Income Taxes

9 Months Ended

Sep. 30, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Earnings (losses) before income taxes, provision (benefit) for income taxes and income tax rates consisted of the following:

	For the Nine Months Ended September 30,						For the Three Months Ended September 30,
(in millions)	2021			2020			2021			2020
Earnings (losses) before income taxes	$	1,544		$	4,349		$	(3,302)		$	(324)
Provision (benefit) for income taxes	693			1,817			(582)			632
Income tax rate	44.9		%	41.8		%	17.6		%	(195.1)		%

Altria’s income tax rates for the nine and three months ended September 30, 2021 and 2020 are not comparable in a meaningful way due to the following significant pre-tax charges and valuation allowances:

▪the $6,157 million impairment of Altria’s equity investment in ABI during the nine and three months ended September 30, 2021; and

▪the $2,600 million impairment of Altria’s investment in JUUL during the nine and three months ended September 30, 2020 and valuation allowances associated with Altria’s investments in JUUL and Altria’s Investment in Cronos.

Altria’s income tax rates for the nine and three months ended September 30, 2021 differ from the U.S. federal statutory rate of 21%, due primarily to the state tax treatment of the impairment charge on Altria’s equity investment in ABI.

Altria’s income tax rates for the nine and three months ended September 30, 2020 differ from the U.S. federal statutory rate of 21%, due primarily to valuation allowances primarily attributable to deferred tax assets recorded in connection with the impairment of Altria’s investment in JUUL, and Altria’s Investment in Cronos.

For further information on the impairments of Altria’s equity investment in ABI and investment in JUUL, see Note 4. Investments in Equity Securities.

The following chart provides a reconciliation of the beginning and ending valuation allowances for the period ended September 30, 2021:

(in millions)
Balance at beginning of year	$	2,817
Additions to valuation allowance charged to income tax expense	264
Reductions to valuation allowance credited to income tax benefit	(73)
Foreign currency translation	(4)
Balance at end of period	$	3,004

Altria determines the realizability of deferred tax assets based on the weight of available evidence, that it is more-likely-than-not that the deferred tax asset will not be realized. In reaching this determination, Altria considers all available positive and negative evidence, including the character of the loss, carryback and carryforward considerations, future reversals of temporary differences and available tax planning strategies.

The current changes in valuation allowances were due to deferred tax assets recorded in connection with Altria’s Investment in Cronos and changes in the estimated fair value of its investment in JUUL. The valuation allowance at the end of the period is primarily attributable to deferred tax assets recorded in connection with Altria’s investment in JUUL and Investment in Cronos.