Income Taxes

12 Months Ended

Dec. 31, 2022

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 (dollars in millions):

	Year Ended December 31,
	2022		2021		2020
Domestic	$	961	$	1,491	$	503
Foreign	198		212		102
Total	$	1,159	$	1,704	$	605

The components of our income tax provision (benefit) from continuing operations were (dollars in millions):

	Year Ended December 31,
	2022		2021		2020
Current tax provision:
U.S. federal	$	180	$	284	$	74
State and local	51		56		16
Foreign	42		56		29
Net current tax provision	273		396		119
Deferred tax provision (benefit):
U.S. federal	(1)		2		(3)
State and local	(4)		—		8
Foreign	12		4		(2)
Net valuation allowance increase (decrease)	(6)		—		(1)
Net deferred tax provision	1		6		2
Total income tax provision	$	274	$	402	$	121

We paid income taxes, net of refunds, of $320 million, $421 million, and $70 million during 2022, 2021, and 2020, respectively. Included in our Consolidated Balance Sheets at December 31, 2022, and 2021, is a net income tax payable of $16 million, and $12 million, respectively.

Deferred Taxes

The tax effects of significant temporary differences creating deferred tax assets and liabilities were (dollars in millions):

	December 31,
	2022		2021
Accrued liabilities	$	20	$	20
Research expenditures	14		—
Inventories	9		8
Operating lease liabilities	7		8
Stock-based compensation	6		4
Benefit relating to capital loss, NOL carryforwards, and credit carryforwards	6		7
Pension and post-retirement benefits	1		4
Other	8		9
Total deferred tax assets	71		60
Valuation allowance	(4)		(10)
Total deferred tax asset after valuation allowance	67		50
Property, plant, and equipment	(152)		(112)
Timber and timberlands	(7)		(8)
Operating lease assets	(7)		(8)
Investment in Entekra	(7)		(6)
Total deferred tax liabilities	(173)		(134)
Net deferred tax liabilities	(106)		(84)
Balance sheet classification
Long-term deferred tax asset	7		2
Long-term deferred tax liability	(113)		(86)
	$	(106)	$	(84)

The benefit relating to capital loss, operating loss, and credit carryforwards included in the above table at December 31, 2022, consisted of (dollars in millions):

	Operating Loss		Benefit Amount		Valuation Allowance		Expiration Beginning in
State credit carryforwards	$	—	$	1	$	—	2034
Chile operating loss carryforwards	8		2		—		No expiration
Canadian capital loss carryforwards	—		4		(4)		No expiration
Total	$	8	$	7	$	(4)

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 record an adjustment to the valuation allowance resulting in an impact on tax provision (benefit) for that period.

As of December 31, 2022, certain of our foreign subsidiaries had accumulated undistributed earnings of approximately $232 million, combined. 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 $30 million.

Tax Rate Reconciliation

Reconciliation of the U.S. federal statutory tax rates to the total effective tax rates from continuing operations (dollars in millions):

	Year Ended December 31,
	2022		2021		2020
U.S. federal tax rate	21	%	21	%	21	%
State and local income taxes net of federal benefit	3		3		3
Effect of foreign tax rates	1		1		1
Uncertain tax positions	—		—		(4)
Other, net	(1)		(1)		(1)
Effective tax rate (%)	24	%	24	%	20	%

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 the U.S. for years 2018 and 2019, in Canada for years 2017 and 2018, and in Chile for years 2016 through 2018.

Uncertain Tax Positions

Tabular reconciliation of the total amount of unrecognized tax benefits at the beginning and end of the years presented (dollars in millions): 

	December 31,
	2022		2021		2020
Beginning balance	$	9	$	11	$	38
Increases:
Tax positions taken in current year	1		1		1
Tax positions taken in prior years	—		—		1
Decreases:
Lapse of statute in current year	(4)		(3)		(29)
Ending balance	$	6	$	9	$	11

Included in the above balances at December 31, 2022, is $6 million of tax benefits that, if recognized, would affect our effective tax rate. We accrued and paid no interest during 2022 and 2021.