net operating loss carryforward	$	103	$	96
Credit carryforward	19		23
Operating lease liabilities	149		136
Accruals	96		68
Pension	99		64
Inventories	34		22
Research and experimental expenditures	94		—
Other	18		26
Deferred taxes assets—total	612		435
Property, plant and equipment	(1,301)		(1,134)
Intangibles	(272)		(288)
Operating lease right-of-use asset	(149)		(134)
Turnaround costs	(49)		(27)
Consolidated partnerships	(234)		(256)
Equity method investments	(237)		(223)
Other	(42)		(17)
Deferred tax liabilities—total	(2,284)		(2,079)
Valuation allowance	(47)		(4)
Total net deferred tax liabilities	$	(1,719)	$	(1,648)
Balance sheet classifications
Noncurrent deferred tax asset	$	16	$	33
Noncurrent deferred tax liability	(1,735)		(1,681)
Total net deferred tax liabilities	$	(1,719)	$	(1,648)

At December 31, 2022, the Company had federal, foreign and state net operating loss carryforwards ("NOLs") of approximately $18, $224 and $733, respectively. The federal NOL of $18 was acquired in connection with the acquisition of Dimex and a foreign NOL of $76 was acquired in connection with the acquisition of Westlake Epoxy. The federal NOL and certain foreign and state NOLs do not expire, while certain other foreign and state NOLs expire in varying amounts between 2023 and 2042. The federal NOL and certain state NOLs are subject to limitations on an annual basis. At December 31, 2022, the Company had various federal and state credits carryforwards of $2 and $17, respectively, which either do not expire or expire in varying amounts between 2028 and 2032. Management believes the Company will realize the benefit of a portion of the net operating loss carryforwards before they expire, but to the extent that the full benefit may not be realized, a valuation allowance has been recorded. The valuation allowance increased by $43 as a result of the Westlake Epoxy acquisition and management judgment regarding the realizability of certain foreign deferred tax assets including net operating loss carryforwards.

The Tax Cuts and Jobs Act of 2017 eliminated the option to deduct research and experimental expenditures immediately in the year incurred and requires taxpayers to capitalize and amortize such expenditures over five years for domestic expenditures and over fifteen years for foreign expenditures effective beginning January 1, 2022. As a result, the Company has identified research and experimental expenditures required to be capitalized and established a deferred tax asset of $94.

The Company has recognized a liability for uncertain income tax positions of $30 as of December 31, 2022. The Company does not believe it is likely that any material amounts will be paid in 2023. The ultimate resolution and timing of payment for remaining matters continues to be uncertain.

The Company files income tax returns in the U.S. federal jurisdiction, various states and foreign jurisdictions. The Company is no longer subject to examinations by tax authorities before the year 2014.