Income Taxes (Tables)

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Components of Income Tax Expense Benefit

Income before income taxes and equity in net income of unconsolidated investments, and current and deferred income tax expense (benefit) are composed of the following (in thousands):

	Year Ended December 31,
	2021		2020		2019
Income before income taxes and equity in net income of unconsolidated investments:
Domestic	$	(186,077)	$	41,346	$	190,195
Foreign	319,695		332,173		372,755
Total	$	133,618	$	373,519	$	562,950
Current income tax expense (benefit):
Federal	$	11,722	$	(140)	$	21,258
State	694		(193)		5,453
Foreign	55,530		56,734		47,056
Total	$	67,946	$	56,401	$	73,767
Deferred income tax (benefit) expense:
Federal	$	(38,413)	$	4,564	$	13,255
State	(5,544)		(2,893)		(7,369)
Foreign	5,457		(3,647)		8,508
Total	$	(38,500)	$	(1,976)	$	14,394
Total income tax expense	$	29,446	$	54,425	$	88,161

Significant Differences Between United States Federal Statutory Rate and Effective Income Tax Rate

The reconciliation of the U.S. federal statutory rate to the effective income tax rate is as follows:

	% of Income Before Income Taxes
	2021		2020		2019
Federal statutory rate	21.0	%	21.0	%	21.0	%
State taxes, net of federal tax benefit	(3.5)		0.3		(0.5)
Change in valuation allowance (a)	33.7		1.9		1.9
Impact of foreign earnings, net(b)(c)	(40.5)		(8.4)		(3.7)
Global intangible low tax inclusion	12.3		1.9		1.8
Section 162(m) limitation	4.5		0.5		0.3
Subpart F income	4.8		1.3		0.6
Stock-based compensation	(7.2)		(1.0)		(0.6)
Depletion	(2.9)		(0.9)		(0.7)
U.S. federal return to provision	(1.7)		(0.9)		(0.4)
Revaluation of unrecognized tax benefits/reserve requirements	3.0		(0.4)		(2.7)
Other items, net	(1.5)		(0.7)		(1.3)
Effective income tax rate	22.0	%	14.6	%	15.7	%

(a)The years ended December 31, 2021 and 2019 includes benefits of $6.0 million and $2.1 million, respectively, due to the release of a foreign valuation allowance due to changes in expected profitability.

(b)Includes a discrete tax benefit of $27.9 million related to the revision of an indemnification estimate for an ongoing tax-related matter in Germany.

(c)Our statutory rate is decreased by of our share of the income of JBC, a Free Zones company under the laws of the Hashemite Kingdom of Jordan. The applicable provisions of the Jordanian law, and applicable regulations thereunder, do not have a termination provision and the exemption is indefinite. As a Free Zones company, JBC is not subject to income taxes on the profits of products exported from Jordan, and currently, substantially all of the profits are from exports. This resulted in a rate benefit of 34.6%, 11.9%, and 8.0% for 2021, 2020, and 2019, respectively.

Deferred Income Tax Assets and Liabilities Recorded on Consolidated Balance Sheets

Deferred income tax assets and liabilities recorded on the consolidated balance sheets as of December 31, 2021 and 2020 consist of the following (in thousands):

	December 31,
	2021		2020
Deferred tax assets:
Accrued employee benefits	$	18,374	$	21,878
Operating loss carryovers	1,295,925		1,321,942
Pensions	48,720		78,683
Tax credit carryovers	2,448		1,582
Other(a)	212,882		57,370
Gross deferred tax assets	1,578,349		1,481,455
Valuation allowance	(1,276,305)		(1,326,204)
Deferred tax assets	302,044		155,251
Deferred tax liabilities:
Depreciation	(411,336)		(348,700)
Intangibles	(83,182)		(91,645)
Hedge of net investment of foreign subsidiary	—		(13,514)
Other(b)	(142,008)		(75,927)
Deferred tax liabilities	(636,526)		(529,786)
Net deferred tax liabilities	$	(334,482)	$	(374,535)
Classification in the consolidated balance sheets:
Noncurrent deferred tax assets	$	18,797	$	20,317
Noncurrent deferred tax liabilities	(353,279)		(394,852)
Net deferred tax liabilities	$	(334,482)	$	(374,535)

(a)    Increase in other primarily related to deferred tax assets for the settlement of an arbitration ruling for a legacy Rockwood legal matter and the expense related to anticipated cost overruns for MRL’s 40% interest in lithium hydroxide conversion assets being built in Kemerton.(b)    Increase in other primarily related to deferred tax liabilities recorded for the gain on the sale of the FCS business.

Changes in Balance of Deferred Tax Asset Valuation Allowance

Changes in the balance of our deferred tax asset valuation allowance are as follows (in thousands):

	Year Ended December 31,
	2021		2020		2019
Balance at January 1	$	(1,326,204)	$	(1,148,268)	$	(1,213,750)
Additions	(61,470)		(182,325)		(24,986)
Deductions	111,369		4,389		90,468
Balance at December 31	$	(1,276,305)	$	(1,326,204)	$	(1,148,268)

Reconciliation of Total Gross Liability Related to Uncertain Tax Positions

The following is a reconciliation of our total gross liability related to uncertain tax positions for 2021, 2020 and 2019 (in thousands):

	Year Ended December 31,
	2021		2020		2019
Balance at January 1	$	11,639	$	17,548	$	19,742
Additions for tax positions related to prior years	75		5,646		2,235
Reductions for tax positions related to prior years	(6)		(174)		—
Additions for tax positions related to current year	10,911		315		—
Lapses in statutes of limitations/settlements	(1,931)		(12,128)		(4,494)
Foreign currency translation adjustment	29		432		65
Balance at December 31	$	20,717	$	11,639	$	17,548