Income Taxes

6 Months Ended

Jun. 30, 2023

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

For interim periods, we recognize income tax expense by applying the estimated annual effective income tax rate to year-to-date results unless this method does not result in a reliable estimate of year-to-date income tax expense. Each period, the income tax accrual is adjusted to the latest estimate, and the difference from the previously accrued year-to-date balance is adjusted in the current quarter. Changes in profitability estimates in various jurisdictions will impact our quarterly effective income tax rates.

The tax provision for income taxes from continuing operations for the six months ended June 30, 2023 and 2022, reflected an estimated annual effective tax rate of 34% and 25%, respectively, excluding discrete items discussed below. The total tax provision for the three and six months ended June 30, 2023 was $21 million and $22 million, compared to $116 million and $240 million for the comparable periods in 2022, respectively. The total effective tax rate for continuing operations for the six months ended June 30, 2023 was 95%, compared to 24% for the comparable period in 2022. The total tax provision as a percentage of income from continuing operations is significantly higher for the six months ended June 30, 2023 when compared to same period in 2022. This is primarily a result of a discrete tax expense of $22 million being recorded in the quarter ended June 30, 2023 relating to the change in indefinite reinvestment assertion on Chile and Brazil earnings described in “Item 2 - Management's Discussion and Analysis of Financial Conditions and Results of Operation”.

We recognized net discrete tax expense of $15 million and discrete tax benefits of $9 million in the six months ended June 30, 2023 and 2022, respectively. The net discrete tax expense in the current year relates primarily to the second quarter change in management’s indefinite reinvestment assertion on Chile and Brazil earnings described in “Item 2 - Management's Discussion and Analysis of Financial Conditions and Results of Operation” of this quarterly report on Form 10-Q, while the net discrete tax benefit in the prior year primarily relates to excess tax benefits from stock-based compensation.