EIDP Income Taxes (Notes)

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Text Block]

INCOME TAXES

Domestic and foreign components of the income (loss) from continuing operations before income taxes and the provision for (benefit from) current and deferred tax expense (benefit) are shown below:

Geographic Allocation of Income (Loss) and Provision for (Benefit from) Income Taxes	For the Year Ended December 31,
(In millions)	2022		2021		2020
Income (loss) from continuing operations before income taxes
Domestic	$	(1)	$	941	$	(83)
Foreign	1,427		1,405		758
Income (loss) from continuing operations before income taxes	$	1,426	$	2,346	$	675
Current tax expense (benefit)
Federal	$	65	$	(13)	$	28
State and local	21		6		9
Foreign	403		329		222
Total current tax expense (benefit)	$	489	$	322	$	259
Deferred tax expense (benefit)
Federal	$	(170)	$	164	$	(116)
State and local	(39)		55		27
Foreign	(70)		(17)		(251)
Total deferred tax expense (benefit)	$	(279)	$	202	$	(340)
Provision for (benefit from) income taxes on continuing operations	210		524		(81)
Net income (loss) from continuing operations after taxes	$	1,216	$	1,822	$	756

The effective income tax rate applicable to income (loss) from continuing operations before income taxes was different from the statutory U.S. federal income tax rate due to the factors listed in the following table:

Reconciliation to U.S. Statutory Rate	For the Year Ended December 31,
	2022		2021		2020
Statutory U.S. federal income tax rate	21.0	%	21.0	%	21.0	%
Effective tax rates on international operations - net1	(3.5)		(2.5)		(13.9)
Acquisitions, divestitures and ownership restructuring activities2	(5.4)		(0.1)		(0.3)
U.S. research and development credit	(2.2)		(2.4)		(2.9)
Exchange gains/losses3	3.7		1.9		3.5
State and local incomes taxes - net	0.3		2.1		4.0
Impact of Swiss Tax Reform4	—		0.2		(27.0)
Excess tax benefits/deficiencies from stock compensation	(0.7)		(0.2)		1.0
Tax settlements and expiration of statute of limitations	0.1		—		0.4
Repatriation of foreign earnings5,6	1.7		1.0		1.0
Other – net5	(0.3)		1.3		1.2
Effective tax rate on income from continuing operations	14.7	%	22.3	%	(12.0)	%

1.    Includes the effects of local and U.S. taxes related to earnings of non-U.S. subsidiaries, changes in the amount of unrecognized tax benefits associated with these earnings, losses at non-U.S. subsidiaries without local tax benefits due to valuation allowances, and other permanent differences between tax and U.S. GAAP results. Includes a tax benefit of $(36) million for the year ended December 31, 2022, relating to the release of a valuation allowance recorded against the net deferred tax asset position of a legal entity in Brazil. Includes a tax benefit of $(51) million for the year ended December 31, 2020, related to a return to accrual adjustment associated with an elective change in accounting method for the 2019 tax year impact of foreign tax provisions.

2.     Includes net tax benefit of $(55) million for the year ended December 31, 2022, related to deferred tax assets established upon change in a U.S. entity's tax characterization, as well as a net tax benefit of $(42) million for the year ended December 31, 2022, related to worthless stock deduction on Company's investment in a subsidiary after a change in the entity's legal structure.

3.    Principally reflects the impact of foreign exchange gains and losses on net monetary assets for which no corresponding tax impact is realized. Further information about the company's foreign currency hedging program is included in Note 6 - Supplementary Information, and Note 19 - Financial Instruments, under the heading Foreign Currency Risk.

4.    Reflects tax benefits of $(182) million primarily driven by the recognition of an elective cantonal component of the enactment of the Federal Act on Tax Reform and AHV Financing ("Swiss Tax Reform") for the year ended December 31, 2020.

5.     Prior year amounts in "other - net" and "repatriation of foreign earnings" for the years ended December 31, 2021 and 2020 have been reclassified from their previous presentation to conform to the current year's presentation.

6.     Includes the effect of withholding tax on distribution of foreign earnings to the U.S., net of U.S. foreign tax credits.

