INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Summary of components of income tax expense (benefit)

Earnings before income taxes and the provision for income taxes are presented in the following table.

	Year Ended December 31,
(in millions)	2021		2020		2019
Earnings (loss) before income taxes:
U.S.1	$	(423)	$	437	$	310
Non-U.S.1	1,212		527		955
Total	$	789	$	964	$	1,265
Provision for income taxes:
Current:
Federal	$	43	$	19	$	32
State	7		2		4
Foreign	276		252		245
Total current expense	326		273		281
Deferred:
Federal	(98)		70		150
State	(13)		11		23
Foreign	(65)		43		14
Total deferred (benefit) expense	(176)		124		187
Total provision for income taxes	$	150	$	397	$	468

__________________________

1 In 2021, the U.S. loss before income taxes was primarily related to the $362 million unrealized loss related to the Company’s investment in Romeo Power, Inc. In 2020, the Company recognized a $382 million unrealized gain related to its investment in Romeo Power, Inc.

Schedule of effective income tax rate reconciliation

The following table provides a reconciliation of tax expense based on the U.S. statutory tax rate to final tax expense.

	Year Ended December 31,
(in millions)	2021		2020		2019
Income taxes at U.S. statutory rate of 21%	$	166	$	203	$	266
Increases (decreases) resulting from:
Valuation allowance adjustments, net	39		53		(2)
Net tax on remittance of foreign earnings	43		93		22
Foreign rate differentials	36		21		35
U.S. tax on non-U.S. earnings	12		11		15
State taxes, net of federal benefit	5		12		3
Derecognition of Morse TEC	—		—		137
Tax credits	(5)		(12)		(17)
Affiliates' earnings	(10)		(4)		(7)
Changes in accounting methods and filing positions	(18)		(18)		(7)
Reserve adjustments, settlements and claims	(17)		45		46
Impact of tax law and rate change	(20)		—		—
Tax holidays	(76)		(36)		(26)
Research and development super deduction	(27)		(9)		(5)
Other, net	22		38		8
Provision for income taxes, as reported	$	150	$	397	$	468

Reconciliation of the total gross unrecognized tax benefits

A roll forward of the Company’s total gross unrecognized tax benefits is presented below:

(in millions)	2021		2020		2019
Balance, January 1	$	231	$	146	$	120
Additions based on tax positions related to current year	23		14		7
Acquisitions	8		54		—
Additions for tax positions of prior years	—		9		26
Reductions for lapse in statute of limitations	(36)		(5)		(6)
Translation adjustment	(5)		13		(1)
Balance, December 31	$	221	$	231	$	146

Summary of tax jurisdiction

The Company is no longer subject to income tax examinations by tax authorities in its major tax jurisdictions as follows:

Tax jurisdiction	Years no longer subject to audit	Tax jurisdiction	Years no longer subject to audit
U.S. Federal	2013 and prior	Japan	2018 and prior
Barbados	2016 and prior	Luxembourg	2016 and prior
China	2015 and prior	Mexico	2015 and prior
France	2015 and prior	Poland	2016 and prior
Germany	2011 and prior	South Korea	2016 and prior
Hungary	2015 and prior	United Kingdom	2015 and prior

Schedule of deferred tax assets (liabilities)

The components of deferred tax assets and liabilities consist of the following:

	December 31,
(in millions)	2021		2020
Deferred tax assets:
Net operating loss and capital loss carryforwards	$	634	$	656
Interest limitation carryforwards	123		111
Research and development capitalization	91		57
Employee compensation	44		39
Pension and other postretirement benefits	41		93
Other comprehensive loss	39		106
Unrecognized tax benefits	32		47
Warranty	31		27
State tax credits	28		28
Foreign tax credits	8		16
Other	167		161
Total deferred tax assets	$	1,238	$	1,341
Valuation allowance	(554)		(529)
Net deferred tax asset	$	684	$	812
Deferred tax liabilities:
Goodwill and intangible assets	(274)		(279)
Unremitted foreign earnings	(146)		(156)
Fixed assets	(123)		(176)
Unrealized gain on equity securities	(5)		(91)
Other	(88)		(95)
Total deferred tax liabilities	$	(636)	$	(797)
Net deferred taxes	$	48	$	15