Annual report [Section 13 and 15(d), not S-K Item 405]

INCOME TAXES

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INCOME TAXES
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes
NOTE 11 - INCOME TAXES
Income (loss) from continuing operations before income taxes includes the following components:
Year Ended December 31,
(In millions) 2024 2023 2022
United States $ (894) $ 600  $ 1,803 
Foreign (49) (3) (7)
Total $ (943) $ 597  $ 1,796 
The components of the income tax expense (benefit) from continuing operations consist of the following:
Year Ended December 31,
(In millions) 2024 2023 2022
Current provision:
United States federal $ (38) $ 4  $ 201 
United States state & local (6) 26  131 
Foreign 3  4  1 
(41) 34  333 
Deferred provision (benefit):
United States federal (152) 97  117 
United States state & local (33) 7  (22)
  Foreign (9) 10  (5)
Total income tax expense (benefit) from continuing operations $ (235) $ 148  $ 423 
Reconciliation of our income tax attributable to continuing operations computed at the U.S. federal statutory rate is as follows:
(In millions) 2024 2023 2022
Tax at U.S. statutory rate $ (198) 21  % $ 125  21  % $ 377  21  %
Increase (decrease) due to:
Percentage depletion in excess of cost depletion (20) 2  (32) (5) (49) (3)
Valuation allowance —  —  14  2  —  — 
Unrecognized tax benefits 7  —  7  1  2  — 
State taxes, net (30) 3  28  5  71  4 
Federal & state provision to return (4) —  (20) (3) 27  1 
Income not subject to tax (10) 1  (11) (2) (9) — 
Goodwill impairment —  —  26  4  —  — 
Other items, net 20  (2) 11  2  4  — 
Provision for income tax expense (benefit) and effective income tax rate including discrete items $ (235) 25  % $ 148  25  % $ 423  23  %
The increase in income tax benefit in 2024, as compared to income tax expense in 2023, as well as the decrease in income tax expense in 2023 compared to 2022 are predominantly related to the decrease in the pre-tax book income year-over-year.
The components of income taxes for other than continuing operations consisted of the following:
(In millions) 2024 2023 2022
Other comprehensive income (loss):
Pension and OPEB $ 55  $ 10  $ (425)
Derivative instruments (37) 47  26 
Total $ 18  $ 57  $ (399)
Significant components of our deferred tax assets and liabilities are as follows:
(In millions) 2024 2023
Deferred tax assets:
Operating loss and other carryforwards $ 589  $ 390 
Pension and OPEB liabilities 129  155 
Environmental 69  67 
Product inventories 53  92 
State and local 36  9 
Lease liabilities 87  79 
Other liabilities 151  180 
Total deferred tax assets before valuation allowance 1,114  972 
Deferred tax asset valuation allowance (388) (396)
Net deferred tax assets 726  576 
Deferred tax liabilities:
Investment in ventures (181) (192)
Lease assets (88) (79)
Property, plant and equipment and mineral rights (811) (837)
Intangible assets (441) (27)
Other assets (59) (76)
Total deferred tax liabilities (1,580) (1,211)
Net deferred tax liabilities $ (854) $ (635)
We had gross domestic (including states) and foreign NOLs of $3,549 million and $1,507 million, respectively, at December 31, 2024. We had gross domestic (including states) and foreign NOLs of $1,704 million and $1,452 million, respectively, at December 31, 2023. The U.S. federal NOLs will begin to expire in 2034, and state NOLs begin to expire in 2025. The foreign NOLs begin to expire in 2035. For the year ended December 31, 2024, we had $92 million gross U.S. interest expense limitation carryforwards. For the year ended December 31, 2023, we had no gross interest expense limitation carryforwards.
The changes in the valuation allowance are presented below:
(In millions) 2024 2023 2022
Balance at beginning of year $ 396  $ 390  $ 409 
Change in valuation allowance:
Income tax (benefit) expense (8) 6  (19)
Balance at end of year $ 388  $ 396  $ 390 
At December 31, 2024 and 2023, we have a valuation allowance recorded of $349 million and $356 million, respectively, related to foreign deferred tax assets, and an additional $39 million and $40 million, respectively, against certain state NOLs, which are expected to expire before utilization.
During 2023, we recorded a $14 million valuation allowance against a portion of our Canadian deferred tax assets due to losses in recent years. We intend to maintain a valuation allowance against these deferred tax assets, unless and until sufficient positive evidence exists to support the realization of such assets.
Our losses in Luxembourg in recent periods represent sufficient negative evidence to require a full valuation allowance against the deferred tax assets in that jurisdiction. We intend to maintain a valuation allowance against the deferred tax assets related to these operating losses, unless and until sufficient positive evidence exists to support the realization of such assets.
At December 31, 2024 and 2023, we had no cumulative undistributed earnings of foreign subsidiaries included in retained earnings. Accordingly, no provision has been made for U.S. deferred taxes related to future repatriation of earnings.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
(In millions) 2024 2023 2022
Unrecognized tax benefits balance as of January 1 $ 76  $ 58  $ 35 
Increases for tax positions in current year 46  18  24 
Decrease due to tax positions in prior year (1) —  (1)
Unrecognized tax benefits balance as of December 31 $ 121  $ 76  $ 58 
At December 31, 2024 and 2023, we had unrecognized tax benefits of $121 million and $76 million, respectively. Of these amounts, $75 million and $76 million were included in Other non-current liabilities on the Statements of Consolidated Financial Position. Additionally, $46 million was included in Deferred income taxes at December 31, 2024. If the unrecognized tax benefits were recognized, the $75 million would impact the effective tax rate. Interest and penalties related to unrecognized tax benefits are $7 million for the year ended December 31, 2024. We do not expect that the amount of unrecognized benefits will change significantly within the next 12 months.
Tax years 2016 and forward remain subject to examination for the U.S., and tax years 2020 and forward remain subject to examination for Canada.