Income Taxes

9 Months Ended

Sep. 30, 2022

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

INCOME TAXES

For periods between the Merger and the Corteva Distribution, Corteva and its subsidiaries were included in DowDuPont's consolidated federal income tax group and consolidated tax return. Generally, the consolidated tax liability of the DowDuPont U.S. tax group for each year was apportioned among the members of the consolidated group based on each member’s separate taxable income. Corteva, DuPont and Dow intend that to the extent Federal and/or State corporate income tax liabilities are reduced through the utilization of tax attributes of the other, settlement of any receivable and payable generated from the use of the other party’s sub-group attributes will be in accordance with a tax matters agreement. See Note 12 - Commitments and Contingent Liabilities, for further information related to indemnifications between Corteva, DuPont and Dow.

Each year the company files hundreds of tax returns in the various national, state and local income taxing jurisdictions in which it operates. These tax returns are subject to examination and possible challenge by the tax authorities. Positions challenged by the tax authorities may be settled or appealed by the company. As a result, there is an uncertainty in income taxes recognized in the company's financial statements in accordance with accounting for income taxes and accounting for uncertainty in income taxes. The ultimate resolution of such uncertainties is not expected to have a material impact on the company's results of operations.

During the three and nine months ended September 30, 2022, the company recognized a tax benefit of $55 million to provision for income taxes on continuing operations related to the impact of a change in a U.S. legal entity's tax characterization, resulting in the establishment of deferred taxes.

During the three months ended September 30, 2022, the company recognized $9 million of net tax charges to provision for income taxes on continuing operations associated with changes in accruals and deferred taxes for certain prior year tax positions and valuation allowances, partially offset by tax benefits associated with U.S. state tax rate changes.

During the nine months ended September 30, 2022, the company recognized $39 million of net tax benefits to provision for income taxes on continuing operations associated with changes in accruals and deferred taxes for certain prior year tax positions in various jurisdictions, U.S state tax rate changes, and stock-based compensation, partially offset by changes in valuation allowances.

During the three and nine months ended September 30, 2021, the company recognized $32 million and $58 million, respectively, of net tax benefits to provision for income taxes on continuing operations associated with changes in accruals for certain prior year tax positions in various jurisdictions, including a $22 million tax benefit associated with U.S. research and development credits.

The company routinely uses foreign currency exchange contracts to offset its net exposures, by currency, related to the foreign currency-denominated monetary assets and liabilities. The objective of the program, which resides in the U.S., is to maintain an approximately balanced position in foreign currencies in order to minimize, on an after-tax basis, the effects of exchange rate changes on net monetary asset positions, which can drive material impacts on the company's effective tax rate. For further discussion of pre-tax and after-tax impacts of the company's foreign currency hedging program and net monetary asset programs, refer to Note 5 - Supplementary Information.

On August 16, 2022, the U.S. federal government enacted the Inflation Reduction Act of 2022 (“the Act”). The Act includes tax provisions, among other things, which implements (i) a 15 percent minimum tax on book income of certain large corporations; (ii) a one percent excise tax on net stock repurchases; and (iii) several tax incentives to promote clean energy. The company does not expect the Act to have a material impact on the company’s financial position, results of operations or cash flows.