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Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Earnings before taxes consists of the following:
Year Ended December 31,
(Dollars in millions)202320222021
Earnings before taxes
Domestic$197 $531 $203 
Foreign(5)(6)(3)
Total
$192 $525 $200 
Income tax provision consists of the following:
Year Ended December 31,
(Dollars in millions)202320222021
Current:
Federal$61 $93 $(1)
State14 24 — 
Foreign1 — 1
Total current
76 117 — 
Deferred:
Federal(44)5 43 
State(7)(6)5 
Foreign(1)4 (2)
Total deferred
(52)3 46 
Total
$24 $120 $46 
The reconciliation from the statutory federal income tax rate to our effective income tax rate follows:
Year Ended December 31,
202320222021
Statutory federal rate21.0 %21.0 %21.0 %
State rate, net of federal benefit2.5 %2.8 %3.6 %
Foreign rate differential0.1 %(0.3)%(0.2)%
Research & development credit, net of reserves(18.0)%(0.5)%(0.2)%
Nondeductible expenses(0.1)%0.2 %0.9 %
Global intangible low taxed income0.2 %0.2 %— %
Change in valuation allowance1.0 %1.5 %(1.4)%
Change in tax reserves1.1 %— %(0.4)%
Divestiture impact4.7 %(1.9)%— %
Other— %(0.1)%(0.3)%
Effective tax rate12.5 %22.9 %23.0 %
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2023 and 2022 are as follows:
 December 31,
(Dollars in millions)20232022
Deferred tax assets:
Federal net operating loss$3 $4 
State net operating loss8 14 
Foreign net operating loss7 10 
Tax credit carryforwards13 4 
Lease liabilities54 61 
Capitalized R&D, net of amortization88 32 
Accrued compensation and benefits25 23 
Contract liabilities20 23 
Accrued expenses3 6 
Pension and post-retirement plans13 15 
Inventory capitalization8 7 
Disallowed interest1 1 
Other15 8 
Total gross deferred tax assets
258 208 
Less valuation allowance21 17 
Deferred tax assets237 191 
Deferred tax liabilities:
Right-of-use assets$(50)$(57)
Intangible assets(41)(45)
Fixed assets(25)(21)
Other(2)(2)
Deferred tax liabilities
(118)(125)
Net deferred tax asset
$119 $66 
Our deferred tax balance associated with our retirement benefit plans includes a deferred tax asset of $9 million and $8 million as of December 31, 2023 and 2022, respectively, that are recorded in accumulated other comprehensive earnings to recognize the funded status of our retirement plans. See Note 14: Pension and Other Postretirement Benefits for additional details. As of December 31, 2023, and 2022 the Company had U.S. federal net operating loss carryforwards of $22 million and $25 million, respectively, which we anticipate we will be able to utilize prior to their expiration which commences in 2032. The annual utilization of approximately $3 million of certain of our Federal net operating losses is subject to limitations under section 382 of the Internal Revenue Code. Our foreign net operating losses have expirations ranging from 2041 to indefinite. In 2023, we recorded an additional valuation allowance in Canada of $2 million. As of December 31, 2023 and 2022, we had apportioned state net operating loss carryforwards of $145 million and $227 million, respectively, which are associated with jurisdictions in which we currently file and the Company expects to utilize prior to expiration except for those for which we have recorded a valuation allowance. Our state net operating losses have expirations ranging from 2024 to 2041 and are offset by a valuation allowance of $2 million.
Cash paid for income taxes, net of refunds was $45 million, $89 million, and $16 million in 2023, 2022 and 2021, respectively.
Tax Uncertainties
The Company maintains reserves for uncertain tax positions related to unrecognized income tax benefits. These reserves involve considerable judgment and estimation and are evaluated by management at least quarterly based on the best information available. The Company’s total liability for unrecognized tax benefits as of December 31, 2023, 2022 and 2021 was approximately $40 million, $24 million and $22 million, respectively; all of which will impact the effective tax rate when recognized. Approximately $2 million, $2 million and $15 million as of December 31, 2023, 2022 and 2021, respectively, was recorded within (and as an offset to) deferred tax assets. In addition, the Company does not believe there are any tax positions for which it is reasonably possible that the unrecognized tax benefits will vary significantly over the next 12 months. The table below summarizes the activity associated with our unrecognized tax benefits:
(Dollars in millions)202320222021
Balance at January 1,
$24 $22 $25 
Increase related to prior year tax positions11 1 — 
Increase related to current year tax positions6 2 1 
Decreases related to prior year tax positions(1)— (4)
Lapse of statute of limitations— (1)— 
Settlements with taxing authorities— — — 
Balance at December 31,
$40 $24 $22 
The Company is subject to U.S. federal income tax as well as income tax of multiple state and foreign jurisdictions. The Company has substantially concluded all U.S. federal income tax matters for years through the tax year ended December 31, 2018 except as it relates to the net operating loss carryforward and tax credit carryforwards. Substantially all material state and local matters have been concluded for years through the tax year ended December 31, 2017. The Company has substantially concluded all material tax matters in foreign jurisdictions for years through the tax years ending during 2017.
As of December 31, 2023, the Company has accumulated undistributed earnings generated by our foreign subsidiaries and most have been taxed in the U.S. as a result of the TCJA. The TCJA allows for a dividend received deduction for repatriation of foreign earnings. We intend to indefinitely reinvest these earnings. Should the Company’s undistributed earnings from its investment in non‐U.S. subsidiaries be distributed in the future in the form of dividends or otherwise, the Company may be subject to foreign and domestic income taxes and withholding taxes.