Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

The U.S. and foreign components of earnings from continuing operations before income taxes and equity in loss of investee companies were as follows:

Year Ended December 31,	2022		2021		2020
United States	$	324	$	4,106	$	2,353
Foreign	942		1,100		794
Total	$	1,266	$	5,206	$	3,147

The components of the provision (benefit) for income taxes were as follows:

Year Ended December 31,	2022		2021		2020
Current:
Federal	$	75	$	179	$	160
State and local	64		138		73
Foreign	194		239		180
Total current	333		556		413
Deferred:
Federal	(57)		249		146
State and local	(14)		49		42
Foreign	(35)		(208)		(66)
Total deferred	(106)		90		122
Provision for income taxes	$	227	$	646	$	535

In addition, included in net earnings from discontinued operations was an income tax provision of $77 million, $57 million and $38 million for 2022, 2021, and 2020, respectively.

The equity in loss of investee companies is shown net of tax on the Consolidated Statements of Operations. The tax benefit relating to losses from equity investments was $33 million in 2022, $49 million in 2021 and $19 million in 2020, which represented an effective tax rate of 13.9%, 35.0% and 40.4% for 2022, 2021, and 2020, respectively.

The difference between income taxes expected at the U.S. federal statutory income tax rate of 21% and the provision (benefit) for income taxes is summarized as follows:

Year Ended December 31,	2022		2021		2020
Taxes on income at U.S. federal statutory rate	$	266	$	1,093	$	661
State and local taxes, net of federal tax benefit	44		190		116
Effect of foreign operations	(20)		(141)		(98)
Noncontrolling interests	(20)		(13)		(52)
U.K. statutory rate change	—		(260)		(100)
Reorganization of foreign operations (a)	(72)		(229)		—
Excess tax (benefit) deficiency from stock-based     compensation	13		(8)		29
Other, net	16		14		(21)
Provision for income taxes	$	227	$	646	$	535

(a) For 2022, reflects a deferred tax benefit resulting from the transfer of intangible assets between our subsidiaries in connection with a reorganization of our international operations. The related deferred tax asset is primarily expected to be realized over a 25-year period. For 2021, reflects a tax benefit from the recognition of a capital loss associated with a change in the tax entity classification of a foreign subsidiary.

The following table summarizes the components of deferred income tax assets and liabilities.

At December 31,	2022		2021
Deferred income tax assets:
Reserves and other accrued liabilities	$	430	$	369
Pension, postretirement and other employee benefits	534		679
Lease liability	425		465
Tax credit and loss carryforwards	397		428
Interest limitation carryforward	93		—
Capitalized costs	49		—
Other	11		23
Total deferred income tax assets	1,939		1,964
Valuation allowance	(488)		(581)
Deferred income tax assets, net	1,451		1,383
Deferred income tax liabilities:
Intangible assets	(643)		(523)
Unbilled licensing receivables	—		(76)
Lease asset	(344)		(391)
Property, equipment and other assets	(180)		(171)
Financing obligations	(69)		(65)
Other	(50)		(14)
Total deferred income tax liabilities	(1,286)		(1,240)
Deferred income tax assets, net	$	165	$	143

In addition to the amounts reflected in the table above, included in “Assets of discontinued operations” on the Consolidated Balance Sheets are net deferred income tax assets of $55 million and $80 million at December 31, 2022 and 2021, respectively.

At December 31, 2022, we had deferred income tax assets for federal foreign tax credit carryforwards of $43 million and net operating loss carryforwards for federal, state and local, and foreign jurisdictions of $261 million,

the majority of which expire in various years from 2023 through 2038. The deferred tax asset for the federal interest limitation carryforward of $93 million at December 31, 2022 has an indefinite carryforward period.

The 2022 and 2021 deferred income tax assets were reduced by a valuation allowance of $488 million and $581 million, respectively, principally relating to income tax benefits from capital losses and net operating losses in foreign jurisdictions which are not expected to be realized.

Generally, the future remittance of foreign undistributed earnings will not be subject to U.S. federal income taxes and as a result, for substantially all of our foreign subsidiaries, we do not intend to assert indefinite reinvestment of both cash held outside of the U.S. and future cash earnings. However, a future repatriation of cash could be subject to state and local income taxes, foreign income taxes, tax on foreign currency translation gains and losses, and withholding taxes. Accordingly, as of December 31, 2022, we recorded deferred income tax liabilities associated with future repatriations of $13 million on the Consolidated Balance Sheet. Additional income taxes have not been provided for outside basis differences inherent in these entities, which could be recognized upon sale or other transaction, as these amounts continue to be indefinitely invested in foreign operations. The determination of the U.S. federal deferred income tax liability for such outside basis difference is not practicable.

The following table sets forth the change in the reserve for uncertain tax positions, excluding related accrued interest and penalties.

At January 1, 2020	$	384
Additions for current year tax positions	15
Additions for prior year tax positions	18
Reductions for prior year tax positions	(34)
Cash settlements	(2)
Statute of limitations lapses	(9)
Reclassification to deferred income tax liability	(64)
At December 31, 2020	308
Additions for current year tax positions	23
Additions for prior year tax positions	32
Reductions for prior year tax positions	(45)
Cash settlements	(6)
Statute of limitations lapses	(11)
At December 31, 2021	301
Additions for current year tax positions	16
Additions for prior year tax positions	3
Reductions for prior year tax positions	(13)
Cash settlements	(2)
Statute of limitations lapses	(2)
At December 31, 2022	$	303

The reserve for uncertain tax positions of $303 million at December 31, 2022 includes $272 million which would affect our effective income tax rate, including discontinued operations, if and when recognized in future years. We recognized interest and penalties of $14 million for each of the years ended December 31, 2022 and 2021 and $16 million for the year ended December 31, 2020 in the Consolidated Statements of Operations. As of December 31, 2022 and 2021, we have recorded liabilities for accrued interest and penalties of $67 million and $56 million, respectively, on the Consolidated Balance Sheets.

Viacom and CBS filed separate tax returns for periods prior to the Merger. For CBS, we are currently under examination by the Internal Revenue Service (“IRS”) for the 2017 and 2018 tax years. For Viacom, we are currently under examination by the IRS for the 2016 through 2019 tax years. For tax returns filed as a merged company, we are currently under examination by the IRS for the 2019 tax year. Various tax years are also currently under examination by state and local and foreign tax authorities. With respect to open tax years in all jurisdictions, we currently do not believe that it is reasonably possible that the reserve for uncertain tax positions will significantly change within the next 12 months; however, it is difficult to predict the final outcome or timing of resolution of any particular tax matter and events could cause our current expectation to change in the future.