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INCOME TAXES
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
The components of the Company’s income from continuing operations before income taxes by taxing jurisdiction were as follows:
In millions
202320222021
U.S.
$121 $176 $80 
Non-U.S.
248 291 248 
Income from continuing operations before income taxes
$369 $467 $328 
Income tax provision by taxing jurisdictions was as follows:
In millions
202320222021
Current tax provision
U.S. federal
$32 $56 $26 
U.S. state and local
11 15 5 
Non-U.S.
73 67 76 
$116 $138 $107 
Deferred tax provision
U.S. federal
$(3)$(11)$(3)
U.S. state and local
(7)(1)(1)
Non-U.S.
10 5 (2)
$— $(7)$(6)
Income tax provision
$116 $131 $101 
A reconciliation of income taxes using the statutory U.S. income tax rate of 21% compared to the reported income tax provision is summarized as follows:

In millions
202320222021
Income from continuing operations before income taxes
$369 $467 $328 
Statutory U.S. income tax rate
21 %21 %21 %
Income taxes using the statutory U.S. income tax rate
77 98 69 
State and local income taxes
2 11 5 
Impact of rate differential on non-U.S. earnings
31 29 33 
Non-U.S. valuation allowance7 2 4 
Permanent benefit for non-U.S. interest deductions(11)(10)(10)
Foreign currency differences and other permanent deductions— (9)— 
Uncertain tax positions
6 — — 
U.S. tax on non-U.S. earnings (GILTI and Subpart F)
2 11 — 
Other, net
2 (1)— 
Income tax provision
$116 $131 $101 
Effective income tax rate
31 %28 %31 %
The components of deferred income tax assets and liabilities are as follows:
In millions
20232022
Deferred income tax assets:
Net operating and capital loss carryforwards
$27 $21 
Accrued payroll and benefits
33 31 
Lease liabilities
12 7 
Tax credits
25 24 
Capitalized research and development15 7 
Other
32 40 
Gross deferred income tax assets
144 130 
Less: valuation allowance
(39)(32)
Net deferred income tax asset
$105 $98 
Deferred income tax liabilities:
Intangibles
$(47)$(44)
Inventories(12)(20)
Right of use assets
(11)(6)
Deferred foreign income
(62)(50)
Plants, properties and equipment
(85)(81)
Forestlands
(52)(48)
Gross deferred income tax liabilities
(269)(249)
Net deferred income tax liability
$(164)$(151)

The Company recognizes deferred income tax assets for deductible temporary differences and carryforwards. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized based on estimates of future taxable income. Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. Based on this evaluation, as of December 31, 2023, a valuation allowance of $39 million has been recorded to reduce the deferred tax asset to the amount that is more likely than not to be realized.

The Company made income tax payments, net of refunds, of $112 million during 2023.
The reconciliation of the beginning and ending amount of unrecognized tax benefits were as follows:
In millions
202320222021
Balance at January 1
$(4)$(3)$(18)
(Additions) reductions for tax positions related to current year
(6)(1)(2)
Reductions for tax positions related to prior years— — — 
Transfer of tax positions related to prior years to Parent
— — 17 
Balance at December 31
$(10)$(4)$(3)

Included in the balance of unrecognized tax benefits as of December 31, 2023, December 31, 2022 and December 31, 2021 are $10 million, $4 million and $3 million, respectively, of tax benefits that if recognized would affect the effective tax rate. The Company accrues interest on unrecognized tax benefits as a component of interest expense. Penalties, if incurred, are recognized as a component of income tax expense. During 2023, we accrued $1 million of interest, and as of December 31, 2023, recognized a liability for interest of $4 million. During 2022, we accrued $1 million of interest, and as of December 31, 2022, recognized a liability for interest of $3 million. During 2021, we accrued $1 million of interest, and as of December 31, 2021, recognized a liability for interest of $2 million.

The Brazilian Federal Revenue Service has challenged the deductibility of goodwill amortization generated in a 2007 acquisition by International Paper do Brasil Ltda., a wholly-owned subsidiary of the Company now named Sylvamo do Brasil Ltda. (“Sylvamo Brasil”). Sylvamo Brasil received assessments for the tax years 2007-2015 totaling approximately $119 million in tax and $274 million in interest, penalties and fees (adjusted for variation in currency exchange rates and a recent law
change pursuant to which the Brazil tax authority agreed to cancel a portion of the interest, penalties, and fees). International Paper challenged and is managing the litigation of this matter pursuant to the Tax Matters Agreement between us and International Paper. After a previous favorable ruling challenging the basis for these assessments, there were subsequent unfavorable decisions from the Brazilian Administrative Council of Tax Appeals. On behalf of Sylvamo Brasil, International Paper has appealed and at present, has advised us that it intends to further appeal these and any future unfavorable administrative judgments to the Brazilian federal courts; however, this tax litigation matter may take many years to resolve. The Company believes that the transaction underlying these assessments was appropriately evaluated, and that the Company’s tax position would be sustained, based on Brazilian tax law.

Pursuant to the terms of the Tax Matters Agreement, International Paper will pay 60%, and Sylvamo will pay 40% on up to $300 million of any assessment related to this matter, and International Paper will pay all amounts of the assessment over $300 million. Also in connection with this agreement, all decisions concerning the conduct of the litigation related to this matter, including strategy, settlement, pursuit and abandonment, will continue to be made by International Paper, which is vigorously defending Sylvamo Brasil’s historic tax position against the current assessments and any similar assessments that may be issued for tax years subsequent to 2015.
The following details the scheduled expiration dates of the Company’s December 31, 2023 net operating loss and income tax credit carryforwards:
In millions
2024
Through
2032
Indefinite
Total
Non-U.S. NOLs
$6 $21 $27 
U.S. federal, non-U.S. and state tax credit
carryforwards
— 25 25 
Total
6 46 52 
Less: related valuation allowance
(6)(31)(37)
Total, net
$— $15 $15