Significant components of the company's net deferred tax asset (liability) were attributable to:

Deferred Tax Balances at December 31,	2022				2021
(In millions)	Assets		Liabilities		Assets		Liabilities
Property	$	—	$	447	$	—	$	341
Operating loss and tax credit carryforwards1	363		—		464		—
Accrued employee benefits	680		—		904		—
Other accruals and reserves3	545		—		372		—
Intangibles	—		2,106		—		2,260
Inventory	198		—		153		—
Research and development capitalization	418		—		224		—
Investments	40		—		36		—
Unrealized exchange gains/losses	—		29		—		10
Other – net3	40		—		42		—
Subtotal	$	2,284	$	2,582	$	2,195	$	2,611
Valuation allowances2	(342)		—		(366)		—
Total	$	1,942	$	2,582	$	1,829	$	2,611
Net Deferred Tax Asset (Liability)	$	(640)			$	(782)

1.    Primarily related to the realization of recorded tax benefits on tax loss and credit carryforwards from operations in the United States and Spain.    

2.    During the year ended December 31, 2022, the company adjusted the valuation allowances recorded against the net deferred tax asset position of various legal entities, the largest of which relates to a legal entity in Brazil that resulted in a tax benefit of $(36) million.

3.     Prior year amounts in "other accruals and reserves" and "other – net" have been reclassified from their previous presentation to conform to the current year's presentation. Adjustments did not impact the amount of the net deferred tax asset (liability) recorded in the Consolidated Balance Sheets.

Details of the company’s operating loss and tax credit carryforwards are shown in the following table:

Operating Loss and Tax Credit Carryforwards	Deferred Tax Asset
(In millions)	2022		2021
Operating loss carryforwards
Expire within 5 years	$	127	$	123
Expire after 5 years or indefinite expiration	158		210
Total operating loss carryforwards	$	285	$	333
Tax credit carryforwards
Expire within 5 years	$	15	$	14
Expire after 5 years or indefinite expiration	63		117
Total tax credit carryforwards	$	78	$	131
Total Operating Loss and Tax Credit Carryforwards	$	363	$	464

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows:

Total Gross Unrecognized Tax Benefits	For the Year Ended December 31,
(In millions)	2022		2021		2020
Total unrecognized tax benefits as of beginning of period	$	377	$	395	$	426
Decreases related to positions taken on items from prior years	(3)		(7)		(14)
Increases related to positions taken on items from prior years	4		13		5
Increases related to positions taken in the current year	11		9		6
Settlement of uncertain tax positions with tax authorities	(24)		(17)		(18)
Decreases due to expiration of statutes of limitations	(5)		(16)		(7)
Exchange (gain) loss	(3)		—		(3)
Total unrecognized tax benefits as of end of period	$	357	$	377	$	395
Total unrecognized tax benefits that, if recognized, would impact the effective tax rate	$	139	$	157	$	156
Total amount of interest and penalties (benefits) recognized in provision for (benefit from) income taxes on continuing operations	$	1	$	1	$	(2)
Total accrual for interest and penalties associated with unrecognized tax benefits at end of period	$	13	$	11	$	18

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. It is reasonably possible that changes to the company’s global unrecognized tax benefits could be significant; however, due to the uncertainty regarding the timing of completion of audits and possible outcomes, a current estimate of the range of increases or decreases that may occur within the next twelve months cannot be made. As of December 31, 2022, the company has made advance deposits of approximately $90 million to a foreign taxing authority, partially as a prerequisite to petition the court related to an open tax examination. These payments are accounted for as a prepaid asset, included in other assets in the Consolidated Balance Sheets.

Tax years that remain subject to examination for the company’s major tax jurisdictions are shown below:

Tax Years Subject to Examination by Major Tax Jurisdiction at December 31, 2022	Earliest Open Year
Jurisdiction
Argentina	2016
Brazil	2015
Canada	2012
China	2014
France	2019
India	2020
Italy	2017
Switzerland	2016
United States:
Federal income tax	2012
State and local income tax	2008

Undistributed earnings of foreign subsidiaries and related companies that are deemed to be indefinitely invested amounted to $3,810 million at December 31, 2022. Distributions of profits from non-U.S. subsidiaries are subject to certain taxes upon repatriation, primarily where foreign withholding taxes apply; these taxes are partially offset by U.S. foreign tax credits. The company is asserting indefinite reinvestment related to certain investments in foreign subsidiaries. Determination of the amount of unrecognized deferred tax liability related to indefinitely reinvested profits is not feasible primarily due to our legal entity structure and the complexity of U.S. and local tax laws.

