ÐÇ¿Õ´«Ã½

Annual report pursuant to Section 13 and 15(d)

INCOME TAXES

v3.24.0.1
INCOME TAXES
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract] Ìý
Income Taxes
NOTE 11 - INCOME TAXES
Income from continuing operations before income taxes includes the following components:
Year Ended December 31,
(In millions) 2023 2022 2021
United States $ 600Ìý $ 1,803Ìý $ 3,827Ìý
Foreign (3) (7) (24)
Total $ 597Ìý $ 1,796Ìý $ 3,803Ìý
The components of the income tax expense from continuing operations consist of the following:
Year Ended December 31,
(In millions) 2023 2022 2021
Current provision:
United States federal $ 4Ìý $ 201Ìý $ 14Ìý
United States stateÌý& local 26Ìý 131Ìý 55Ìý
Foreign 4Ìý 1Ìý —Ìý
34Ìý 333Ìý 69Ìý
Deferred provision (benefit):
United States federal 97Ìý 117Ìý 683Ìý
United States stateÌý& local 7Ìý (22) 31Ìý
ÌýÌýForeign 10Ìý (5) (10)
Total income tax expense from continuing operations $ 148Ìý $ 423Ìý $ 773Ìý
Reconciliation of our income tax attributable to continuing operations computed at the U.S. federal statutory rate is as follows:
(In millions) 2023 2022 2021
Tax at U.S. statutory rate $ 125Ìý 21Ìý % $ 377Ìý 21Ìý % $ 799Ìý 21Ìý %
Increase (decrease) due to:
Percentage depletion in excess of cost depletion (32) (5) (49) (3) (99) (3)
Valuation allowance 14Ìý 2Ìý —Ìý —Ìý —Ìý —Ìý
Unrecognized tax benefits 7Ìý 1Ìý 2Ìý —Ìý 9Ìý —Ìý
State taxes, net 28Ìý 5Ìý 71Ìý 4Ìý 86Ìý 2Ìý
Federal & state provision to return (20) (3) 27Ìý 1Ìý (2) —Ìý
Income not subject to tax (11) (2) (9) —Ìý (9) —Ìý
Goodwill impairment 26Ìý 4Ìý —Ìý —Ìý —Ìý —Ìý
Other items, net 11Ìý 2Ìý 4Ìý —Ìý (11) —Ìý
Provision for income tax expense and effective income tax rate including discrete items $ 148Ìý 25Ìý % $ 423Ìý 23Ìý % $ 773Ìý 20Ìý %
The decreases in income tax expense in 2023, as compared to 2022, as well as 2022 compared to 2021 are predominately related to the decrease in the pre-tax book income year-over-year.
The components of income taxes for other than continuing operations consisted of the following:
(In millions) 2023 2022 2021
Other comprehensive income (loss):
Pension and OPEB $ 10Ìý $ (425) $ (206)
Derivative financial instruments 47Ìý 26Ìý (21)
Total $ 57Ìý $ (399) $ (227)
Significant components of our deferred tax assets and liabilities are as follows:
(In millions) 2023 2022
Deferred tax assets:
Operating loss and other carryforwards $ 390Ìý $ 389Ìý
Pension and OPEB liabilities 155Ìý 244Ìý
Environmental 67Ìý 96Ìý
Product inventories 92Ìý 54Ìý
State and local 9Ìý 14Ìý
Lease liabilities 79Ìý 62Ìý
Other liabilities 180Ìý 135Ìý
Total deferred tax assets before valuation allowance 972Ìý 994Ìý
Deferred tax asset valuation allowance (396) (390)
Net deferred tax assets 576Ìý 604Ìý
Deferred tax liabilities:
Investment in ventures (192) (195)
Lease assets (79) (38)
Property, plant and equipment and mineral rights (837) (827)
Other assets (103) (122)
Total deferred tax liabilities (1,211) (1,182)
Net deferred tax assets (liabilities) $ (635) $ (578)
We had gross domestic (including states) and foreign NOLs of $1,704 million and $1,452 million, respectively, at DecemberÌý31, 2023. We had gross domestic (including states) and foreign NOLs of $2,278 million and $1,444 million, respectively, at DecemberÌý31, 2022. The U.S. federal NOLs will begin to expire in 2034 and state NOLs begin to expire in 2024. The foreign NOLs begin to expire in 2035. For the year ended December 31, 2023, we had no gross interest expense limitation carryforwards. For the year ended December 31, 2022, we had $77 million gross interest expense limitation carryforwards.
The changes in the valuation allowance are presented below:
(In millions) 2023 2022 2021
Balance at beginning of year $ 390Ìý $ 409Ìý $ 836Ìý
Change in valuation allowance:
Included in income tax expense 6Ìý (19) (82)
Decrease from acquisitions —Ìý —Ìý (345)
Balance at end of year $ 396Ìý $ 390Ìý $ 409Ìý
At DecemberÌý31, 2023 and 2022, we have a valuation allowance recorded of $356 million and $342 million, respectively, related to foreign deferred tax assets, and an additional $40 million and $48 million, respectively, against certain state NOLs, which are expected to expire before utilization.
During 2023, we recorded a $14Ìýmillion valuation allowance against a portion of our Canadian deferred tax assets due to losses in recent years. We intend to maintain a valuation allowance against these deferred tax assets, unless and until sufficient positive evidence exists to support the realization of such assets.
During 2021, we recorded a decrease to the valuation allowance of $345 million related to the election filed with our 2020 federal tax return to waive the pre-acquisition NOLs that are limited under Section 382 of the IRC. An offsetting decrease was recorded in the NOL deferred tax asset in the same period.
Our losses in Luxembourg in recent periods represent sufficient negative evidence to require a full valuation allowance against the deferred tax assets in that jurisdiction. We intend to maintain a valuation allowance against the deferred tax assets related to these operating losses, unless and until sufficient positive evidence exists to support the realization of such assets.
At DecemberÌý31, 2023 and 2022, we had no cumulative undistributed earnings of foreign subsidiaries included in retained earnings. Accordingly, no provision has been made for U.S. deferred taxes related to future repatriation of earnings.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
(In millions) 2023 2022 2021
Unrecognized tax benefits balance as of JanuaryÌý1 $ 58Ìý $ 35Ìý $ 107Ìý
Increases for tax positions in current year 18Ìý 24Ìý 4Ìý
Decrease due to tax positions in prior year —Ìý (1) (66)
Lapses in statutes of limitations —Ìý —Ìý (10)
Unrecognized tax benefits balance as of DecemberÌý31 $ 76Ìý $ 58Ìý $ 35Ìý
At DecemberÌý31, 2023 and 2022, we had unrecognized tax benefits of $76 million and $58 million, respectively, included in Other non-current liabilities on the Statements of Consolidated Financial Position. If the unrecognized tax benefits were recognized, the full $76 million would impact the effective tax rate. Interest and penalties related to unrecognized tax benefits are $8 million for the year ended December 31, 2023. We do not expect that the amount of unrecognized benefits will change significantly within the next 12 months.
Tax years 2016 and forward remain subject to examination for the U.S., and tax years 2018 and forward remain subject to examination for Canada.