Income Taxes

6 Months Ended

Jun. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Earnings before income taxes, provision for income taxes and income tax rates consisted of the following:

	For the Six Months Ended June 30,						For the Three Months Ended June 30,
(in millions)	2022			2021			2022			2021
Earnings before income taxes	$	4,278		$	4,846		$	1,605		$	2,909
Provision for income taxes	1,428			1,275			714			759
Income tax rate	33.4		%	26.3		%	44.5		%	26.1		%

Our income tax rates for the six and three months ended June 30, 2022 differ from the U.S. federal statutory rate of 21%, due primarily to a valuation allowance recorded against a deferred tax asset related to the decreases in the estimated fair value of our investment in JUUL.

Our income tax rates for the six months ended June 30, 2021 differ from the U.S. federal statutory rate of 21%, due primarily to valuation allowances recorded against deferred tax assets related to our investment in JUUL and our Investment in Cronos.

Our income tax rates for the three months ended June 30, 2021 differ from the U.S. federal statutory rate of 21%, due primarily to a valuation allowance recorded against a deferred tax asset related to our Investment in Cronos, partially offset by a valuation allowance release related to the increase in the estimated fair value of our investment in JUUL.

For further information on the changes in the estimated fair value of our investment in JUUL and our Investment in Cronos, see Note 3. Investments in Equity Securities.

The following chart provides a reconciliation of the beginning and ending valuation allowances for the period ended June 30, 2022:

(in millions)
Balance at beginning of year	$	3,097
Additions to valuation allowance charged to income tax expense	368
Reductions to valuation allowance credited to income tax benefit	(8)
Foreign currency translation	(1)
Balance at end of period	$	3,456

We determine the realizability of deferred tax assets based on the weight of available evidence, that it is more-likely-than-not that the deferred tax asset will not be realized. In reaching this determination, we consider all available positive and negative evidence, including the character of the loss, carryback and carryforward considerations, future reversals of temporary differences and available tax planning strategies.

The changes in valuation allowances for the six months ended June 30, 2022 were due primarily to deferred tax assets recorded in connection with decreases in the estimated fair value of our investment in JUUL. The cumulative valuation allowance at June 30, 2022 was primarily attributable to deferred tax assets recorded in connection with our investment in JUUL and our Investment in Cronos.