v3.22.4
INCOME TAXES (Notes)
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES
Geographic Allocation of Income and Provision for Income Taxes
In millions202220212020
Income (loss) before income taxes
Domestic $767 $531 $558 
Foreign (1)(2)(1)
Income before income taxes$766 $529 $557 
Current tax expense (benefit)
Federal$157 $(11)$82 
State and local9 5 2 
Foreign1 20 — 
Total current tax expense$167 $14 $84 
Deferred tax expense (benefit)
Federal$(2)$122 $42 
State and local3 23 4 
Foreign4 (5)— 
Total deferred tax expense$5 $140 $46 
Provision for income taxes $172 $154 $130 
Net income$594 $375 $427 
Reconciliation to U.S. Statutory Rate202220212020
Statutory U.S. federal income tax rate21.0 %21.0 %21.0 %
Unrecognized tax benefits(0.7)3.0 (0.9)
Federal tax accrual adjustments 0.7 — 3.0 
State and local tax impact1.7 5.3 0.2 
Other - net(0.2)(0.2)— 
Effective Tax Rate 1
22.5 %29.1 %23.3 %
1.The tax rate for 2022 was unfavorably impacted by state and local tax charges. In 2021, the Corporation recognized additional charges related to state and local jurisdictions and an uncertain tax position related to litigation in a foreign jurisdiction which negatively impacted the effective tax rate. The tax rate for 2020 was unfavorably impacted by an accrual-to-return adjustment.

Deferred Tax Balances at Dec 3120222021
In millionsAssetsLiabilitiesAssetsLiabilities
Property$— $154 $— $167 
Tax loss and credit carryforwards26 — 23 — 
Postretirement benefit obligations72 — 119 — 
Other accruals and reserves293 3 313 6 
Inventory2 — — — 
Other - net18 — 18 — 
Subtotal $411 $157 $473 $173 
Valuation allowances 1
(15)— (12)— 
Total $396 $157 $461 $173 
1.Primarily related to the realization of recorded tax benefits on state tax loss carryforwards from operations in the United States.

Operating Loss and Tax Credit Carryforwards at Dec 3120222021
In millionsAssetsAssets
Operating loss carryforwards
Expire within 5 years$8 $11 
Expire after 5 years or indefinite expiration12 7 
Total operating loss carryforwards$20 $18 
Tax credit carryforwards
Expire within 5 years$5 $5 
Expire after 5 years or indefinite expiration1 — 
Total tax credit carryforwards$6 $5 
Total tax loss and tax credit carryforwards$26 $23 

Undistributed earnings of foreign subsidiaries and related companies that are deemed to be permanently invested were zero at December 31, 2022 ($7 million at December 31, 2021). The unrecognized deferred tax liability on those earnings was not material.
The following table provides a reconciliation of the Corporation's unrecognized tax benefits:

Total Gross Unrecognized Tax Benefits
In millions202220212020
Total unrecognized tax benefits at Jan 1$8 $1 $1 
Decreases related to positions taken on items from prior years— (1)— 
Increases related to positions taken on items from prior years — 8 — 
Total unrecognized tax benefits at Dec 31$8 $8 $1 
Total unrecognized tax benefits that, if recognized, would impact the effective tax rate$8 $8 $1 
Total amount of interest and penalties (benefit) recognized in "Provision for income taxes"$(10)$11 $(5)
Total accrual for interest and penalties recognized in the consolidated balance sheets$10 $12 $— 

During 2021, the Corporation recorded an uncertain tax position related to a foreign jurisdiction.

The Corporation is included in TDCC's consolidated federal income tax group. Current and deferred tax expenses are calculated for the Corporation as a stand-alone group and are allocated to the group from the consolidated totals, consistent with the TDCC-UCC Tax Sharing Agreement. The Corporation is currently under examination in a number of tax jurisdictions, including the U.S. federal and various state jurisdictions. It is reasonably possible that these examinations may be resolved in the next twelve months. The impact on the Corporation’s results of operations is not expected to be material. The earliest open tax years are 2004 for state income taxes and 2007 for federal income taxes in the United States.

Inherent uncertainties exist in estimates of tax contingencies due to changes in tax law, both legislated and concluded through the various jurisdictions' tax court systems. It is the opinion of the Corporation's management that the possibility is remote that costs in excess of those accrued will have a material impact on the Corporation's consolidated financial statements.