For periods between the Merger on August 31, 2017, 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 sharing agreement and/or Tax Matters Agreement. See Note 15 - Commitments and Contingent Liabilities, to the Consolidated Financial Statements for further information related to indemnifications between Corteva, DuPont and Dow.

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.

EIDP

Income Tax Disclosure [Text Block]

Refer to page F-25 of the Corteva, Inc. Consolidated Financial Statements for discussion of tax items that do not differ between Corteva, Inc. and EIDP.

Geographic Allocation of Income (Loss) and Provision for (Benefit from) Income Taxes	For the Year Ended December 31,
(In millions)	2022		2021		2020
Income (loss) from continuing operations before income taxes
Domestic	$	(46)	$	892	$	(183)
Foreign	1,427		1,404		758
Income (loss) from continuing operations before income taxes	$	1,381	$	2,296	$	575
Current tax expense (benefit)
Federal	$	56	$	(23)	$	8
State and local	19		4		5
Foreign	403		329		222
Total current tax expense (benefit)	$	478	$	310	$	235
Deferred tax expense (benefit)
Federal	$	(170)	$	164	$	(116)
State and local	(39)		55		27
Foreign	(70)		(17)		(251)
Total deferred tax expense (benefit)	$	(279)	$	202	$	(340)
Provision for (benefit from) income taxes on continuing operations	199		512		(105)
Net income (loss) from continuing operations	$	1,182	$	1,784	$	680

Reconciliation to U.S. Statutory Rate	For the Year Ended December 31,
	2022		2021		2020
Statutory U.S. federal income tax rate	21.0	%	21.0	%	21.0	%
Effective tax rates on international operations - net1	(3.6)		(2.6)		(16.4)
Acquisitions, divestitures and ownership restructuring activities2	(5.5)		(0.1)		(0.3)
U.S. research and development credit	(2.3)		(2.5)		(3.4)
Exchange gains/losses3	3.8		1.9		4.1
State and local income taxes - net	0.2		2.2		4.2
Impact of Swiss Tax Reform4	—		0.2		(31.7)
Excess tax benefits/deficiencies from stock compensation	(0.7)		(0.2)		1.2
Tax settlements and expiration of statute of limitations	0.1		—		0.4
Repatriation of foreign earnings5,6	1.7		1.0		1.2
Other – net5	(0.3)		1.3		1.4
Effective tax rate	14.4	%	22.2	%	(18.3)	%

1.    Includes the effects of local and U.S. taxes related to earnings of non-U.S. subsidiaries, changes in the amount of unrecognized tax benefits associated with these earnings, losses at non-U.S. subsidiaries without local tax benefits due to valuation allowances, and other permanent differences between tax and U.S. GAAP results. Includes a tax benefit of $(36) million for the year ended December 31, 2022, relating to the release of a valuation allowance recorded against the net deferred tax asset position of a legal entity in Brazil. Includes a tax benefit of $(51) million for the year ended December 31, 2020, related to a return to accrual adjustment associated with an elective change in accounting method that alters the 2019 impact of foreign tax provisions.

2.     Includes net tax benefit of $(55) million for the year ended December 31, 2022, related to deferred tax assets established upon change in a U.S. entity's tax characterization, as well as a net tax benefit of $(42) million for the year ended December 31, 2022, related to worthless stock deduction on Company's investment in a subsidiary after a change in the entity's legal structure.

3.    Principally reflects the impact of foreign exchange gains and losses on net monetary assets for which no corresponding tax impact is realized. Further information about the company's foreign currency hedging program is included in Note 6 - Supplementary Information, and Note 19 - Financial Instruments, under the heading Foreign Currency Risk.

4.    Reflects tax benefits of $(182) million primarily driven by the recognition of an elective cantonal component of the recent enactment of the Federal Act on Tax Reform and AHV Financing ("Swiss Tax Reform") for the year ended December 31, 2020.

5.     Prior year amounts in "other - net" and "repatriation of foreign earnings" for the years ended December 31, 2021 and 2020 have been reclassified from their previous presentation to conform to the current year's presentation.

6.     Includes the effect of withholding tax on distribution of foreign earnings to the U.S., net of U.S. foreign tax credits.