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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2023

Schedule of Earnings Before Income Taxes and Provision for Income Taxes

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


	For the Years Ended December 31,
(in millions)	2023		2022		2021
Earnings (losses) before income taxes:
United States	$	10,971	$	7,628	$	4,239
Outside United States	(43)		(239)		(415)
Total	$	10,928	$	7,389	$	3,824
Provision (benefit) for income taxes:
Current:
Federal	$	2,346	$	1,968	$	1,965
State and local	681		603		542
Outside United States	1		1		2
	3,028		2,572		2,509
Deferred:
Federal	(133)		(893)		(1,190)
State and local	(97)		(54)		30
	(230)		(947)		(1,160)
Total provision for income taxes	$	2,798	$	1,625	$	1,349

Reconciliation of Beginning and Ending Unrecognized Tax Benefits

A reconciliation of the beginning and ending unrecognized tax benefits was as follows:


	For the Years Ended December 31,
(in millions)	2023		2022		2021
Balance at beginning of year	$	69	$	53	$	74
Additions based on tax positions related to the current year	1,548		1		—
Additions for tax positions of prior years	—		16		40
Reductions for tax positions due to lapse of statutes of limitations	—		—		(5)
Reductions for tax positions of prior years	(6)		—		(23)
Tax settlements	(3)		(1)		(33)
Balance at end of year	$	1,608	$	69	$	53

Reconciliation of Effective Tax Rate and U.S. Federal Statutory Rate

A reconciliation between actual income taxes and amounts computed by applying the federal statutory rate to earnings before income taxes was as follows:


	For the Years Ended December 31,
	2023				2022				2021
(dollars in millions)	$		%		$		%		$		%
U.S. federal statutory rate	$	2,295	21.0	%	$	1,552	21.0	%	$	803	21.0	%
Increase (decrease) resulting from:
State and local income taxes, net of federal tax benefit	463		4.2		435		5.9		451		11.8
Tax basis in foreign investments	34		0.3		11		0.1		25		0.7

Uncertain tax positions	8		0.1		—		—		(25)		(0.7)
Investment in ABI	(37)		(0.3)		(24)		(0.3)		(16)		(0.4)
Investment in JUUL	53		0.5		306		4.1		7		0.2
Investment in Cronos	11		0.1		30		0.4		128		3.3
Valuation allowance releases	—		—		(664)		(9.0)		(15)		(0.4)
Other	(29)		(0.3)		(21)		(0.2)		(9)		(0.2)
Effective tax rate	$	2,798	25.6	%	$	1,625	22.0	%	$	1,349	35.3	%

Schedule of Deferred Income Tax Assets and Liabilities

The tax effects of temporary differences that gave rise to deferred income tax assets and liabilities consisted of the following at December 31:


(in millions)	2023		2022
Deferred income tax assets:
Accrued postretirement and postemployment benefits	$	302	$	303
Settlement charges	644		729

JUUL related losses	2,028		3,001
Investment in Cronos	397		407
IQOS deferred gain	691		—
Net operating losses and tax credit carryforwards	217		31
Other	125		—
Total deferred income tax assets	4,404		4,471
Deferred income tax liabilities:
Property, plant and equipment	(237)		(233)
Intangible assets	(3,210)		(2,849)
Investment in ABI	(1,391)		(1,226)
Accrued pension costs	(81)		(70)
Other	—		(115)
Total deferred income tax liabilities	(4,919)		(4,493)
Valuation allowances	(2,256)		(2,800)
Net deferred income tax liabilities	$	(2,771)	$	(2,822)

Summary of Valuation Allowance

A reconciliation of the beginning and ending valuation allowances was as follows:


	For the Years Ended December 31,
(in millions)	2023		2022		2021
Balance at beginning of year	$	2,800	$	3,097	$	2,817
Additions to valuation allowance charged to income tax expense	114		429		401
Reductions to valuation allowance credited to income tax benefit	(6)		(730)		(118)
Foreign currency translation	(1)		4		(3)
Additions to valuation allowance due to NJOY Transaction (no impact to earnings)	12		—		—
Reductions to valuation allowance offset to deferred tax asset (no impact to earnings)	(663)		—		—
Balance at end of year	$	2,256	$	2,800	$	3,097