Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

Income Tax Provision

The components of income from continuing operations before income taxes, including equity in unconsolidated affiliates, were as follows:

	Year Ended December 31,
	2021		2020		2019
Domestic	$	1,632	$	528	$	18
Foreign	167		93		(41)
Total	$	1,799	$	621	$	(23)

The following presents the components of our income tax provision (benefit) from continuing operations.

	Year Ended December 31,
	2021		2020		2019
Current tax provision (benefit):
U.S. federal	$	314	$	79	$	(5)
State and local	62		17		(1)
Foreign	44		27		(17)
Net current tax provision (benefit)	420		123		(23)
Deferred tax provision (benefit):
U.S. federal	2		(3)		7
State and local	—		8		(1)
Foreign	4		(2)		5
Net valuation allowance increase (decrease)	—		(1)		(1)
Net deferred tax provision	6		2		10
Total income tax provision (benefit)	$	426	$	125	$	(13)

We paid income taxes, net of refunds, of $421 million, $70 million, and $20 million during 2021, 2020, and 2019, respectively. Included in our Consolidated Balance Sheets at December 31, 2021 and 2020, is a net income tax payable of $12 million, and $15 million, respectively.

Deferred Taxes

The tax effects of significant temporary differences creating deferred tax assets and liabilities were as follows:

	December 31,
	2021		2020
Accrued liabilities	$	20	$	23
Pension and post-retirement benefits	4		5
Stock-based compensation	4		4
Benefit relating to capital loss, NOL carryforwards, and credit carryforwards	7		9
Inventories	8		7
Operating lease liabilities	8		5
Other	9		12
Total deferred tax assets	60		65
Valuation allowance	(10)		(10)
Total deferred tax asset after valuation allowance	50		55
Property, plant, and equipment	(112)		(109)
Timber and timberlands	(8)		(9)
Operating lease assets	(8)		(5)
Investment in Entekra	(6)		(7)
Total deferred tax liabilities	(134)		(130)
Net deferred tax liabilities	(84)		(75)
Balance sheet classification
Long-term deferred tax asset	2		3
Long-term deferred tax liability	(86)		(78)
	$	(84)	$	(75)

The benefit relating to capital loss and credit carryforwards included in the above table at December 31, 2021, consisted of:

	Benefit Amount		Valuation Allowance		Expiration Beginning in
State credit carryforwards	$	1	$	—	2034
Canadian capital loss carryforwards	6		(6)		No expiration
	$	7	$	(6)

We periodically review the need for valuation allowances against deferred tax assets and recognize these deferred tax assets to the extent that their realization is more likely than not. As part of our review, we consider all positive and negative evidence, including earnings history, the future reversal of deferred tax liabilities, and the relevant expirations of carryforwards. We believe that the valuation allowances provided are appropriate. If future years’ earnings differ from the estimates used to establish these valuation allowances, or other objective positive or negative evidence arises, we may be required to record an adjustment to the valuation allowance resulting in an impact on tax provision (benefit) for that period.

As of December 31, 2021, certain of our foreign subsidiaries had accumulated undistributed earnings of approximately $184 million. These earnings have been, and are intended to be, indefinitely reinvested in our foreign operations, and we expect future U.S. cash generation to be sufficient to meet our future U.S. cash needs. As a result, no deferred taxes have been recorded with respect to the difference between the financial accounting value and the tax basis in these subsidiaries.

Since most of these earnings have previously been subject to the one-time U.S. transition tax on foreign earnings required by the 2017 Tax Cuts and Jobs Act, they are eligible to be repatriated without additional U.S. tax. Any additional taxes due with respect to such earnings, if repatriated to the U.S., would generally be limited to foreign withholding taxes, net of U.S. foreign tax credits, which we estimate could be up to $23 million.

Tax Rate Reconciliation

The following table summarizes the differences between the U.S. federal statutory tax rates and the total effective tax rates from continuing operations:

	Year Ended December 31,
	2021			2020			2019
Income from continuing operations before income taxes, including equity in unconsolidated affiliates	$	1,799		$	621		$	(23)
U.S. federal tax rate	21		%	21		%	21		%
State and local income taxes net of federal benefit	3			3			11
Effect of foreign tax rates	1			1			9
Effect of foreign exchange on functional currencies	—			—			(4)
Tax credits	—			(1)			8
Noncontrolling interest	—			—			(4)
Stock-based compensation	—			—			5
Capital gain tax rate differential	—			—			5
Inflationary adjustment	—			—			5
Valuation allowance	—			—			8
Uncertain tax positions	—			(4)			(7)
Other, net	(1)			—			1
Effective tax rate (%)	24		%	20		%	58		%

We are subject to U.S. federal income tax as well as income taxes of multiple state jurisdictions. Our foreign subsidiaries are subject to income tax in Canada, Chile, Brazil, Peru, Colombia, Argentina, and Paraguay.

We generally remain subject to U.S. federal and state examinations for tax years 2018 and subsequent. In addition to the U.S., we have tax years that remain open and subject to examination by tax authorities in the following major tax jurisdictions: Brazil and Chile for tax years 2016 and subsequent, and Canada for tax years 2017 and subsequent. Our tax returns are currently under examination by tax authorities in Canada for years 2017 and 2018, and in Chile for years 2016 through 2018.

Uncertain Tax Positions

In accordance with the accounting for uncertain tax positions, the following is a tabular reconciliation of the total amount of unrecognized tax benefits at the beginning and end of the years presented: 

	December 31,
	2021		2020		2019
Beginning balance	$	11	$	38	$	41
Increases:
Tax positions taken in current year	1		1		1
Tax positions taken in prior years	—		1		—
Decreases:
Settlements during the year	—		—		(4)
Lapse of statute in current year	(3)		(29)		—
Ending balance	$	9	$	11	$	38

Included in the above balances at December 31, 2021, is $9 million of tax benefits that, if recognized, would affect our effective tax rate. We accrued and paid no interest during 2021and 2020.