Provision (Benefit) for Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Provision (Benefit) for Income Taxes [Text Block]

Note 6 – Provision (Benefit) for Income Taxes

The Provision (benefit) for income taxes from continuing operations includes:

	Year Ended December 31,
	2023		2022		2021
	(Millions)
Current:
Federal	$	3	$	(25)	$	(1)
State	21		19		3
	24		(6)		2
Deferred:
Federal	872		424		421
State	109		7		88
	981		431		509
Provision (benefit) for income taxes	$	1,005	$	425	$	511

Reconciliations from the Provision (benefit) at statutory rate from continuing operations to recorded Provision (benefit) for income taxes are as follows:

	Year Ended December 31,
	2023		2022		2021
	(Millions)
Provision (benefit) at statutory rate	$	925	$	534	$	435
Increases (decreases) in taxes resulting from:
State income taxes (net of federal benefit)	129		113		71
State deferred income tax rate change	(25)		(92)		—
Federal valuation allowance	—		(70)		3
Federal settlements	—		(45)		—
Impact of nontaxable noncontrolling interests	(26)		(14)		(9)
Other – net	2		(1)		11
Provision (benefit) for income taxes	$	1,005	$	425	$	511

The State deferred income tax rate change benefit of $25 million and $92 million in 2023 and 2022, respectively, is related to a decrease in our estimate of the deferred state income tax rate (net of federal effect) driven primarily by the enacted decline in the Pennsylvania state income tax rate over the next several years.

During the course of audits of our business by domestic and foreign tax authorities, we frequently face challenges regarding the amount of taxes due. These challenges include questions regarding the timing and amount of deductions and the allocation of income among various tax jurisdictions. In evaluating the liability associated with our various filing positions, we apply the two-step process of recognition and measurement. In association with this liability, we record an estimate of related interest and tax exposure as a component of our tax provision. The impact of this accrual is included within Other – net in our reconciliation of the Provision (benefit) at statutory rate to recorded Provision (benefit) for income taxes.

Significant components of Deferred income tax liabilities are as follows:

	December 31,
	2023		2022
	(Millions)
Gross deferred income tax liabilities:
Property, plant and equipment	$	3,541	$	3,171
Investments	1,740		1,784
Other	146		138
Total gross deferred income tax liabilities	5,427		5,093
Gross deferred income tax assets:
Accrued liabilities	935		1,108
Foreign tax credits	35		91
Federal loss carryovers	398		730
State losses and credits	293		356
Other	103		121
Total gross deferred income tax assets	1,764		2,406
Less valuation allowance	183		200
Net deferred income tax assets	1,581		2,206
Deferred income tax liabilities	$	3,846	$	2,887

The valuation allowance at December 31, 2023 and 2022 serves to reduce the available deferred income tax assets to an amount that will, more likely than not, be realized. We considered all available positive and negative evidence, which incorporates available tax planning strategies, and management’s estimate of future reversals of existing taxable temporary differences, and have determined that a portion of our deferred income tax assets related to the Foreign tax credits and State losses and credits may not be realized. In 2022, we released $70 million of valuation allowance upon determining we expect to utilize additional foreign tax credits prior to expiration between 2024 and 2025. The amounts presented in the table above are, with respect to state items, before any federal benefit. The change from prior year for the State losses and credits reflects increases in losses and credits generated in the current and prior years less losses and/or credits utilized in the current year. We have loss and credit carryovers in multiple state taxing jurisdictions. These attributes generally expire between 2024 and 2042 with some carryovers having indefinite carryforward periods.

Federal loss carryovers at December 31, 2023 reflect deferred tax assets on net operating loss carryovers with no expiration date.

Cash payments for income taxes (net of refunds) were $31 million and $13 million in 2023 and 2022, respectively. Cash refunds for income taxes (net of payments) were $45 million in 2021.

During the second quarter of 2022, we finalized settlements for 2011 through 2014 on certain contested matters with the Internal Revenue Service (IRS) that resulted in a 2022 year-to-date tax benefit of approximately $45 million and we received cash refunds totaling $7 million. During the fourth quarter of 2023, we closed the audit for 2018 and made a $5 million payment.

We recognize related interest and penalties as a component of Provision (benefit) for income taxes. No significant interest and penalties were recognized for any period presented. There are no interest or penalties relating to uncertain tax positions accrued as of December 31, 2023 and December 31, 2022.

Consolidated U.S. Federal income tax returns are open to IRS examination for years after 2019. The statute of limitations for most states expires one year after expiration of the IRS statute.