Income Taxes (Tables)

12 Months Ended

Dec. 31, 2022

Schedule of Income before Income Tax, Domestic and Foreign

Earnings (loss) before taxes consists of the following:


	Year Ended December 31,
(Dollars in millions)	2022		2021		2020
Earnings before taxes
Domestic	$	531	$	203	$	112
Foreign	(6)		(3)		—
Total	$	525	$	200	$	112

Schedule of Income Tax Provision (Benefit)

Income tax provision (benefit) consists of the following:


	Year Ended December 31,
(Dollars in millions)	2022		2021		2020
Current:
Federal	$	93	$	(1)	$	—
State	24		—		3
Foreign	—		1		2
	117		—		5
Deferred:
Federal	5		43		24
State	(6)		5		—
Foreign	4		(2)		(2)
	3		46		22
Total	$	120	$	46	$	27

Schedule of Effective Income Tax Rate Reconciliation

The reconciliation from the statutory federal income tax rate to our effective income tax rate follows:


	Year Ended December 31,
	2022				2021		2020
Statutory federal rate	21.0	%			21.0	%	21.0	%
State rate, net of federal benefit	2.8	%			3.6	%	2.3	%
Foreign rate differential	(0.3)	%			(0.2)	%	0.5	%
Research & development credit, net of reserves	(0.5)	%			(0.2)	%	(0.7)	%
Nondeductible expenses	0.2	%			0.9	%	0.4	%
Global intangible low taxed income	0.2	%			—	%	0.2	%
Change in valuation allowance	1.5	%			(1.4)	%	(2.5)	%
Change in tax reserves	—	%			(0.4)	%	2.2	%
Divestiture impact	(1.9)	%	—	%	—	%	—	%
Other	(0.1)	%			(0.3)	%	0.7	%
Effective tax rate	22.9	%			23.0	%	24.1	%

Schedule of Deferred Tax Assets and Liabilities

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2022 and 2021 are as follows:


	December 31,
(Dollars in millions)	2022		2021
Deferred tax assets:
Federal net operating loss	$	4	$	3
State net operating loss	14		16
Foreign net operating loss	$	10	$	2
Tax credit carryforwards	4		21
Lease liabilities	$	61	$	59
Capitalized R&D, net of amortization	32		—
Accrued compensation and benefits	23		23
Contract liabilities	23		21
Accrued expenses	6		5
Pension and post-retirement plans	15		18
Inventory capitalization	7		5
Disallowed Interest	1		1
Other	8		5
Total gross deferred tax assets	208		179
Less valuation allowance	17		10
Deferred tax assets	191		169
Deferred tax liabilities:
Right of use assets	$	(57)	$	(56)
Intangible assets	(45)		(41)
Fixed assets	(21)		(15)
Other	(2)		(1)
Deferred tax liabilities	(125)		(113)
Net deferred tax asset	$	66	$	56

Schedule of Unrecognized Tax Benefits

The table below summarizes the activity associated with our unrecognized tax benefits:


(Dollars in millions)	2022		2021		2020
Balance at January 1,	$	22	$	25	$	18
Increase related to prior year tax positions	1		—		3
Increase related to current year tax positions	2		1		4
Decreases related to prior year tax positions	—		(4)		—
Lapse of statute of limitations	(1)		—		—
Settlements with taxing authorities	—		—		—
Balance at December 31,	$	24	$	22	$	25