Income Taxes

9 Months Ended

Sep. 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 nine months ended September 30, 2023 and 2022, reflected an estimated annual effective tax rate of 27% and 25%, respectively, excluding discrete items discussed below. The total effective tax rate for continuing operations for the three and nine months ended September 30, 2023 was 27% and 36%, respectively, compared to 26% and 24%, respectively, for the comparable period in 2022.

We recognized net discrete tax expense of $16 million and net discrete tax benefits of $9 million in the nine months ended September 30, 2023 and 2022, respectively. The net discrete tax expense in the current year relates primarily to a $22 million expense related 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.