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Income Taxes
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Provision for Income Taxes
 Successor CompanyPredecessor Company
As Restated
For the Year Ended December 31, 2022For the Period of July 1, 2021 to December 31, 2021For the Six Months Ended June 30, 2021For the Year Ended December 31, 2020
Income Tax Expense (Benefit)
Current - U.S. Federal$(18)(86)$— $10 
Deferred - U.S. Federal56 137 30 56 
 Total income tax expense$38 $51 $30 $66 
Deferred tax assets and liabilities on the Consolidated Balance Sheets represent the tax consequences of differences between the financial reporting and tax basis of assets and liabilities.
Components of Deferred Tax Assets (Liabilities)
Successor Company
As Restated
December 31, 2022December 31, 2021
Deferred Tax Assets
Tax basis deferred policy acquisition costs$129 $110 
VOBA and reserves415 716 
Net operating loss carryover1 25 
Employee benefits4 7 
Foreign tax credit carryover16 16 
Net unrealized loss on investments703 4 
Deferred reinsurance gain231 187 
 Total deferred tax assets1,499 1,065 
Deferred Tax Liabilities
Investment related items(366)(449)
Other(13)(13)
 Total deferred tax liabilities(379)(462)
 Net deferred tax asset$1,120 $603 
The statute of limitations is closed through the 2018 tax year with the exception of net operating loss ("NOL") carryforwards utilized in open tax years. Management believes that an adequate provision has been made on the consolidated financial statements for any potential adjustments that may result from tax examinations and other tax-related matters for all open tax years. As of December 31, 2022 and 2021(Successor Company), the Company had no reserves for uncertain tax positions. As of December 31, 2022 and 2021(Successor Company), there were no unrecognized tax benefits that if recognized would affect the effective tax rate and that had a reasonable possibility of significantly increasing or decreasing within the next 12 months.
The Company classifies interest and penalties (if applicable) as income tax expense on the consolidated financial statements. The Company recognized no interest expense for the year ended December 31, 2022 (Successor Company), the period of July 1, 2021 to December 31, 2021 (Successor Company), the six months ended June 30, 2021 (Predecessor Company) and the year ended December 31, 2020 (Predecessor Company). The Company had no interest payable as of December 31, 2022 and 2021(Successor Company). The Company does not believe it would be subject to any penalties in any open tax years and, therefore, has not recorded any accrual for penalties.
The Company believes it is more likely than not that all deferred tax assets will be fully realized. In assessing the need for a valuation allowance, management considered future taxable temporary difference reversals, future taxable income exclusive of reversing temporary differences and carryovers, taxable income in open carry back years and other tax planning strategies. From time to time, tax planning strategies could include holding a portion of debt securities with market value losses until recovery, making investments which have specific tax characteristics and business considerations such as asset-liability matching.
Net deferred income taxes include the future tax benefits associated with the net operating loss carryover and foreign tax credit carryover as follows:
Net Operating Loss Carryover
As of December 31, 2022 and 2021(Successor Company), the net deferred tax asset included the expected tax benefit attributable to net operating losses of $3 and $117, respectively. These U.S. losses that were generated in 2018 were primarily due to the Commonwealth annuity reinsurance agreement. These losses do not expire, but their utilization in any carryforward year is limited to 80% of taxable income in that year. The loss carryforwards are also subject to Internal Revenue Code Section 382, which may limit the amount that can be utilized in any carryforward year.
Given the Company's expected future earnings, the Company believes sufficient taxable income will be generated in the future to utilize its net operating loss carryover. Although the Company believes there will be sufficient future taxable income to fully recover the remainder of the loss carryover, the Company's estimate of the likely realization may change over time.
Foreign Tax Credit Carryover
As of December 31, 2022 and 2021 (Successor Company), the net deferred tax asset included the expected tax benefit attributable to foreign tax credit carryovers of $16 and $16, respectively.
A reconciliation of the tax provision at the U.S. Federal statutory rate to the provision (benefit) for income taxes is as follows.
Income Tax Rate Reconciliation
 Successor CompanyPredecessor Company
As Restated
For the Year Ended December 31, 2022For the Period of July 1, 2021 to December 31, 2021For the Six Months Ended June 30, 2021For the Year Ended December 31, 2020
 
Tax provision at U.S. Federal statutory rate$83 $70 $45 $98 
Dividends received deduction ("DRD")(38)(16)(14)(28)
Foreign related investments(7)(2)(1)(4)
Other— (1)— — 
Provision for income taxes$38 $51 $30 $66 
The separate account DRD is estimated for the current year using information from the most recent return, adjusted for current year equity market performance and other appropriate factors, including estimated levels of corporate dividend payments and level of policy owner equity account balances. The actual current year DRD can vary from estimates based on, but not limited to, changes in eligible dividends received in the mutual funds, amounts of distributions from these mutual funds and the Company’s taxable income before the DRD. The Company evaluates its DRD computations on a quarterly basis.
Corporate Alternative Minimum Tax ("CAMT")
The Inflation Reduction Act of 2022 introduced a 15% CAMT effective in 2023. Generally, the CAMT imposes a minimum tax on the adjusted financial statement income ("AFSI") of certain corporations with average annual AFSI over a three-year period in excess of $1 billion. While the Company does not anticipate being subject to the CAMT in 2023, it could be subject to the CAMT in future years.