Annual report pursuant to Section 13 and 15(d)

INCOME TAXES (Tables)

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INCOME TAXES (Tables)
 12 Months Ended
Dec. 31, 2024
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 2024 2023 2022
U.S. income (loss) $ 2,857  $ (541) $ 1,336 
Foreign income 2,046  2,167  1,483 
Income before income taxes $ 4,903  $ 1,626  $ 2,819 
Schedule of Components of Income Tax Expense (Benefit)
Income tax expense (benefit) consisted of the following:
  Years ended December 31,
In millions 2024 2023 2022
Current      
U.S. federal and state $ 433  $ 611  $ 425 
Foreign 611  632  485 
Total current income tax expense 1,044  1,243  910 
Deferred      
U.S. federal and state (241) (468) (229)
Foreign 32  11  (45)
Total deferred income tax benefit (209) (457) (274)
Income tax expense $ 835  $ 786  $ 636 
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,
  2024 2023 2022
Statutory U.S. federal income tax rate 21.0  % 21.0  % 21.0  %
State income tax, net of federal effect 1.2  (0.4) 1.3 
Differences in rates and taxability of foreign subsidiaries and joint ventures (1)
4.2  11.9  3.1 
Research tax credits (1.5) (4.7) (1.8)
Foreign derived intangible income (1.3) (4.2) (2.0)
Settlement Agreements, federal impact (2)
—  22.4  — 
Settlement Agreements, state impact (2)
—  2.1  — 
Non-taxable Atmus gain (3)
(6.1) —  — 
Other, net (0.5) 0.2  1.0 
Effective tax rate 17.0  % 48.3  % 22.6  %
(1) Included the jurisdictional mix of pre-tax income and impact of actual and planned repatriation of earnings back to the U.S.
(2) See NOTE 14, "COMMITMENTS AND CONTINGENCIES," for additional information.
(3) See NOTE 21, "ATMUS INITIAL PUBLIC OFFERING (IPO) AND DIVESTITURE," for additional information.
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 2024 2023
Deferred tax assets    
U.S. and state carryforward benefits $ 254  $ 272 
Foreign carryforward benefits 653  609 
Employee benefit plans 308  347 
Warranty expenses 545  483 
Lease liabilities 109  125 
Capitalized research and development expenditures 805  591 
Accrued expenses 207  253 
Other 139  78 
Gross deferred tax assets 3,020  2,758 
Valuation allowance (872) (789)
Total deferred tax assets 2,148  1,969 
Deferred tax liabilities    
Property, plant and equipment (371) (367)
Unremitted income of foreign subsidiaries and joint ventures (162) (179)
Employee benefit plans (289) (278)
Lease assets (109) (123)
Intangible assets (315) (406)
Other (172) (64)
Total deferred tax liabilities (1,418) (1,417)
Net deferred tax assets $ 730  $ 552 
Tax Related Line Items on the Consolidated Balance Sheets
Our Consolidated Balance Sheets contain the following tax related items:
December 31,
In millions 2024 2023
Prepaid expenses and other current assets    
Refundable income taxes $ 121  $ 81 
Other assets
Deferred income tax assets 1,119  1,082 
Long-term refundable income taxes 47  27 
Other accrued expenses
Income tax payable 244  242 
Other liabilities
Long-term income taxes 5  111 
Deferred income tax liabilities 389  530 
Schedule of Unrecognized Tax Benefits Roll Forward
A reconciliation of unrecognized tax benefits for the years ended December 31, 2024, 2023 and 2022 was as follows:
December 31,
In millions 2024 2023 2022
Balance at beginning of year $ 330  $ 283  $ 89 
Additions to tax positions due to acquisitions —  8  189 
Additions to current year tax positions 21  21  17 
Additions to prior years' tax positions 9  19  17 
Reductions to prior years' tax positions (18) (1) (1)
Reductions for tax positions due to settlements with taxing authorities (38) —  (28)
Balance at end of year $ 304  $ 330  $ 283