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Income Taxes
 6 Months Ended
Jun. 16, 2022
Income Tax Disclosure [Abstract]  
Income Tax Disclosure
6.Income Taxes
The Company's income tax benefit was as follows:
SuccessorPredecessor
Three Months
Ended
September 30, 2022		Three Months Ended September 24, 2021
Current tax benefit$20.5 $26.2 
Deferred tax benefit4.4 5.8 
Income tax benefit$24.9 $32.0 
SuccessorPredecessor
Period from
June 17, 2022
through
September 30, 2022		Period from
January 1, 2022
 through
June 16, 2022		Nine Months Ended
September 24, 2021
Current tax benefit$23.8 $23.9 $62.8 
Deferred tax benefit10.8 473.4 19.1 
Income tax benefit$34.6 $497.3 $81.9 
As stated in Note 1, the unaudited condensed consolidated financial statements as of September 30, 2022 have been prepared assuming the Company will continue as a going concern. Therefore, the Company has determined that its net deferred tax assets in certain jurisdictions are more likely than not realizable, and has released the associated valuation allowance as of the Effective Date.
The effective tax rate for the three months ended September 30, 2022 (Successor) and the period from June 17, 2022 through September 30, 2022 (Successor) was 8.0% and 9.0%, respectively. The current and deferred income tax benefits were predominately related to intangible asset amortization and activity attributed to fresh-start adjustments, partially offset by the utilization of loss carryforwards.
The income tax benefit of $24.9 million for the three months ended September 30, 2022 (Successor) was attributed to the jurisdictional mix of pretax earnings, separation costs, reorganization items, net and restructuring charges.
The income tax benefit of $34.6 million for the period from June 17, 2022 through September 30, 2022 (Successor) was attributed to the jurisdictional mix of pretax earnings, separation costs, reorganization items, net and restructuring charges.
The effective tax rate for the period from January 1, 2022 through June 16, 2022 (Predecessor) was 61.3%. The income tax benefit for the period from January 1, 2022 through June 16, 2022 (Predecessor) primarily consisted of the income tax impacts from reorganization and fresh-start adjustments, including adjustments to the Company's valuation allowance. For the period January 1, 2022 through June 16, 2022 (Predecessor), the Company recorded an income tax benefit of $497.3 million, primarily for reorganization adjustments in the Predecessor period consisting of (1) $1,231.5 million of tax expense for the reduction in federal and state NOL carryforwards from the cancellation of debt income ("CODI") realized upon emergence and limitations under Sections 382 and 383 of the IRC; (2) $141.3 million of tax expense for the net decrease in deferred tax assets resulting from reorganization adjustments; and (3) $1,270.1 million of tax benefit for the reduction in the valuation allowance on the Company's deferred tax assets; and fresh-start adjustments in the Predecessor period consisting of (4) $297.1 million of tax benefit for the net decrease in deferred tax liabilities resulting from fresh-start adjustments and (5) $285.3 million of tax benefit associated with the release of uncertain tax positions. The remaining tax benefit was attributable to the jurisdictional mix of pretax earnings during the Predecessor period.
The effective tax rate for the three and nine months ended September 24, 2021 (Predecessor) was 10.6% and 13.6%, respectively. The current and deferred income tax benefits for the three and nine months ended September 24, 2021 (Predecessor) were primarily impacted by intangible asset amortization, an increase to prepaid taxes and a decrease to uncertain tax positions partially offset by the utilization of loss carryforwards in non-valuation allowance jurisdictions.
The income tax benefit of $32.0 million for the three months ended September 24, 2021 (Predecessor) consisted of $16.9 million attributed to the jurisdictional mix of pretax earnings, $11.8 million attributed to uncertain tax positions and $4.3 million attributed to separation costs, reorganization items, net and restructuring charges, partially offset by $1.0 million attributed to the Coronavirus Aid, Relief, and Economic Security ("CARES") Act.
The income tax benefit of $81.9 million for the nine months ended September 24, 2021 (Predecessor) consisted of $55.9 million attributed to the jurisdictional mix of pretax earnings, $15.1 million attributed to uncertain tax positions and $11.0 million attributed to separation costs, reorganization items, net, and restructuring charges, partially offset by $0.1 million attributed to the CARES Act.
During the period June 17, 2022 through September 30, 2022 (Successor) and the period January 1, 2022 through June 16, 2022 (Predecessor), net cash payments for income taxes were $3.8 million and $3.0 million, respectively. During the nine months ended September 24, 2021 (Predecessor), net cash refunds for income taxes were $160.4 million. Included within the net cash refunds of $160.4 million were refunds of $178.8 million received as a result of provisions in the CARES Act and net payments of $18.4 million related to operational activity.
On July 15, 2022, the Company received notification that the Joint Committee on Taxation approved the Internal Revenue Service audit reports relating to three CARES Act tax refund claims that were individually in excess of $5.0 million. The Company expects to receive CARES Act tax refunds totaling $135.9 million, excluding related interest, within the next twelve months. Such amount has been reflected as a component of prepaid expenses and other current assets on the unaudited condensed consolidated balance sheet as of September 30, 2022 (Successor).
The Company's unrecognized tax benefits, excluding interest, totaled $24.8 million and $333.5 million as of September 30, 2022 (Successor) and December 31, 2021 (Predecessor), respectively. The decrease of $308.7 million primarily resulted from a reduction of prior period tax positions related to fresh-start adjustments of $306.1 million and settlements of $2.6 million. If favorably settled, $24.8 million of unrecognized tax benefits as of September 30, 2022 (Successor) would benefit the effective tax rate. The total amount of accrued interest and penalties related to these obligations was $2.5 million and $18.9 million as of September 30, 2022 (Successor) and December 31, 2021 (Predecessor), respectively.
Within the next twelve months, the unrecognized tax benefits and the related interest and penalties are not expected to decrease.
Certain of the Company's subsidiaries continue to be subject to examination by taxing authorities. The earliest open years subject to examination for both the U.S federal and state jurisdictions and various foreign jurisdictions, including Ireland, Japan, Luxembourg, Switzerland and the United Kingdom is 2013.
As a result of the Plan, the Company recognized CODI on its indebtedness, resulting in the utilization of, and reduction to, certain of its tax losses and tax credits in the U.S. and Luxembourg. The remaining of its U.S. tax losses and credits are expected to be significantly limited under Sections 382 and 383 of the IRC. Additionally, the Company recognized a U.S. capital loss as a result of the Plan. This capital loss may be carried forward to offset capital gains recognized by the Company in the next five years, to the extent it is not reduced by CODI or limited under IRC section 382 or 383. The deferred tax asset associated with the capital loss carryforward is offset by a valuation allowance due to significant uncertainty regarding the Company's ability to utilize the carryforward prior to its expiration. The portion of deferred tax assets associated with the tax losses and credits that are limited under IRC Section 382 or 383, and that have a remote possibility of being utilized, have been written off.
The Plan's tax effect, and impacts on the Company's tax losses and credits, is expected to be finalized when the U.S. Federal income tax return that is due in 2023 is completed.