Income Taxes

12 Months Ended

Dec. 31, 2023

Income Taxes

Income Taxes

16. Income Taxes

The difference between the book basis and the tax basis of our net assets, not directly subject to income taxes, is as follows:

	Icahn Enterprises
	December 31,
	2023		2022
		(in millions)
Book basis of net assets	$	3,224	$	3,901
Book/tax basis difference		(540)		(1,267)
Tax basis of net assets	$	2,684	$	2,634

Income (loss) from continuing operations before income tax benefit (expense) is as follows:

	Year Ended December 31,
	2023		2022		2021
	(in millions)
Domestic	$	(943)	$	(8)	$	(576)
International		21		17		(2)
	$	(922)	$	9	$	(578)

Income tax benefit (expense) attributable to continuing operations is as follows:

	Year Ended December 31,
	2023		2022		2021
	(in millions)
Current:
Domestic	$	(130)	$	(174)	$	(87)
International		(8)		(8)		(3)
Total current		(138)		(182)		(90)
Deferred:
Domestic		41		149		166
International		7		(1)		2
Total deferred		48		148		168
	$	(90)	$	(34)	$	78

A reconciliation of the income tax benefit (expense) calculated at the federal statutory rate to income tax benefit (expense) on continuing operations as shown in the consolidated statements of operations is as follows:

	Year Ended December 31,
	2023		2022		2021
	(in millions)
Income tax benefit at U.S. statutory rate	$	193	$	(2)	$	121
Tax effect from:
Valuation allowance		(1)		100		13
Non-controlling interest		23		38		10
Credits and incentives		26		—		—
Uncertain tax positions		17		—		—
Deconsolidation		23		—		—
Tax gain not on books		(83)		—		—
Tax rate changes		—		—		13
Dividends received		(20)		(23)		(24)
Income not subject to taxation		(239)		(88)		(64)
State taxes		(26)		(49)		—
Other		(3)		(10)		9
Income tax benefit (expense)	$	(90)	$	(34)	$	78

The tax effect of significant differences representing deferred tax assets (liabilities) (the difference between financial statement carrying value and the tax basis of assets and liabilities) is as follows:

	December 31,
	2023		2022
	(in millions)
Deferred tax assets:
Contingent liabilities	$	61	$	—
Net operating loss		954		954
Tax credits		48		46
Capital loss		200		253
Leases		139		115
Investment in partnerships		147		74
Other		105		101
Total deferred tax assets		1,654		1,543
Less: Valuation allowance		(860)		(866)
Net deferred tax assets	$	794	$	677
Deferred tax liabilities:
Property, plant and equipment	$	(408)	$	(100)
Intangible assets		(65)		(70)
Investment in partnerships		(180)		(435)
Investment in U.S. subsidiaries		(163)		(184)
Leases		(135)		(112)
Other		(58)		(6)
Total deferred tax liabilities		(1,009)		(907)
	$	(215)	$	(230)

We recorded deferred tax assets and deferred tax liabilities of $184 million and $399 million, respectively, as of December 31, 2023 and $109 million and $339 million, respectively, as of December 31, 2022.

We analyze all positive and negative evidence to consider whether it is more likely than not that all of the deferred tax assets will be realized. Projected future income, tax planning strategies and the expected reversal of deferred tax liabilities are considered in making this assessment. As of December 31, 2023 we had a valuation allowance of approximately $860 million primarily related to tax loss and credit carryforwards and other deferred tax assets. The current and future provisions for income taxes may be significantly impacted by changes to valuation allowances. These allowances will be maintained until it is more likely than not that the deferred tax assets will be realized. For the year ended December 31, 2023, the valuation allowance on deferred tax assets decreased by $6 million. The decrease was primarily attributable to utilization of capital loss carryforwards and changes in net operating loss carryforwards partially offset by increases in other deferred tax assets.

At December 31, 2023, American Entertainment Properties Corp. (“AEPC”), a wholly-owned corporate subsidiary of Icahn Enterprises, which includes all or parts of our Automotive, Food Packaging, Pharma, Home Fashion and Real Estate segments had U.S. federal net operating loss carryforwards of approximately $3.2 billion with expiration dates from 2024 through unlimited carryforward periods. Additionally, AEPC and its corporate subsidiaries had foreign net operating loss carryforwards of $19 million with an unlimited carryforward period.

At December 31, 2023, CVR Energy had state income tax credits of $14 million, which are available to reduce future state income taxes. These credits have an indefinite carryforward period.

As of December 31, 2023, we have not provided taxes on approximately $74 million of undistributed earnings in foreign subsidiaries which are deemed to be indefinitely reinvested. If at some future date these earnings cease to be permanently reinvested, we may be subject to foreign income and withholding taxes upon repatriation of such amounts. An estimate of the tax liability that would be incurred upon repatriation of foreign earnings is not practicable to determine.

Accounting for Uncertainty in Income Taxes

A summary of the changes in the gross amounts of unrecognized tax benefits for the years ended December 31, 2023, 2022 and 2021 are as follows:

	Year Ended December 31,
	2023		2022		2021
	(in millions)
Balance at January 1	$	27	$	33	$	35
Addition based on tax positions related to the current year		—		—		—
Increase for tax positions of prior years		—		—		—
Decrease for tax positions of prior years		—		—		(1)
Decrease for statute of limitation expiration		(17)		(6)		(1)
Balance at December 31	$	10	$	27	$	33

At December 31, 2023, 2022 and 2021, we had unrecognized tax benefits of $10 million, $27 million and $33 million, respectively. Of these totals, $10 million, $25 million and $29 million represent the amount of unrecognized tax benefits that if recognized, would affect the annual effective tax rate in the respective periods. The total unrecognized tax benefits differ from the amount which would affect the effective tax rate primarily due to the impact of valuation allowances.

During the next 12 months, we believe that it is reasonably possible that unrecognized tax benefits may decrease by approximately $2 million due to statute expirations.

We recognize interest and penalties accrued related to unrecognized tax benefits as a component of income tax expense. We recorded $4 million, $6 million and $5 million as of December 31, 2023, 2022 and 2021, respectively, in liabilities for tax related net interest and penalties in our consolidated balance sheets. Income tax expense (benefit) related to interest and penalties were $(2) million, $2 million and $2 million for the years December 31, 2023, 2022 and 2021, respectively. We or certain of our subsidiaries file income tax returns in the U.S. federal jurisdiction, various state jurisdictions and various non-U.S. jurisdictions. We and our subsidiaries are no longer subject to U.S. federal tax examinations for years before 2019 or state and local examinations for years before 2018, with limited exceptions.