Note 17 - Income Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 17: INCOME TAXES

The components of earnings (loss) from continuing operations before income taxes and the related provision for U.S. and other income taxes were as follows:

	Year Ended December 31,
(in millions)	2024			2023			2022
Earnings (loss) from continuing operations before income taxes:
U.S.	$	70		$	36		$	(2	)
Outside the U.S.		40			51			33
Total	$	110		$	87		$	31
U.S. income taxes:
Deferred benefit	$	(1	)	$	(1	)	$	(3	)
Income taxes outside the U.S.:
Current provision		9			12			7
Deferred provision		—			1			1
Total provision	$	8		$	12		$	5

The differences between income taxes computed using the U.S. federal income tax rate and the provision for income taxes for continuing operations were as follows:

	Year Ended December 31,
(in millions)	2024			2023			2022
Amount computed using the statutory rate	$	23		$	18		$	7
Increase (reduction) in taxes resulting from:
Unremitted foreign earnings		—			1			(2	)
Operations outside the U.S.		7			13			4
Legislative tax law and rate changes		—			—			—
Valuation allowance		(23	)		(19	)		(9	)
Tax settlements and adjustments, including interest		1			—			4
Other, net		—			(1	)		1
Provision for income taxes	$	8		$	12		$	5

The significant components of deferred tax assets and liabilities were as follows:

	As of December 31,
(in millions)	2024			2023
Deferred tax assets
Restructuring programs	$	1		$	1
Leasing		7			8
Foreign tax credit		134			281
Inventories		13			11
Investment tax credit		21			25
Employee deferred compensation		7			9
Workers' compensation and other employee reserves		13			14
Depreciation		26			31
Research and development costs		44			42
Tax loss carryforwards		539			529
Other deferred revenue		2			2
Other		71			79
Total deferred tax assets before valuation allowances	$	878		$	1,032
Valuation allowances		(671	)		(778	)
Total net deferred tax assets	$	207		$	254
Deferred tax liabilities
Pension and postretirement obligations	$	(205	)	$	(251	)
Leasing	$	(5	)	$	(6	)
Goodwill/intangibles		(6	)		(8	)
Unremitted foreign earnings		(15	)		(16	)
Total deferred tax liabilities		(231	)		(281	)
Net deferred tax liabilities	$	(24	)	$	(27	)

Deferred tax liabilities are reported in the following component within the Consolidated Statement of Financial Position:

	As of December 31,
(in millions)	2024			2023
Other long-term liabilities	$	(24	)	$	(27	)
Net deferred tax liabilities	$	(24	)	$	(27	)

As of December 31, 2024, Kodak had available domestic and foreign net operating loss ("NOL") carryforwards for income tax purposes of approximately $2,228 million, of which approximately $1,062 million have an indefinite carryforward period. The $1,062 million with an indefinite carryforward period includes $218 million of U.S interest carryforward. The remaining $1,166 million that do not have an indefinite carryforward period expire between the years 2025 and 2043. Kodak also had foreign tax and investment

tax credit carryforwards of $134 million and $21 million, respectively, which expire between 2025 and 2039. A total of $97 million of the foreign tax credit carryforwards will expire in 2025 if left unutilized. If written off, these tax attributes are expected to be fully offset by a corresponding decrease in Kodak's valuation allowance, resulting in no net tax provision.

As of December 31, 2024, approximately $147 million of unused foreign tax credits expired and were written off. The write-off of these tax attributes was fully offset by a corresponding reduction in Kodak’s valuation allowance, which resulted in no net tax provision.

As of December 31, 2024, Kodak had available $10 million of tax credits related to its research and development activities. These credits expire between 2034 and 2043. A full valuation allowance has been recorded on these credits.

Kodak’s ability to utilize its U.S. NOLs and tax credits may be subject to limitations imposed by Section 382 of the Internal Revenue Code. Section 382 limits the utilization of NOLs in the event of significant changes in the stock ownership of the Company. An ownership change occurs if, among other things, the aggregate ownership of stockholders owning five percent of Kodak’s stock increases by more than 50 percentage points over a three-year rolling period. An ownership change can also occur by other events, such as the sale of Kodak shares that are owned by its 5% shareholders. Future transactions, when combined with reported transactions within the testing period could aggregate to an ownership change during the testing period in excess of 50 percentage points.

Kodak intends to repatriate its offshore earnings when prudent. Accordingly, it recorded deferred tax liabilities of $15 million and $16 million for potential taxes on undistributed earnings as of December 31, 2024 and 2023, respectively. These taxes are primarily attributable to foreign withholding taxes.

Kodak’s valuation allowance as of December 31, 2024 was $671 million. Of this amount, $259 million was attributable to Kodak’s net deferred tax assets outside the U.S. of $251 million, and $412 million related to Kodak’s net deferred tax assets in the U.S. of $396 million, for which Kodak believes it is not more likely than not that the assets will be realized.

Kodak’s valuation allowance as of December 31, 2023 was $778 million. Of this amount, $290 million was attributable to Kodak’s net deferred tax assets outside the U.S. of $279 million, and $488 million related to Kodak’s net deferred tax assets in the U.S. of $472 million, for which Kodak believes it is not more likely than not that the assets will be realized.

Accounting for Uncertainty in Income Taxes

A reconciliation of the beginning and ending amount of Kodak’s liability for income taxes associated with unrecognized tax benefits is as follows:

	Year Ended December 31,
(in millions)	2024			2023			2022
Balance as of January 1	$	2		$	3		$	4
Tax positions related to the current year:
Additions		1			—			—
Tax positions related to prior years:
Additions		1			1			1
Reductions		(2	)		(1	)		(2	)
Settlements with taxing jurisdictions		—			(1	)		—
Balance as of December 31	$	2		$	2		$	3

Kodak’s policy is to recognize interest and/or penalties related to income tax matters as a component of its provision for income taxes. Kodak had approximately $11 million, $10 million and $10 million of interest and penalties associated with uncertain tax benefits accrued as of December 31, 2024, 2023 and 2022 respectively.

Kodak had uncertain tax benefits of approximately $14 million, $13 million and $13 million as of December 31, 2024, 2023 and 2022 respectively, that, if recognized, would affect the effective income tax rate. Kodak has classified certain income tax liabilities as current or noncurrent based on management’s estimate of when these liabilities will be settled. The current income tax liabilities are recorded in Other current liabilities in the Consolidated Statement of Financial Position. Noncurrent income tax liabilities are recorded in Other long-term liabilities in the Consolidated Statement of Financial Position.

It is reasonably possible that the liability associated with Kodak’s unrecognized tax benefits will increase or decrease within the next twelve months. These changes may be the result of settling ongoing audits or the expiration of statutes of limitations. Audit outcomes and the timing of audit settlements are subject to significant uncertainty.

Although management believes that adequate provision has been made for such issues, there is the possibility that the ultimate resolution of such issues could have an adverse effect on the earnings of Kodak. Conversely, if these issues are resolved favorably in the future, the related provision would be reduced, thus having a positive impact on earnings.

Kodak is subject to taxation and files income tax returns in the U.S. federal jurisdiction and in many state and foreign jurisdictions. Kodak has substantially concluded all U.S. federal income tax matters for years through 2019 and state income tax matters for years through 2016 with the respective tax authorities. With respect to countries outside the U.S., Kodak has substantially concluded all material foreign income tax matters through 2013 with respective foreign tax jurisdiction authorities.