Income Taxes (Tables)

12 Months Ended

Dec. 31, 2023

Federal and foreign income tax expense consisted of the following:


	Year Ended December 31
$ in millions	2023		2022		2021
Federal income tax expense:
Current	$	949	$	1,289	$	1,398
Deferred	(670)		(353)		518
Total federal income tax expense	279		936		1,916
Foreign income tax expense:
Current	15		3		6
Deferred	(4)		1		11
Total foreign income tax expense	11		4		17
Total federal and foreign income tax expense	$	290	$	940	$	1,933

Income tax reconciliation

Income tax expense differs from the amount computed by multiplying earnings before income taxes by the statutory federal income tax rate due to the following:


	Year Ended December 31
$ in millions	2023				2022				2021
Income tax expense at statutory rate	$	493	21.0	%	$	1,226	21.0	%	$	1,877	21.0	%
Research credit	(210)		(8.9)		(177)		(3.0)		(192)		(2.2)
Foreign derived intangible income	(63)		(2.7)		(66)		(1.1)		(50)		(0.6)

IT services divestiture nondeductible goodwill	—		—		—		—		250		2.8

Settlements with taxing authorities	(1)		—		(86)		(1.5)		—		—
Net interest expense	69		2.9		22		0.4		17		0.2


Other, net	2		0.1		21		0.3		31		0.4
Total federal and foreign income taxes	$	290	12.4	%	$	940	16.1	%	$	1,933	21.6	%

Unrecognized tax benefit rollforward

The change in unrecognized tax benefits during 2023, 2022 and 2021, excluding interest, is as follows:


	December 31
$ in millions	2023		2022		2021
Unrecognized tax benefits at beginning of the year	$	1,663	$	1,630	$	1,481
Additions based on tax positions related to the current year	276		262		355
Additions for tax positions of prior years	254		6		47
Reductions for tax positions of prior years	(9)		(124)		(251)
Settlements with taxing authorities	(189)		(110)		(1)
Other, net	(1)		(1)		(1)
Net change in unrecognized tax benefits	331		33		149
Unrecognized tax benefits at end of the year	$	1,994	$	1,663	$	1,630

Components of deferred tax assets and liabilities

The tax effects of temporary differences and carryforwards that gave rise to year-end deferred federal, state and foreign tax balances, as presented in the consolidated statements of financial position, are as follows:


	December 31
$ in millions	2023		2022
Deferred Tax Assets
Retiree benefits	$	115	$	117
Capitalized research and experimental expenditures	3,380		1,671
Accrued employee compensation	400		378
Provisions for accrued liabilities	509		65
Inventory	279		484
Stock-based compensation	35		37
Operating lease liabilities	575		556
Tax credits	557		464
Other	215		144
Gross deferred tax assets	6,065		3,916
Less: valuation allowance	(517)		(428)
Net deferred tax assets	5,548		3,488
Deferred Tax Liabilities
Goodwill	534		534
Purchased intangibles	83		98
Property, plant and equipment, net	805		854
Operating lease right-of-use assets	563		545
Contract accounting differences	2,437		1,348
Other	106		79
Deferred tax liabilities	4,528		3,458
Total net deferred tax assets	$	1,020	$	30