Note 12 - Income Taxes

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Income Tax Disclosure [Text Block]

NOTE 12: INCOME TAXES

Kodak’s income tax (benefit) provision and effective tax rate were as follows:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(in millions)	2023			2022			2023			2022
Earnings from operations before income taxes	$	—		$	3		$	78		$	21
Effective tax rate		—			33.3	%		10.3	%		9.5	%
(Benefit) provision for income taxes		(2	)		1			8			2
Provision for income taxes at U.S. statutory tax rate		—			1			16			4
Difference between tax at effective vs. statutory rate	$	(2	)	$	—		$	(8	)	$	(2	)

For the three months ended September 30, 2023, the difference between Kodak’s effective tax rate and the U.S. statutory rate of 21.0% is primarily attributable to: (1) the impact related to existing valuation allowances associated with changes in net deferred tax assets from current earnings and losses, (2) the results from operations in jurisdictions outside the U.S., and (3) a benefit associated with foreign withholding taxes on undistributed earnings.

For the nine months ended September 30, 2023, the difference between Kodak’s effective tax rate and the U.S. statutory rate of 21.0% is primarily attributable to: (1) the impact related to existing valuation allowances associated with changes in net deferred tax assets from current earnings and losses, (2) the results from operations in jurisdictions outside the U.S., (3) a benefit associated with foreign withholding taxes on undistributed earnings and (4) changes in audit reserves, including a settlement with a taxing authority in a location outside the U.S.

During the quarter ended June 30, 2023, Kodak agreed to terms with a taxing authority outside the U.S. and settled open tax audits for years 2013 through 2017. This settlement included a cash payment of $1 million which is reflected in the provision for taxes in the quarter-to-date and year-to-date periods.

For the three months ended September 30, 2022, the difference between Kodak’s effective tax rate and the U.S. statutory rate of 21.0% is primarily attributable to: (1) the impact related to existing valuation allowances associated with changes in net deferred tax assets from current earnings and losses, (2) the results from operations in jurisdictions outside the U.S, (3) a benefit associated with foreign withholding taxes on undistributed earnings and (4) changes in audit reserves. 

For the nine months ended September 30, 2022, the difference between Kodak’s effective tax rate and the U.S. statutory rate of 21.0% is primarily attributable to: (1) the impact related to existing valuation allowances associated with changes in net deferred tax assets from current earnings and losses, (2) the results from operations in jurisdictions outside the U.S., (3) a benefit associated with foreign withholding taxes on undistributed earnings and (4) changes in audit reserves, including a settlement with a taxing authority in a location outside the U.S. 

During the quarter ended March 31, 2022, Kodak agreed to terms with a taxing authority outside the U.S. and settled open tax audits for years 2015 through 2018. This settlement included a cash payment of $2 million which is reflected in the provision for taxes in the prior year-to-date period, and a decrease in net deferred tax assets of $3 million which was fully offset by a corresponding change in the valuation allowance.