Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

We are subject to income taxation through certain of our subsidiaries primarily in the United States, South Korea and other jurisdictions in Asia.

The components of income tax (benefit) expense were as follows:

(in millions of US dollars)	2023		2022		2021
Current taxes
United States	$	62	$	—	$	—
Foreign	46		39		1
Current taxes	108		39		1
Deferred taxes
United States	21		(40)		—
Foreign	(905)		—		—
Deferred taxes	(884)		(40)		—
Income tax (benefit) expense	$	(776)	$	(1)	$	1

The components of income (loss) before income taxes are as follows:

(in millions of US dollars)	2023		2022		2021
United States	$	(217)	$	(232)	$	(297)
Foreign	801		139		(1,245)
Income (loss) before income taxes	$	584	$	(93)	$	(1,542)

Differences between the provision at the federal statutory rate and the provision recorded at the consolidated level are as follows:

(in millions of US dollars)	2023		2022		2021
Taxes computed at the federal statutory rate	$	122	$	(20)	$	(324)
Differences resulting from:
Statutory rate difference	28		51		(44)
Change in valuation allowances	(1,031)		(144)		393
GILTI	91		93		—
Stock compensation	44		37		(20)
Tax credit	(47)		(35)		(5)
Other nondeductible expense	17		15		—
Other	—		2		1
Income tax (benefit) expense	$	(776)	$	(1)	$	1

Our resulting effective tax rate differs from the applicable statutory rate primarily due to changes in the valuation allowance against our deferred tax assets, impacts from GILTI, tax credits and equity-based compensation.

The income tax effects of temporary differences that give rise to significant portions of the deferred income tax assets and deferred income tax liabilities were as follows:

(in millions of US dollars)	December 31, 2023		December 31, 2022
Deferred tax assets
Provision and allowances	$	69	$	57
Depreciation	8		7
Accrued expenses	69		52
Amortization	21		32
Defined severance benefits	84		71
Lease liabilities	409		353
Net operating loss carryforwards	643		790
Tax credits	33		55
Other	49		28
Total deferred tax assets	1,385		1,445
Less: valuation allowances	(82)		(1,085)
Total deferred tax assets net of valuation allowance	$	1,303	$	360
Deferred tax liabilities
Lease asset	(371)		(317)
Other	(7)		(3)
Total deferred tax liabilities	(378)		(320)
Net deferred tax assets	$	925	$	40

Our valuation allowances were $82 million and $1.1 billion as of December 31, 2023 and 2022, respectively. The valuation allowance at December 31, 2022 was primarily related to our Korea net operating loss carryforwards that, in our judgment, were not more likely than not to be realized. During 2023, we continued to see improved and sustained profitability in Korea, which represents objective positive evidence for the realizability of certain deferred tax assets. As such, based on our analysis of the positive and negative evidence in each tax jurisdiction, during 2023 we released the valuation allowance primarily related to the Korea net operating loss deferred tax assets. The release of the valuation allowance in 2023 resulted in an increase to the carrying value of deferred tax assets on the balance sheet and a benefit to our provision for income taxes of $905 million. Changes in the valuation allowances were as follows:

(in millions)	2023		2022		2021
Beginning balance, January 1	$	(1,085)	$	(1,284)	$	(975)
Changes to existing valuation allowances	140		103		(393)
Derecognition of valuation allowances	905		41		—
Changes in foreign exchange rates, statutory rates and other	(42)		55		84
Ending balance, December 31	$	(82)	$	(1,085)	$	(1,284)

As of December 31, 2023, we have net operating loss carryforwards for corporate income tax purposes of $2.6 billion which are available to offset future corporate taxable income, if any. The net operating loss carryforwards in Korea expire as follows:

(in millions)	Korea
2026	14
2027	506
2028	819
2029	128
2035 - 2037	899
Total net operating loss carryforwards	$	2,366

At December 31, 2023, we had $255 million of net operating loss carryforwards in other jurisdictions, including Taiwan, Japan and China which begin to expire in 2026.

We have corporate tax credit carryforwards of $67 million in the US which are available to reduce future corporate regular income taxes and $49 million of which expires between 2037 and 2043.

We did not have any material uncertain tax positions as of December 31, 2023 and 2022.

The open tax years for our major tax jurisdictions are 2019 - 2023 for the United States and 2018 - 2023 for Korea.