Income Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 13. INCOME TAXES

Significant components of our deferred tax liabilities (assets) are as follows at December 31:

	2024		2023
Depreciation and amortization	$	36,531	$	37,931
Licenses and nonamortizable intangibles	20,660		20,049
Lease right-of-use assets	5,103		5,100
Lease liabilities	(5,107)		(5,146)
Employee benefits	(3,017)		(2,970)
Deferred fulfillment costs	1,788		1,941
Equity in partnership	2,716		2,943
Net operating loss and other carryforwards	(5,619)		(6,484)
Other – net	1,466		563
Subtotal	54,521		53,927
Deferred tax assets valuation allowance	4,338		4,656
Net deferred tax liabilities	$	58,859	$	58,583
Noncurrent deferred tax liabilities	$	58,939	$	58,666
Less: Noncurrent deferred tax assets	(80)		(83)
Net deferred tax liabilities	$	58,859	$	58,583

At December 31, 2024, we had combined net operating and capital loss carryforwards (tax effected) for federal income tax purposes of $692, state of $683 and foreign of $2,447, expiring through 2044. Additionally, we had federal credit carryforwards of $299 and state credit carryforwards of $1,498, expiring primarily through 2044.

We recognize a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion, or all, of a deferred tax asset will not be realized. Our valuation allowances at December 31, 2024 and 2023 related primarily to state and foreign net operating losses and state credit carryforwards.

We consider post-1986 unremitted foreign earnings subjected to the one-time transition tax not to be indefinitely reinvested as such earnings can be repatriated without any significant incremental tax costs. We consider other types of unremitted foreign earnings to be indefinitely reinvested. U.S. income and foreign withholding taxes have not been recorded on temporary differences related to investments in certain foreign subsidiaries as such differences are considered indefinitely reinvested. The amount of unrecognized deferred tax liability does not have a material impact on the financial statements.

We recognize the financial statement effects of a tax return position when it is more likely than not, based on the technical merits, that the position will ultimately be sustained. For tax positions that meet this recognition threshold, we apply our judgment, taking into account applicable tax laws, our experience in managing tax audits and relevant GAAP, to determine the amount of tax benefits to recognize in our financial statements. For each position, the difference between the benefit realized on our tax return and the benefit reflected in our financial statements is recorded on our consolidated balance sheets as an unrecognized tax benefit (UTB). We update our UTBs at each financial statement date to reflect the impacts of audit settlements and other resolutions of audit issues, the expiration of statutes of limitation, developments in tax law and ongoing discussions with taxing authorities.

A reconciliation of the change in our UTB balance from January 1 to December 31 for 2024 and 2023 is as follows:

Federal, State and Foreign Tax	2024		2023
Balance at beginning of year	$	11,924	$	9,657
Increases for tax positions related to the current year	369		1,026
Increases for tax positions related to prior years	1,017		448
Decreases for tax positions related to prior years	(772)		(212)
Lapse of statute of limitations	(8)		(16)
Settlements	3		1,021
Balance at end of year	12,533		11,924
Accrued interest and penalties	2,223		1,785
Gross unrecognized income tax benefits	14,756		13,709
Less: Deferred federal and state income tax benefits	(849)		(687)
Less: Tax attributable to timing items included above	(6,964)		(6,438)
Total UTB that, if recognized, would impact the effective income tax rate as of the end of the year	$	6,943	$	6,584

Periodically we make deposits to taxing jurisdictions which reduce our UTB balance but are not included in the reconciliation above. The amount of deposits that reduced our UTB balance was $2,282 at December 31, 2024 and $2,361 at December 31, 2023. Current tax assets on our consolidated balance sheets were $2,236 at December 31, 2024 and $2,079 at December 31, 2023.

Accrued interest and penalties included in UTBs were $2,223 as of December 31, 2024 and $1,785 as of December 31, 2023. We record interest and penalties related to federal, state and foreign UTBs in income tax expense. The net interest and penalty expense (benefit) included in income tax expense was $474 for 2024, $324 for 2023 and $(86) for 2022.

We file income tax returns in the U.S. federal jurisdiction and various state, local and foreign jurisdictions. As a large taxpayer, our income tax returns are regularly audited by the Internal Revenue Service (IRS) and other taxing authorities.

The IRS has completed field examinations of our tax returns through 2015. All audit periods prior to 2006 are closed for federal examination purposes, and we have effectively resolved all outstanding audit issues for years through 2010 with the IRS Appeals Division.

While we do not expect material changes, we are generally unable to estimate the range of impacts on the balance of the remaining uncertain tax positions or the impact on the effective tax rate from the resolution of these issues until each year is closed; it is possible that the amount of unrecognized benefit with respect to our uncertain tax positions could increase or decrease within the next 12 months.

The components of income tax (benefit) expense are as follows:

	2024		2023		2022
Federal:
Current	$	2,769	$	2,280	$	579
Deferred	1,289		2,250		2,206
	4,058		4,530		2,785
State and local:
Current	859		423		21
Deferred	(512)		(832)		912
	347		(409)		933
Foreign:
Current	68		66		106
Deferred	(28)		38		(44)
	40		104		62
Total	$	4,445	$	4,225	$	3,780

“Income (Loss) from Continuing Operations Before Income Taxes” in the consolidated statements of income included the following components for the years ended December 31:

	2024		2023		2022
U.S. income (loss) before income taxes	$	16,674	$	20,506	$	(1,480)
Foreign income (loss) before income taxes	24		(658)		(1,614)
Total	$	16,698	$	19,848	$	(3,094)

A reconciliation of income tax expense (benefit) on continuing operations and the amount computed by applying the statutory federal income tax rate of 21% to income from continuing operations before income taxes is as follows:

	2024			2023			2022
Taxes computed at federal statutory rate	$	3,507		$	4,168		$	(650)
Increases (decreases) in income taxes resulting from:
State and local income taxes – net of federal income tax benefit	478			345			795
Tax on foreign investments	3			102			43
Noncontrolling interest	(274)			(259)			(308)
Permanent items and R&D credit	(174)			(207)			(121)
Audit resolutions	192			319			(642)
Divestitures	—			(75)			(481)
Goodwill impairment1	929			9			5,210
Other – net	(216)			(177)			(66)
Total	$	4,445		$	4,225		$	3,780
Effective Tax Rate	26.6		%	21.3		%	(122.2)		%
1 Goodwill impairments are not deductible for tax purposes.