INCOME TAXES

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

Income Tax Provision

Components of income tax provision
	Year Ended December 31,
(in millions)	2023		2022		2021
Current tax provision:
Federal	$	—	$	—	$	—
State and local	(8)		(1)		(1)
International	(11)		(4)		(3)
Deferred tax (provision) benefit:
Federal	(896)		(525)		(130)
State and local	(84)		(66)		16
Income tax provision	$	(999)	$	(596)	$	(118)

The following table presents the principal reasons for the difference between the effective tax rate and the U.S. federal statutory income tax rate:

Reconciliation of statutory federal income tax rate to the effective income tax rate
	Year Ended December 31,
	2023		2022		2021
U.S. federal statutory income tax rate	21.0	%	21.0	%	21.0	%
State taxes, net of federal benefit	2.0		3.0		(4.4)
Permanent differences	0.7		1.0		4.9
Valuation allowance	(5.0)		7.3		9.1
Other	(0.9)		(1.1)		(0.8)
Effective income tax rate	17.8	%	31.2	%	29.8	%

Deferred Taxes

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting and income tax purposes.

Significant components of deferred income tax assets and liabilities
	December 31,
(in millions)	2023		2022
Deferred tax assets:
Net operating loss carryforwards	$	1,217	$	1,395
Capital loss carryforward	8		50
Pension, postretirement and other benefits	1,488		1,467
Investments	806		1,106
Deferred revenue	2,110		2,334
Lease liabilities	2,193		2,376
Other	709		682
Valuation allowance	(877)		(1,176)
Total deferred tax assets	$	7,654	$	8,234
Deferred tax liabilities:
Depreciation	$	5,570	$	5,110
Operating lease assets	1,533		1,624
Intangible assets	1,143		1,121
Other	73		78
Total deferred tax liabilities	$	8,319	$	7,933
Balance Sheet Position:
Other noncurrent assets	$	243	$	325
Deferred income taxes, net	(908)		(24)
Net deferred tax (liabilities) assets	$	(665)	$	301

Valuation Allowance

We periodically assess whether it is more likely than not that we will generate sufficient taxable income to realize our deferred income tax assets. We establish valuation allowances if it is more likely than not that we will be unable to realize our deferred income tax assets. In making this determination, we consider available positive and negative evidence and make certain assumptions. We consider, among other things, projected future taxable income, scheduled reversals of deferred tax liabilities, the overall business environment, our historical financial results and tax planning strategies.

At December 31, 2023 our net deferred tax liability balance was $665 million, including an $877 million valuation allowance primarily related to certain net realized and unrealized capital losses and certain state net operating losses.

As of December 31, 2023, we had approximately $4.5 billion of U.S. federal pre-tax net operating loss carryforwards which we are expecting to utilize by the end of 2025. Approximately $800 million of these net operating loss carryforwards were generated prior to 2018 and will not begin to expire until 2029, while the remaining net operating loss carryforwards do not expire. Therefore, we have not recorded a valuation allowance on our deferred tax assets other than the certain net realized and unrealized capital losses and certain state net operating losses that have short expiration periods.

The following table presents the balance of our valuation allowance on our deferred income tax assets and the associated activity:

Valuation allowance activity
(in millions)	2023		2022
Balance at January 1	$	1,176	$	833
Tax provision	(299)		155
Equity investment activity	—		188
Balance at December 31	$	877	$	1,176

Other

The amount of, and changes to, our uncertain tax positions were not material in any of the years presented. We are currently under audit by the IRS for the 2023 and 2022 tax years.