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Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The geographical sources of income (loss) before income taxes were as follows (in millions):
Year Ended December 31,
 202320222021
U.S.$167 $(69)$328 
Outside U.S.167 613 640 
Total$334 $544 $968 
Income tax expense (benefit) consisted of the following (in millions):
Year Ended December 31,
 202320222021
Current:
Federal$2 $141 $63 
State8 22 12 
Foreign63 126 124 
Total current$73 $289 $199 
Deferred:
Federal(5)(168)(48)
State(7)(22)(12)
Foreign(23)(18)(8)
Total deferred$(35)$(208)$(68)
Total$38 $81 $131 

The Company’s effective tax rates were 11.4%, 14.9% and 13.5% for the years ended December 31, 2023, 2022 and 2021, respectively.
A reconciliation of the U.S. federal statutory income tax rate to our actual income tax rate is provided below:
Year Ended December 31,
202320222021
Provision computed at statutory rate21.0 %21.0 %21.0 %
Remeasurement of deferred taxes(2.4)(0.4)(1.0)
Change in valuation allowance2.3 0.1 (0.1)
U.S. impact of Enterprise acquisition 0.3 0.4 0.3 
Change in contingent income tax reserves0.4 (0.3)(0.2)
Foreign earnings subject to U.S. taxation(5.3)(3.5)(2.0)
Foreign rate differential(0.1)(3.4)(1.7)
State income tax, net of federal tax benefit0.5 (0.5)0.3 
Tax credits(5.5)(3.1)(2.0)
Equity compensation deductions0.4 (0.1)(2.4)
Return to provision and other true ups(1.8)1.5 (0.9)
Settlements with tax authorities0.3 2.0 0.0 
Permanent differences and other1.3 1.2 2.2 
Provision for income taxes11.4 %14.9 %13.5 %

For the year ended December 31, 2023, the Company’s effective tax rate was lower than the federal statutory rate of 21% primarily due to the tax benefit related to foreign earnings subject to U.S. taxation, remeasurements of deferred taxes, and the generation of tax credits. For the year ended December 31, 2022, the Company’s effective tax rate was lower than the federal statutory rate of 21% due to lower tax rates in foreign jurisdictions, the generation of tax credits and the favorable impacts of foreign earnings subject to U.S. taxation. For the year ended December 31, 2021, the Company’s effective tax rate was lower than the federal statutory rate of 21% primarily due to lower tax rates in foreign jurisdictions, the generation of tax credits and the favorable impacts of share-based compensation benefits.

In December of 2021, the Organization for Economic Co-operation and Development (“OECD”) released Pillar Two Model Rules defining the global minimum tax rules, which contemplate a global minimum tax rate of 15%. Several member countries have enacted Pillar Two provisions that are effective in 2024. The Company believes it will qualify for safe harbor exemptions in many of these jurisdictions and any remaining impact to future effective tax rates and corporate tax liability will be minimal.

The Company earns a significant amount of its operating income outside of the U.S. that is taxed at rates different than the U.S. federal statutory rate. The Company’s principal foreign jurisdictions that provide sources of operating income are the U.K. and Singapore. The Company had an incentivized tax rate from the Singapore Economic Development Board, which reduced the income tax rate in that jurisdiction effective for calendar years 2019 to 2023. The Company has not renewed the incentivized tax rate for future years, which did not have a significant impact on our current year effective tax rate nor is it expected to have a significant impact on future year effective tax rates.
Tax effects of temporary differences that resulted in deferred tax assets and liabilities are as follows (in millions):
 December 31,
 20232022
Deferred tax assets:
Capitalized research expenditures$225 $138 
Deferred revenue76 93 
Tax credits43 32 
Net operating loss carryforwards435 432 
Other accruals38 31 
Inventory items23 21 
Sales return/rebate reserve42 81 
Share-based compensation expense15 14 
Legal accrual13 55 
Lease liabilities23 23 
Valuation allowance(422)(420)
Total deferred tax assets$511 $500 
Deferred tax liabilities:
Depreciation and amortization103 127 
Unrealized gains and losses on securities and investments11 12 
Undistributed earnings2 2 
Right of use lease assets19 20 
Other5 7 
Total deferred tax liabilities$140 $168 
Net deferred tax assets$371 $332 

