INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2023

Schedule of Provision/(Benefit) for Income Taxes

The provision/(benefit) for income taxes consisted of:


	Year Ended December 31,
Dollars in millions	2023		2022		2021
Current:
U.S.	$	2,745	$	3,017	$	1,879
Non-U.S.	943		1,089		598
Total current	3,688		4,106		2,477
Deferred:
U.S.	(2,339)		(2,889)		(1,255)
Non-U.S.	(949)		151		(138)
Total deferred	(3,288)		(2,738)		(1,393)
Total Provision for Income Taxes	$	400	$	1,368	$	1,084

Schedule of Effective Income Tax Rate Reconciliation

The reconciliation of the effective tax rate to the U.S. statutory Federal income tax rate was as follows:


	% of Earnings Before Income Taxes
Dollars in millions	2023				2022				2021
Earnings before income taxes:
U.S.	$	2,624			$	(140)			$	1,593
Non-U.S.	5,816				7,853				6,505
Total	8,440				7,713				8,098
U.S. statutory rate	1,772		21.0	%	1,620		21.0	%	1,701		21.0	%
GILTI, net of foreign derived intangible income deduction	223		2.6	%	634		8.2	%	645		8.0	%
Foreign tax effect of certain operations in Ireland, Puerto Rico and Switzerland	(850)		(10.1)	%	(416)		(5.4)	%	(143)		(1.8)	%
Non-U.S. tax ruling	(656)		(7.8)	%	—		—	%	—		—	%
Internal transfers of intangible and other assets	—		—	%	(93)		(1.2)	%	(983)		(12.1)	%
U.S. Federal valuation allowance	(171)		(2.0)	%	58		0.8	%	6		0.1	%
U.S. Federal, state and foreign contingent tax matters	143		1.7	%	(297)		(3.9)	%	154		1.9	%
U.S. Federal research-based credits	(243)		(2.9)	%	(142)		(1.8)	%	(165)		(2.0)	%
Charitable contributions of inventory	(75)		(0.9)	%	(94)		(1.2)	%	(42)		(0.5)	%
Contingent value rights	—		—	%	—		—	%	(108)		(1.3)	%
Puerto Rico excise tax credit	—		—	%	(144)		(1.9)	%	(152)		(1.9)	%
State and local taxes (net of valuation allowance)	92		1.1	%	103		1.3	%	33		0.4	%
Foreign and other	165		2.0	%	139		1.8	%	138		1.6	%
Total Provision for Income Taxes	$	400	4.7	%	$	1,368	17.7	%	$	1,084	13.4	%

Schedule of Deferred Income Tax Assets/(Liabilities)

The components of deferred income tax assets/(liabilities) were as follows:


	December 31,
Dollars in millions	2023		2022
Deferred tax assets
Foreign net operating loss and other carryforwards	$	2,017	$	566
State net operating loss and credit carryforwards	349		329
U.S. Federal capital loss, net operating loss and tax credit	249		236
Milestone payments and license fees	918		1,030
Capitalized research expenditures	2,682		1,573
Other	1,883		1,284
Total deferred tax assets	8,098		5,018
Valuation allowance	(764)		(873)
Deferred tax assets net of valuation allowance	$	7,334	$	4,145

Deferred tax liabilities
Acquired intangible assets	$	(4,052)	$	(4,362)
Goodwill and other	(852)		(605)
Total deferred tax liabilities	$	(4,904)	$	(4,967)

Deferred tax assets/(liabilities), net	$	2,430	$	(822)

Recognized as:
Deferred income taxes assets – non-current	$	2,768	$	1,344
Deferred income taxes liabilities – non-current	(338)		(2,166)
Total	$	2,430	$	(822)

Changes in the Valuation Allowance

Changes in the valuation allowance were as follows:


	Year Ended December 31,
Dollars in millions	2023		2022		2021
Balance at beginning of year	$	873	$	1,056	$	2,809
Provision	(39)		213		201
Utilization	(54)		(68)		(1,087)
Foreign currency translation	(19)		(59)		(157)
Acquisitions/(dispositions)/(liquidations), net	—		(271)		(720)
Non-U.S. rate change	3		2		10
Balance at end of year	$	764	$	873	$	1,056

Reconciliation of Gross Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows (excluding interest and penalties):


	Year Ended December 31,
Dollars in millions	2023		2022		2021
Balance at beginning of year	$	1,766	$	2,042	$	2,003
Gross additions to tax positions related to current year	38		53		66
Gross additions to tax positions related to prior years	145		137		75
Gross additions to tax positions assumed in acquisitions	—		15		—
Gross reductions to tax positions related to prior years	(5)		(381)		(22)
Settlements	(30)		(8)		(70)
Reductions to tax positions related to lapse of statute	(4)		(83)		(5)
Cumulative translation adjustment	4		(9)		(5)
Balance at end of year	$	1,914	$	1,766	$	2,042

Summary of Income Tax Examinations

Additional information regarding unrecognized tax benefits is as follows:


	Year Ended December 31,
Dollars in millions	2023		2022		2021
Unrecognized tax benefits that if recognized would impact the effective tax rate	$	1,872	$	1,736	$	1,957
Accrued interest	434		332		424
Accrued penalties	23		25		26
Interest and penalties expense/(benefit)	110		(87)		66

The following is a summary of major tax jurisdictions for which tax authorities may assert additional taxes based upon tax years currently under audit and subsequent years that will likely be audited:


U.S.			2008 to 2012, 2016 to 2023
Canada			2012 to 2023
France			2020 to 2023
Germany			2015 to 2023
Italy			2019 to 2023
Japan			2018 to 2023
UK			2012 to 2023