INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Components of (Benefit) Provision for Income Taxes

The following is a summary of the components of the (benefit) provision for income taxes for Verso:

	Year Ended December 31,
(Dollars in millions)	2019		2020		2021
Current tax (benefit) provision:
U.S. federal	$	—	$	—	$	—
U.S. state and local	1		—		—
Total current tax (benefit) provision	1		—		—
Deferred tax (benefit) provision:
U.S. federal	22		(9)		(1)
U.S. state and local	1		(9)		(2)
Total deferred tax (benefit) provision	23		(18)		(3)
Less: valuation allowance	(115)		9		—
Total income tax (benefit) provision	$	(91)	$	(9)	$	(3)

Reconciliation of Income Tax Expense Using Statutory Federal Income Tax Rate Compared with Actual Income Tax Expense

A reconciliation of income tax expense using the statutory federal income tax rate compared with actual income tax expense follows:

	Year Ended December 31,
(Dollars in millions)	2019		2020		2021
Tax at Statutory U.S. Rate of 21%	$	(4)	$	(23)	$	(1)
Changes resulting from:
Deferred tax adjustments	26		12		(1)
Other expenses	—		2		1
Net permanent differences	26		14		—
Valuation allowance	(115)		9		—
State income taxes (benefit)	2		(9)		(2)
Other	—		—		—
Total income tax (benefit) provision	$	(91)	$	(9)	$	(3)

Significant Components of Net Deferred Tax Asset (Liability)

The following is a summary of the significant components of the net deferred tax asset (liability):

	December 31,
(Dollars in millions)	2020		2021
Deferred tax assets:
Net operating loss	$	79	$	78
Credit carryforwards	36		36
Pension	88		31
Compensation obligations	10		5
Inventory reserves/capitalization	19		18
Capitalized expenses	4		4
Other	9		8
Gross deferred tax assets	245		180
Less: valuation allowance	(20)		(20)
Deferred tax assets, net of allowance	$	225	$	160
Deferred tax liabilities:
Property, plant and equipment	$	(95)	$	(70)
Intangible assets	(4)		(3)
Other	(4)		(2)
Total deferred tax liabilities	(103)		(75)
Net deferred tax assets	$	122	$	85

Reconciliation of Beginning and Ending Amount of Unrecognized Tax Benefits

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

(Dollars in millions)
Balance at December 31, 2019	$	2
Additions	—
Reductions	—
Balance at December 31, 2020	2
Additions	—
Reductions	—
Balance at December 31, 2021	$	2