Income Taxes

6 Months Ended

Jun. 30, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Effective Tax Rates

Our quarterly provision for income taxes is measured using an annual effective tax rate, adjusted for discrete items within the periods presented.

Our effective tax rates are as follows:

	Three Months Ended June 30,		Six Months Ended June 30,
	2023	2022	2023	2022
Effective Tax Rate	22.7%	20.6%	21.4%	21.4%

Our effective tax rate for the three months ended June 30, 2023, is higher than the prior year’s comparable period primarily due to transaction related expenses to support the Separation, partially offset by foreign tax credits.

Our effective tax rate for the six months ended June 30, 2023, is consistent with the prior year’s comparable period.

Our effective tax rates for the three-and-six-months ended June 30, 2023, are higher than the statutory U.S. federal tax rate of 21% primarily due to net permanent increases that impact the statutory tax rate.

The Tax Matters Agreement specifies the rights, responsibilities, and obligations after the Separation with respect to tax liabilities and benefits. The agreement specifies the portion, if any, of this tax liability for which we and SpinCo will bear responsibility, and we and SpinCo agreed to indemnify each other against any amounts for which they are not responsible.

The change from a “carve-out” basis to a stand-alone entity basis resulted in an increase in uncertain tax positions of $15.6 million and a related $8.5 million tax indemnification receivable from SpinCo adjusted through “Net transfers from Crane” in our Unaudited Consolidated and Combined Condensed Statements of Changes in Equity through “Crane Net Investment”. As of June 30, 2023, we had gross unrecognized tax benefits of $23.9 million included in “Other liabilities” in our Unaudited Consolidated and Combined Condensed Balance Sheets.

The balances computed on a stand-alone entity basis resulted in a decrease in Accrued Income Tax liabilities of approximately $10.2 million adjusted through “Net transfers from Crane” in our Unaudited Consolidated and Combined Condensed Statements of Changes in Equity through “Crane Net Investment”. As of June 30, 2023, we had a future tax obligation of $8.2 million included in “U.S. and foreign taxes on income” in our Unaudited Consolidated and Combined Condensed Balance Sheets.