Income Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The components of Loss before income taxes were:

Years ended December 31,	2024	2023	2022
U.S.	($12,813)	($2,512)	($5,457)
Non-U.S.	603	507	435
Total	($12,210)	($2,005)	($5,022)

Income tax (benefit)/expense consisted of the following:

Years ended December 31,	2024	2023	2022
Current tax (benefit)/expense
U.S. federal	($277)	$9	($58)
Non-U.S.	184	179	142
U.S. state	14	19	(42)
Total current	(79)	207	42
Deferred tax (benefit)/expense
U.S. federal	(71)	6	(62)
Non-U.S.	3	5	(3)
U.S. state	(234)	19	54
Total deferred	(302)	30	(11)
Total income tax (benefit)/expense	($381)	$237	$31

Net income tax payments/(refunds) were $187, $204 and ($1,317) in 2024, 2023 and 2022, respectively.

The following is a reconciliation of the U.S. federal statutory tax to actual income tax (benefit)/expense:

Years ended December 31,	2024			2023			2022
	Amount	Rate		Amount	Rate		Amount	Rate
U.S. federal statutory tax	($2,564)	21.0	%	($421)	21.0	%	($1,054)	21.0	%
Valuation allowance	3,145	(25.8)		1,150	(57.3)		1,199	(23.9)
Federal audit settlement(1)	(490)	4.0
Research and development credits	(409)	3.3		(472)	23.6		(204)	4.1
State income tax provision, net of effects on U.S. federal tax	(223)	1.8		(75)	3.7		(90)	1.8
Tax on non-U.S. activities	113	(0.9)		35	(1.8)		64	(1.3)
Impact of subsidiary shares purchased from noncontrolling interests				(29)	1.5
Other provision adjustments	47	(0.3)		49	(2.5)		116	(2.3)
Income tax (benefit)/expense	($381)	3.1	%	$237	(11.8)	%	$31	(0.6)	%

(1)     In the second quarter of 2024, we recorded a tax benefit of $490 related to the settlement of the 2018-2020 federal tax audit, which excludes an associated $155 valuation expense that is recorded in the Valuation allowance line.

Significant components of our deferred tax assets/(liabilities) at December 31 were as follows:

	2024	2023
Inventory and long-term contract methods of income recognition	($4,765)	($5,115)
Federal net operating loss, credit, interest and other carryovers(1)	4,719	2,551
Research expenditures	3,936	2,873
Fixed assets, intangibles and goodwill	(1,526)	(1,566)
State net operating loss, credit, interest and other carryovers(2)	1,353	1,137
Other employee benefits	1,049	1,162
Pension benefits	1,045	1,178
Accrued expenses and reserves	1,029	956
Other postretirement benefit obligations	587	590
Other	473	614
Gross deferred tax assets/(liabilities) before valuation allowance	$7,900	$4,380
Valuation allowance	(7,837)	(4,550)
Net deferred tax assets/(liabilities) after valuation allowance	$63	($170)

(1)     Of the deferred tax asset for federal net operating loss, credit, interest and other carryovers, $1,848 expires on or before December 31, 2044 and $2,871 may be carried over indefinitely.

(2)     Of the deferred tax asset for state net operating loss, credit, interest and other carryovers, $686 expires on or before December 31, 2044 and $667 may be carried over indefinitely.

Net deferred tax assets/(liabilities) at December 31 were as follows:

	2024	2023
Deferred tax assets	$17,991	$14,743
Deferred tax liabilities	(10,091)	(10,363)
Valuation allowance	(7,837)	(4,550)
Net deferred tax assets/(liabilities)	$63	($170)

The Company’s deferred income tax assets of $17,991 can be used in future years to offset taxable income and reduce income taxes payable. The Company’s deferred income tax liabilities of $10,091 will partially offset deferred income tax assets and result in higher taxable income in future years and increase income taxes payable. Tax law determines whether future reversals of temporary differences will result in taxable and deductible amounts that offset each other in future years. The particular years in which temporary differences result in taxable or deductible amounts generally are determined by the timing of the recovery of the related asset or settlement of the related liability. The deferred income tax assets and liabilities relate primarily to U.S. federal and state tax jurisdictions. From a U.S. federal tax perspective, the Company generated tax net operating losses in 2021 and 2024 and interest carryovers in 2021, 2022, 2023, and 2024 that can be carried forward indefinitely and federal research and development credits that can be carried forward 20 years.

Throughout 2023 and 2024, the Company was in a three-year cumulative pre-tax loss position. For purposes of assessing the recoverability of deferred tax assets, the Company determined that it could not include future projected earnings in the analysis due to recent history of losses.

As of December 31, 2024 and 2023, the Company has recorded valuation allowances of $7,837 and $4,550 primarily for certain domestic deferred tax assets, and certain domestic net operating losses, tax credit and interest carryforwards. To measure the valuation allowance, the Company estimated in what year each of its deferred tax assets and liabilities would reverse using systematic and logical methods to estimate the reversal patterns. The valuation allowance results from not having sufficient income from deferred tax liability reversals in the appropriate future periods to support the realization of deferred tax assets.

During 2024, the Company increased the valuation allowance by $3,287, primarily due to tax credits and other carryforwards generated in 2024 that cannot be realized in 2024.

Until the Company generates sustained levels of profitability, additional valuation allowances may have to be recorded with corresponding adverse impacts on earnings and/or OCI.

In 2024, we determined that earnings from our non-U.S. subsidiaries are no longer considered to be indefinitely reinvested.

As of December 31, 2024 and 2023, the amounts accrued for the payment of income tax-related interest and penalties included in the Consolidated Statements of Financial Position were not significant. The amounts of interest included in the Consolidated Statements of Operations were not significant for 2024, 2023 and 2022.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

	2024	2023	2022
Unrecognized tax benefits – January 1	$1,131	$915	$858
Gross increases – tax positions in prior periods		38	17
Gross decreases – tax positions in prior periods	(453)	(3)	(51)
Gross increases – current period tax positions	216	181	91
Gross decreases – current period tax positions
Settlements	(206)
Unrecognized tax benefits – December 31	$688	$1,131	$915

As of December 31, 2024, 2023 and 2022, the total amount of unrecognized tax benefits include $651, $1,088 and $878, respectively, that would affect the effective tax rate, if recognized. As of December 31, 2024, these amounts were primarily associated with the amount of research tax credits claimed.

Federal income tax audits have been settled for all years prior to 2021. The Internal Revenue Service is expected to begin the 2021-2023 federal tax audit in the third quarter of 2025. We are also subject to examination in major state and international jurisdictions for the 2010-2023 tax years. We believe appropriate provisions for all outstanding tax issues have been made for all jurisdictions and all open years.

The Organization for Economic Co-operation and Development has introduced Pillar Two model rules, which establish a new global minimum tax of 15%. While it is unlikely that the United States will adopt these rules, certain other countries in which we operate have enacted Pillar Two legislation commencing in 2024. Since we do not have significant operations in jurisdictions with tax rates below the 15% minimum, Pillar Two has not materially increased our global tax costs in 2024 and is not expected to be material in future periods. We will continue to monitor both US and international legislative developments related to Pillar Two to assess for any potential impacts.