Meritor Acquisition and 2022 Financial Results
Table of Contents
Income tax expense (benefit) consisted of the following:
In millions
Current
U.S. federal and state
Foreign
Total current income tax expense
Deferred
U.S. federal and state
Foreign
Impact of India tax law changes
Total deferred income tax (benefit) expense
Income tax expense
A reconciliation of the statutory U.S. federal income tax rate to the effective tax rate was as follows:
Statutory U.S. federal income tax rate
State income tax, net of federal effect
Differences in rates and taxability of foreign subsidiaries and joint ventures
Research tax credits
Foreign derived intangible income
Impact of India tax law changes
Other, net
Effective tax rate
Years ended December 31,
2022
2021
2020
$
425
$
261 $
162
485
319
358
910
580
520
(229)
(12)
(45)
19
22
(17)
(274)
7
7
$
636 $
587
$
527
Years ended December 31,
2022
2021
2020
21.0 %
21.0 %
21.0 %
1.3
1.1
1.0
3.1
0.1
3.6
(1.8)
(0.6)
(1.3)
(2.0)
(1.0)
(1.2)
(0.7)
1.0
0.7
0.1
22.6 %
21.3 %
22.5%
The year ended December 31, 2022, contained discrete tax items that netted to zero, primarily due to $1 million of favorable changes in accrued withholding taxes,
$29 million of favorable changes in tax reserves, $15 million of favorable valuation allowance adjustments and $9 million of favorable other net discrete items, offset by $69
million of unfavorable tax costs associated with internal restructuring ahead of the planned separation of our filtration business and $15 million of unfavorable return to
provision adjustments related to the 2021 filed tax returns.
The year ended December 31, 2021, contained $9 million of unfavorable net discrete tax items, primarily due to $12 million of unfavorable provision to return adjustments
related to the 2020 filed tax returns, partially offset by $3 million of favorable other discrete tax items.
The year ended December 31, 2020, contained $26 million of unfavorable net discrete tax items, primarily due to $33 million of unfavorable changes in tax reserves and
$10 million of withholding tax adjustments, partially offset by $15 million of favorable changes due to the India Tax Law Change. The India Tax Law Change eliminated the
dividend distribution tax and replaced it with a lower rate withholding tax as the burden shifted from the dividend payor to the dividend recipient for a net favorable income
statement impact of $35 million.
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