INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Schedule 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)	2023		2022		2021
Earnings (loss) before income taxes:
U.S.1	$	(316)	$	(40)	$	(523)
Non-U.S.1	1,307		953		1,033
Total	$	991	$	913	$	510
Provision for income taxes:
Current:
Federal	$	42	$	49	$	15
State	8		7		5
Foreign	299		233		232
Total current expense	349		289		252
Deferred:
Federal	(85)		(54)		(90)
State	—		(8)		(10)
Foreign	25		(32)		(87)
Total deferred (benefit) expense	(60)		(94)		(187)
Total provision for income taxes	$	289	$	195	$	65

__________________________

1 In 2023, the U.S. loss before income taxes was primarily due to the realized and unrealized loss on debt and equity securities of $174 million that was primarily related to the Company’s investment in Wolfspeed convertible debt securities that was sold during the year. 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.

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)	2023		2022		2021
Income taxes at U.S. statutory rate of 21%	$	209	$	192	$	107
Increases (decreases) resulting from:
Valuation allowance adjustments, net	186		21		(13)
Net tax on remittance of foreign earnings	45		36		35
Foreign rate differentials	20		57		66
U.S. tax on foreign earnings	18		10		10
State taxes, net of federal benefit	6		(3)		(6)
Other permanent differences	6		5		14
Impact of tax law and rate change	(1)		1		(19)
Affiliates' earnings	(7)		(6)		(9)
Reserve adjustments, settlements and claims	(15)		13		(20)
Changes in accounting methods and filing positions	(18)		(15)		(7)
Tax credits	(21)		(15)		(5)
Foreign derived intangible income deduction	(23)		(23)		(8)
Enhanced research and development deductions	(35)		(33)		(22)
Tax holidays	(35)		(38)		(81)
Deferred tax impact of intra-group transactions	(70)		—		—
Other, net	24		(7)		23
Provision for income taxes, as reported	$	289	$	195	$	65

Schedule of Reconciliation of Total Gross Unrecognized Tax Benefits

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

(in millions)	2023		2022		2021
Balance, January 1	$	172	$	181	$	198
Additions based on tax positions related to current year	15		19		21
Reductions for tax positions of prior years	(11)		(7)		—
Reductions for lapse in statute of limitations	(10)		—		(36)
Reductions for closure of tax audits and settlements	(5)		(9)		—
Translation adjustment	—		(12)		(2)
Balance, December 31	$	161	$	172	$	181

Schedule 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	2015 and prior	Japan	2018 and prior
Barbados	2016 and prior	Luxembourg	2019 and prior
China	2015 and prior	Mexico	2015 and prior
France	2015 and prior	Poland	2016 and prior
Germany	2015 and prior	South Korea	2016 and prior
Hungary	2017 and prior	United Kingdom	2018 and prior

Schedule of Deferred Tax Assets (Liabilities)

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

	December 31,
(in millions)	2023		2022
Deferred tax assets:
Net operating loss and capital loss carryforwards	$	359	$	256
Research and development capitalization	211		143
Employee compensation	43		41
State tax credits	23		29
Unrecognized tax benefits	21		24
Warranty	20		20
Pension and other postemployment benefits	4		10
Other comprehensive loss	3		—
Unrealized loss on equity securities	—		8
Foreign tax credits	—		6
Other	103		97
Total deferred tax assets	$	787	$	634
Valuation allowance	(310)		(136)
Net deferred tax asset	$	477	$	498
Deferred tax liabilities:
Goodwill and intangible assets	(135)		(194)
Fixed assets	(121)		(113)
Unremitted foreign earnings	(115)		(125)
Unrealized gain on equity securities	(2)		—
Other comprehensive income	—		(14)
Other	(7)		(16)
Total deferred tax liabilities	$	(380)	$	(462)
Net deferred taxes	$	97	$	36