INCOME TAXES

9 Months Ended

Sep. 30, 2023

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 6 - INCOME TAXES

The following table summarizes components of income tax expense:

	Three months ended September 30,						Nine months ended September 30,
millions	2023			2022			2023			2022
Income before income taxes	$	1,809		$	3,648		$	4,870		$	11,717
Current
Federal	(243)			(297)			(689)			(1,152)
State and Local	(21)			(43)			(53)			(127)
Foreign	(120)			(290)			(482)			(826)
Total current tax expense	$	(384)		$	(630)		$	(1,224)		$	(2,105)
Deferred
Federal	(56)			(264)			(75)			1,718
State and Local	(2)			5			(8)			83
Foreign	8			(13)			(65)			(36)
Total deferred tax benefit (expense)	$	(50)		$	(272)		$	(148)		$	1,765
Total income tax expense	$	(434)		$	(902)		$	(1,372)		$	(340)
Net income	$	1,375		$	2,746		$	3,498		$	11,377
Worldwide effective tax rate	24		%	25		%	28		%	3		%

The 24%, 25%, and 28% worldwide effective tax rates for the three months ended September 30, 2023, three months ended September 30, 2022, and nine months ended September 30, 2023, 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 3% tax rate for the nine months ended September 30, 2022, which was impacted by a tax benefit associated with Occidental's legal entity reorganization as described below.

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 three months ended March 31, 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, for the year ended December 31, 2022, Occidental recorded a tax benefit of $2.7 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. The legal entity reorganization transaction is currently under IRS review as part of Occidental’s 2022 federal tax audit.