Income Taxes

6 Months Ended

Jun. 30, 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 and six months ended June 30, 2022 and 2021:

	Three months ended June 30,						Six months ended June 30,
millions	2022			2021			2022			2021
Income from continuing operations before income taxes	$	4,986		$	143		$	8,069		$	458
Current
Federal	$	(640)		$	(30)		$	(855)		$	—
State and Local	(50)			21			(84)			11
Foreign	(338)			(165)			(536)			(282)
Total current tax expense	$	(1,028)		$	(174)		$	(1,475)		$	(271)
Deferred
Federal	(231)			(62)			1,982			16
State and Local	5			79			78			83
Foreign	23			114			(23)			113
Total deferred tax benefit (expense)	$	(203)		$	131		$	2,037		$	212
Total income tax benefit (expense)	$	(1,231)		$	(43)		$	562		$	(59)
Income from continuing operations	$	3,755		$	100		$	8,631		$	399
Worldwide effective tax rate	25		%	30		%	(7)		%	13		%

The 25% and 30% worldwide effective tax rates for the three months ended June 30, 2022 and June 30, 2021, respectively, are primarily driven by Occidental's jurisdictional mix of income. U.S. income is taxed at a U.S. federal statutory rate of 21%, while international income is subject to tax at statutory rates as high as 55%. These effective rates differ from the negative 7% tax rate for income from continuing operations for the six months ended June 30, 2022, which was impacted by a non-cash tax benefit associated with Occidental's legal entity reorganization as described above. The effective tax rate of 13% for the six months ended June 30, 2021 was impacted by a state margin tax rate reduction and one-time benefits associated with the settlement of federal and state audit matters.