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Annual report [Section 13 and 15(d), not S-K Item 405]

INCOME TAXES

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INCOME TAXES
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract] 听
Income Taxes
NOTE 11 - INCOME TAXES
Income (loss) from continuing operations before income taxes includes the following components:
Year Ended December 31,
(In millions) 2024 2023 2022
United States $ (894) $ 600听 $ 1,803听
Foreign (49) (3) (7)
Total $ (943) $ 597听 $ 1,796听
The components of the income tax expense (benefit) from continuing operations consist of the following:
Year Ended December 31,
(In millions) 2024 2023 2022
Current provision:
United States federal $ (38) $ 4听 $ 201听
United States state听& local (6) 26听 131听
Foreign 3听 4听 1听
(41) 34听 333听
Deferred provision (benefit):
United States federal (152) 97听 117听
United States state听& local (33) 7听 (22)
听听Foreign (9) 10听 (5)
Total income tax expense (benefit) from continuing operations $ (235) $ 148听 $ 423听
Reconciliation of our income tax attributable to continuing operations computed at the U.S. federal statutory rate is as follows:
(In millions) 2024 2023 2022
Tax at U.S. statutory rate $ (198) 21听 % $ 125听 21听 % $ 377听 21听 %
Increase (decrease) due to:
Percentage depletion in excess of cost depletion (20) 2听 (32) (5) (49) (3)
Valuation allowance 鈥�听 鈥�听 14听 2听 鈥斕� 鈥斕�
Unrecognized tax benefits 7听 鈥�听 7听 1听 2听 鈥斕�
State taxes, net (30) 3听 28听 5听 71听 4听
Federal & state provision to return (4) 鈥�听 (20) (3) 27听 1听
Income not subject to tax (10) 1听 (11) (2) (9) 鈥斕�
Goodwill impairment 鈥�听 鈥�听 26听 4听 鈥斕� 鈥斕�
Other items, net 20听 (2) 11听 2听 4听 鈥斕�
Provision for income tax expense (benefit) and effective income tax rate including discrete items $ (235) 25听 % $ 148听 25听 % $ 423听 23听 %
The increase in income tax benefit in 2024, as compared to income tax expense in 2023, as well as the decrease in income tax expense in 2023 compared to 2022 are predominantly 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) 2024 2023 2022
Other comprehensive income (loss):
Pension and OPEB $ 55听 $ 10听 $ (425)
Derivative instruments (37) 47听 26听
Total $ 18听 $ 57听 $ (399)
Significant components of our deferred tax assets and liabilities are as follows:
(In millions) 2024 2023
Deferred tax assets:
Operating loss and other carryforwards $ 589听 $ 390听
Pension and OPEB liabilities 129听 155听
Environmental 69听 67听
Product inventories 53听 92听
State and local 36听 9听
Lease liabilities 87听 79听
Other liabilities 151听 180听
Total deferred tax assets before valuation allowance 1,114听 972听
Deferred tax asset valuation allowance (388) (396)
Net deferred tax assets 726听 576听
Deferred tax liabilities:
Investment in ventures (181) (192)
Lease assets (88) (79)
Property, plant and equipment and mineral rights (811) (837)
Intangible assets (441) (27)
Other assets (59) (76)
Total deferred tax liabilities (1,580) (1,211)
Net deferred tax liabilities $ (854) $ (635)
We had gross domestic (including states) and foreign NOLs of $3,549 million and $1,507 million, respectively, at December听31, 2024. We had gross domestic (including states) and foreign NOLs of $1,704 million and $1,452 million, respectively, at December听31, 2023. The U.S. federal NOLs will begin to expire in 2034, and state NOLs begin to expire in 2025. The foreign NOLs begin to expire in 2035. For the year ended December听31, 2024, we had $92 million gross U.S. interest expense limitation carryforwards. For the year ended December听31, 2023, we had no gross interest expense limitation carryforwards.
The changes in the valuation allowance are presented below:
(In millions) 2024 2023 2022
Balance at beginning of year $ 396听 $ 390听 $ 409听
Change in valuation allowance:
Income tax (benefit) expense (8) 6听 (19)
Balance at end of year $ 388听 $ 396听 $ 390听
At December听31, 2024 and 2023, we have a valuation allowance recorded of $349 million and $356 million, respectively, related to foreign deferred tax assets, and an additional $39 million and $40 million, respectively, against certain state NOLs, which are expected to expire before utilization.
During 2023, we recorded a $14听million 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.
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 December听31, 2024 and 2023, 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) 2024 2023 2022
Unrecognized tax benefits balance as of January听1 $ 76听 $ 58听 $ 35听
Increases for tax positions in current year 46听 18听 24听
Decrease due to tax positions in prior year (1) 鈥斕� (1)
Unrecognized tax benefits balance as of December听31 $ 121听 $ 76听 $ 58听
At December听31, 2024 and 2023, we had unrecognized tax benefits of $121 million and $76 million, respectively. Of these amounts, $75 million and $76 million were included in Other non-current liabilities on the Statements of Consolidated Financial Position. Additionally, $46 million was included in Deferred income taxes at December 31, 2024. If the unrecognized tax benefits were recognized, the $75 million would impact the effective tax rate. Interest and penalties related to unrecognized tax benefits are $7 million for the year ended December 31, 2024. 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 2020 and forward remain subject to examination for Canada.