For tax years beginning in 2022, the Tax Cuts and Jobs Act of 2017 imposed a requirement that all R&D expenses be capitalized and amortized for U.S. tax purposes. The effect of this new provision is an increase of approximately $100 million and $130 million to deferred tax assets for the years ended December 31, 2023 and 2022, respectively, with corresponding increases to the current tax liabilities.

The Company’s valuation allowance primarily relates to Luxembourg reorganization activities in 2019, which had resulted in the realization of deferred tax liabilities and a corresponding increase in valuation allowances related to depreciation and amortization. The Company’s valuation allowance also consists of certain net operating loss (“NOL”) and credit carryforwards for which the Company believes it is more likely than not that a tax benefit will not be realized. With respect to all other deferred tax assets, the Company believes it is more likely than not that the results of future operations will generate sufficient taxable income to realize a tax benefit. There were no significant adjustments to the Company’s valuation allowance during the year ended December 31, 2023.

As of December 31, 2023, the Company had approximately $435 million (tax effected) of “NOLs” and $43 million of credit carryforwards. Approximately $171 million of NOLs will expire beginning in 2024 through 2039, and $34 million of credits will expire beginning in 2024 through 2041, with the remaining amounts of NOLs and credit carryforwards having no expiration dates.

The Company is subject to the GILTI, BEAT and FDII provisions, for which we recorded an income tax benefit of $16 million, $19 million and $20 million for the years ended December 31, 2023, 2022 and 2021, respectively. These impacts are included in the calculation of the Company’s effective tax rate.

The Company is not permanently reinvested with respect to its U.S. directly-owned foreign subsidiaries. The Company is subject to U.S. income tax on substantially all foreign earnings under GILTI, while any remaining foreign earnings are eligible for a dividends received deduction. As a result, future repatriation of earnings will not be subject to additional U.S. federal income tax but may be subject to currency translation gains or losses. Where required, the Company has recorded a deferred tax liability for foreign withholding taxes on current earnings. Additionally, gains and losses on any future taxable dispositions of U.S.-owned foreign affiliates continue to be subject to U.S. income tax.
The Company has not recognized deferred tax liabilities in the U.S. with respect to its outside basis differences in its directly-owned foreign affiliates. It is not practicable to determine the amount of unrecognized deferred tax liabilities on these indefinitely reinvested earnings.

Unrecognized tax benefits
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in millions):
Year ended December 31,
20232022
Balance at beginning of year$7 $7 
Additions for tax positions related to the current year11 — 
Additions for tax positions related to prior years— 3 
Settlements for tax positions— (2)
Lapse of statutes(1)(1)
Balance at end of year$17 $7 

As of December 31, 2023 and December 31, 2022, there were $9 million and $7 million of unrecognized tax benefits that, if recognized, would affect the annual effective tax rate. Additionally, fiscal years 2009 through 2023 remain open to examination by multiple foreign and U.S. state taxing jurisdictions.

As of December 31, 2023, no significant uncertain tax positions are expected to be settled within the next twelve months. Due to uncertainties in any tax audit or litigation outcome, the Company’s estimates of the ultimate settlements of uncertain tax positions may change and the actual tax benefits may differ significantly from estimates.
The Company recognized less than $1 million of net tax benefit associated with interest and penalties related to income tax matters during the years ended December 31, 2023 and 2022. The Company recognized no expense or benefit for interest and penalties during the year ended December 31, 2021. The expense or benefit associated with interest and penalties is reflected within Income tax expense on the Consolidated Statements of Operations. The Company has included $4 million and $5 million of estimated interest and penalty obligations within Other long-term liabilities on the Consolidated Balance Sheets each as of December 31, 2023 and 2022