Annual report pursuant to Section 13 and 15(d)

INCOME TAXES (Tables)

v3.22.4
INCOME TAXES (Tables)
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
Schedule of Income before Income Tax, Domestic and Foreign
The following table summarizes income before income taxes:
  Years ended December 31,
In millions 2022 2021 2020
U.S. income $ 1,336  $ 1,251  $ 1,134 
Foreign income 1,483  1,500  1,204 
Income before income taxes $ 2,819  $ 2,751  $ 2,338 
Schedule of Components of Income Tax Expense (Benefit)
Income tax expense (benefit) consisted of the following:
  Years ended December 31,
In millions 2022 2021 2020
Current      
U.S. federal and state $ 425  $ 261  $ 162 
Foreign 485  319  358 
Total current income tax expense 910  580  520 
Deferred      
U.S. federal and state (229) (12) 2 
Foreign (45) 19  22 
Impact of India tax law changes —  —  (17)
Total deferred income tax (benefit) expense (274) 7  7 
Income tax expense $ 636  $ 587  $ 527 
Schedule of Effective Income Tax Rate Reconciliation
A reconciliation of the statutory U.S. federal income tax rate to the effective tax rate was as follows:
  Years ended December 31,
  2022 2021 2020
Statutory U.S. federal income tax rate 21.0  % 21.0  % 21.0  %
State income tax, net of federal effect 1.3  1.1  1.0 
Differences in rates and taxability of foreign subsidiaries and joint ventures 3.1  0.1  3.6 
Research tax credits (1.8) (0.6) (1.3)
Foreign derived intangible income (2.0) (1.0) (1.2)
Impact of India tax law changes —  —  (0.7)
Other, net 1.0  0.7  0.1 
Effective tax rate 22.6  % 21.3  % 22.5  %
Schedule of Other Income Tax Adjustments
The India Tax Law Change resulted in the following adjustments to the Consolidated Statements of Net Income for the year ended December 31, 2020:
In millions Favorable (Unfavorable)
Equity, royalty and interest income from investees $ 37 
Income tax expense (1)
17 
Less: Net income attributable to noncontrolling interests (19)
Net income statement impact $ 35 
(1) The adjustment to income tax expense includes $15 million of favorable discrete items.
Schedule of Deferred Tax Assets and Liabilities
Carryforward tax benefits and the tax effect of temporary differences between financial and tax reporting that give rise to net deferred tax assets (liabilities) were as follows:
  December 31,
In millions 2022 2021
Deferred tax assets    
U.S. and state carryforward benefits $ 272  $ 218 
Foreign carryforward benefits 527  177 
Employee benefit plans 258  254 
Warranty expenses 458  445 
Lease liabilities 110  108 
Capitalized research and development expenditures 238  — 
Accrued expenses 174  111 
Other 126  74 
Gross deferred tax assets 2,163  1,387 
Valuation allowance (704) (360)
Total deferred tax assets 1,459  1,027 
Deferred tax liabilities    
Property, plant and equipment (369) (272)
Unremitted income of foreign subsidiaries and joint ventures (210) (197)
Employee benefit plans (311) (355)
Lease assets (108) (105)
Intangible assets (435) (44)
Other (50) (29)
Total deferred tax liabilities (1,483) (1,002)
Net deferred tax (liabilities) assets $ (24) $ 25 
Tax Related Line Items on the Consolidated Balance Sheets
Our Consolidated Balance Sheets contain the following tax related items:
December 31,
In millions 2022 2021
Prepaid expenses and other current assets    
Refundable income taxes $ 83  $ 101 
Other assets
Deferred income tax assets 625  428 
Long-term refundable income taxes 14  — 
Other accrued expenses
Income tax payable 173  107 
Other liabilities
Long-term income taxes 192  263 
Deferred income tax liabilities 649  403 
Schedule of Unrecognized Tax Benefits Roll Forward
A reconciliation of unrecognized tax benefits for the years ended December 31, 2022, 2021 and 2020 was as follows:
December 31,
In millions 2022 2021 2020
Balance at beginning of year $ 89  $ 122  $ 77 
Additions to tax positions due to acquisitions 189  —  — 
Additions to current year tax positions 17  11  9 
Additions to prior years' tax positions 17  16  49 
Reductions to prior years' tax positions (1) (28) (13)
Reductions for tax positions due to settlements with taxing authorities (28) (32) — 
Balance at end of year $ 283  $ 89  $ 122