Income Taxes

3 Months Ended

Mar. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 7 - INCOME TAXES

LEGAL ENTITY REORGANIZATION

To align Occidental’s legal entity structure with the nature of its business activities after completing the acquisition of Anadarko and subsequent large scale post-Acquisition divestiture program, management undertook a legal entity reorganization that was completed in the first quarter of 2022.

As a result of this legal entity reorganization, management made an adjustment to the tax basis in a portion of its operating assets, thus reducing Occidental’s deferred tax liabilities. Accordingly, in the first quarter of 2022, Occidental recorded an estimated non-cash tax benefit of $2.6 billion in connection with this reorganization. The timing of any reduction in Occidental’s future cash taxes as a result of this legal entity reorganization will be dependent on a number of factors, including prevailing commodity prices, capital activity level and production mix. Further refinement of the non-cash tax benefit may be necessary as Occidental finalizes its tax basis calculations, its tax returns and other information.

The following summarizes components of income tax benefit (expense) on continuing operations for the three months ended March 31, 2022 and 2021:

	Three months ended
millions	March 31, 2022			March 31, 2021
Income from continuing operations before income taxes	$	3,083		$	315
Current
Federal	$	(215)		$	30
State and Local	(34)			(10)
Foreign	(198)			(117)
Total current tax expense	$	(447)		$	(97)
Deferred
Federal	2,213			78
State and Local	73			4
Foreign	(46)			(1)
Total deferred tax benefit	$	2,240		$	81
Total income tax benefit (expense)	$	1,793		$	(16)
Income from continuing operations	$	4,876		$	299
Worldwide effective tax rate	(58)		%	5		%

Occidental's worldwide effective tax rate for the three months ended March 31, 2022 was negative 58%. The difference between the negative 58% effective tax rate for income from continuing operations for the three months ended March 31, 2022, and the 21% U.S. federal statutory tax rate was primarily driven by a non-cash tax benefit associated with Occidental's legal entity reorganization, as described above, partially offset by higher tax rates in the foreign jurisdictions in which Occidental operates. The difference between the 5% effective tax rate for income from continuing operations for the three months ended March 31, 2021, and the 21% U.S. federal statutory tax rate was primarily driven by the jurisdictional mix of income. U.S. losses, taxed at a U.S. federal statutory rate of 21%, were mostly offset by foreign income that is subject to tax at statutory rates as high as 55%. In addition, the effective tax rate was impacted by benefits associated with the settlement of federal tax audit matters.