XML 62 R42.htm IDEA: XBRL DOCUMENT v3.22.4
Income Taxes (Tables)
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
Geographic Allocation of Income and Provision for Income Taxes
Geographic Allocation of Income (Loss) and Provision for (Benefit from) Income Taxes For the Year Ended December 31,
(In millions)202220212020
Income (loss) from continuing operations before income taxes
Domestic$(1)$941 $(83)
Foreign1,427 1,405 758 
Income (loss) from continuing operations before income taxes$1,426 $2,346 $675 
Current tax expense (benefit)
Federal$65 $(13)$28 
State and local21 6 9 
Foreign403 329 222 
Total current tax expense (benefit)$489 $322 $259 
Deferred tax expense (benefit)
Federal$(170)$164 $(116)
State and local(39)55 27 
Foreign(70)(17)(251)
Total deferred tax expense (benefit)$(279)$202 $(340)
Provision for (benefit from) income taxes on continuing operations210 524 (81)
Net income (loss) from continuing operations after taxes$1,216 $1,822 $756 
Reconciliation to US Statutory Rate
Reconciliation to U.S. Statutory RateFor the Year Ended December 31,
202220212020
Statutory U.S. federal income tax rate21.0 %21.0 %21.0 %
Effective tax rates on international operations - net1
(3.5)(2.5)(13.9)
Acquisitions, divestitures and ownership restructuring activities2
(5.4)(0.1)(0.3)
U.S. research and development credit(2.2)(2.4)(2.9)
Exchange gains/losses3
3.7 1.9 3.5 
State and local incomes taxes - net0.3 2.1 4.0 
Impact of Swiss Tax Reform4
— 0.2 (27.0)
Excess tax benefits/deficiencies from stock compensation(0.7)(0.2)1.0 
Tax settlements and expiration of statute of limitations0.1 — 0.4 
Repatriation of foreign earnings5,6
1.7 1.0 1.0 
Other – net5
(0.3)1.3 1.2 
Effective tax rate on income from continuing operations14.7 %22.3 %(12.0)%
1.    Includes the effects of local and U.S. taxes related to earnings of non-U.S. subsidiaries, changes in the amount of unrecognized tax benefits associated with these earnings, losses at non-U.S. subsidiaries without local tax benefits due to valuation allowances, and other permanent differences between tax and U.S. GAAP results. Includes a tax benefit of $(36) million for the year ended December 31, 2022, relating to the release of a valuation allowance recorded against the net deferred tax asset position of a legal entity in Brazil. Includes a tax benefit of $(51) million for the year ended December 31, 2020, related to a return to accrual adjustment associated with an elective change in accounting method for the 2019 tax year impact of foreign tax provisions.
2.     Includes net tax benefit of $(55) million for the year ended December 31, 2022, related to deferred tax assets established upon change in a U.S. entity's tax characterization, as well as a net tax benefit of $(42) million for the year ended December 31, 2022, related to worthless stock deduction on Company's investment in a subsidiary after a change in the entity's legal structure.
3.    Principally reflects the impact of foreign exchange gains and losses on net monetary assets for which no corresponding tax impact is realized. Further information about the company's foreign currency hedging program is included in Note 6 - Supplementary Information, and Note 19 - Financial Instruments, under the heading Foreign Currency Risk.
4.    Reflects tax benefits of $(182) million primarily driven by the recognition of an elective cantonal component of the enactment of the Federal Act on Tax Reform and AHV Financing ("Swiss Tax Reform") for the year ended December 31, 2020.
5.     Prior year amounts in "other - net" and "repatriation of foreign earnings" for the years ended December 31, 2021 and 2020 have been reclassified from their previous presentation to conform to the current year's presentation. 6.     Includes the effect of withholding tax on distribution of foreign earnings to the U.S., net of U.S. foreign tax credits.
Deferred Tax Balances
Deferred Tax Balances at December 31,20222021
(In millions)AssetsLiabilitiesAssetsLiabilities
Property$— $447 $— $341 
Operating loss and tax credit carryforwards1
363 — 464 — 
Accrued employee benefits680 — 904 — 
Other accruals and reserves3
545 — 372 — 
Intangibles— 2,106 — 2,260 
Inventory198 — 153 — 
Research and development capitalization418 — 224 — 
Investments40 — 36 — 
Unrealized exchange gains/losses— 29 — 10 
Other – net3
40 — 42 — 
Subtotal$2,284 $2,582 $2,195 $2,611 
Valuation allowances2
(342)— (366)— 
Total$1,942 $2,582 $1,829 $2,611 
Net Deferred Tax Asset (Liability)$(640)$(782)
1.    Primarily related to the realization of recorded tax benefits on tax loss and credit carryforwards from operations in the United States and Spain.    
2.    During the year ended December 31, 2022, the company adjusted the valuation allowances recorded against the net deferred tax asset position of various legal entities, the largest of which relates to a legal entity in Brazil that resulted in a tax benefit of $(36) million.
3.     Prior year amounts in "other accruals and reserves" and "other – net" have been reclassified from their previous presentation to conform to the current year's presentation. Adjustments did not impact the amount of the net deferred tax asset (liability) recorded in the Consolidated Balance Sheets.
Operating Loss and Tax Credit Carryforwards
Operating Loss and Tax Credit CarryforwardsDeferred Tax Asset
(In millions)20222021
Operating loss carryforwards
Expire within 5 years$127 $123 
Expire after 5 years or indefinite expiration158 210 
Total operating loss carryforwards$285 $333 
Tax credit carryforwards
Expire within 5 years$15 $14 
Expire after 5 years or indefinite expiration63 117 
Total tax credit carryforwards$78 $131 
Total Operating Loss and Tax Credit Carryforwards$363 $464 
Total Gross Unrecognized Tax Benefits
Total Gross Unrecognized Tax BenefitsFor the Year Ended December 31,
(In millions)202220212020
Total unrecognized tax benefits as of beginning of period$377 $395 $426 
Decreases related to positions taken on items from prior years(3)(7)(14)
Increases related to positions taken on items from prior years4 13 5 
Increases related to positions taken in the current year11 9 6 
Settlement of uncertain tax positions with tax authorities(24)(17)(18)
Decreases due to expiration of statutes of limitations(5)(16)(7)
Exchange (gain) loss(3)— (3)
Total unrecognized tax benefits as of end of period$357 $377 $395 
Total unrecognized tax benefits that, if recognized, would impact the effective tax rate$139 $157 $156 
Total amount of interest and penalties (benefits) recognized in provision for (benefit from) income taxes on continuing operations$1 $1 $(2)
Total accrual for interest and penalties associated with unrecognized tax benefits at end of period$13 $11 $18 
Tax Year Subject to Examination
Tax Years Subject to Examination by Major Tax Jurisdiction at December 31, 2022Earliest Open Year
Jurisdiction
Argentina2016
Brazil2015
Canada2012
China2014
France2019
India2020
Italy2017
Switzerland2016
United States:
Federal income tax2012
State and local income tax2008