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Income Taxes
9 Months Ended
Sep. 30, 2022
Income Tax Disclosure [Abstract]  
Income Taxes
11 – Income Taxes

We determine our quarterly tax provision using the year-to-date effective tax rate because the estimated annual approach is not reliable given that small changes in estimated ordinary annual income result in significant changes in our estimated annual effective tax rate. The year-to-date effective tax rate treats the year-to-date period as if it was the annual period and determines the income tax expense or benefit on that basis.

In the three and nine months ended September 30, 2022, we recognized tax expense of $26 million and $66 million, respectively, compared to the three and nine months ended September 30, 2021 where we recognized tax expense of $28 million and $66 million, respectively. The relationship between our pre-tax income or loss and our income tax provision or benefit varies from period to period due to various factors which include changes in total pre-tax income or loss, the jurisdictions in which our income is earned, the tax laws in those jurisdictions and in our operating structure. We provide for
income taxes based on the laws and rates in effect in the countries in which operations are conducted, or in which we or our subsidiaries are considered residents for income tax purposes. Our income tax provisions are primarily driven by income in certain jurisdictions, deemed profit countries and withholding taxes on intercompany and third-party transactions that do not directly correlate to ordinary income or loss and other adjustments. Impairments and other charges recognized may not result in significant tax benefit due to our inability to forecast realization of the tax benefit of such losses.

The Inflation Reduction Act (“IRA”) was signed into law during the third quarter of 2022 which instituted new tax provisions, including a Minimum Business Tax. Given our current tax position, it should not have a significant impact on our financial statements. We will continue to evaluate our position, and potential impact of the IRA.

We routinely undergo tax examination in various jurisdictions. We cannot predict the timing or outcome regarding resolution of these tax examinations or if they will have a material impact on our financial statements. The expense in the nine months ended September 30, 2022 included a $27 million recognition of a benefit from previously uncertain tax positions. As of September 30, 2022, we anticipate that it is reasonably possible that our uncertain tax positions of $228 million may decrease by up to $14 million in the next twelve months due to expiration of statutes of limitations, settlements and/or conclusions of tax examinations.