INCOME TAXES

6 Months Ended

Jun. 30, 2024

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The following table summarizes our Income tax expense:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(in millions, except percentages)	2024			2023			2024			2023
Income (loss) before income taxes	$	2,053		$	1,588		$	(2,433)		$	2,888
Income tax expense	$	438		$	549		$	123		$	865
Effective tax rate	21.4		%	34.6		%	(5.1)		%	29.9		%

Our effective income tax rate of 21.4% for the three months ended June 30, 2024 differed from the U.S. federal statutory rate of 21% primarily due to unfavorable changes in the fair value of our equity investments that are non-deductible for income tax purposes, partially offset by a settlement with a tax authority.

Our effective income tax rate of (5.1)% for the six months ended June 30, 2024 differed from the U.S. federal statutory rate of 21% primarily due to $3.9 billion of non-deductible acquired IPR&D expense recorded in connection with our acquisition of CymaBay, partially offset by a decrease in state deferred tax liabilities associated with the $2.4 billion NSCLC IPR&D intangible asset impairment charge and settlements with tax authorities.

Our effective income tax rate of 34.6% and 29.9% for the three and six months ended June 30, 2023, respectively, differed from the U.S. federal statutory rate of 21% primarily due to remeasurement of certain deferred tax liabilities related to acquired intangible assets and non-deductible acquired IPR&D expenses recorded in connection with our second quarter 2023 acquisition of XinThera and first quarter 2023 acquisition of Tmunity.

Our income tax returns are subject to audit by federal, state and foreign tax authorities. We are currently under examination by the Internal Revenue Service for our 2019 to 2021 tax years. There are differing interpretations of tax laws and regulations, and as a result, significant disputes may arise with these tax authorities involving issues on the timing and amount of deductions and allocations of income among various tax jurisdictions. We periodically evaluate our exposures associated with our tax filing positions.