Income Taxes |
6 Months Ended |
|---|---|
Jun. 30, 2025 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | Income TaxesDuring the three months ended June 30, 2025, we recorded a total income tax provision of $131 million on a pre-tax income of $611 million, resulting in an effective tax rate of 21.4% for the quarter. During the three months ended June 30, 2024, we recorded a total income tax provision of $207 million on a pre-tax income of $920 million, resulting in an effective tax rate of 22.5% for the quarter. During the six months ended June 30, 2025, we recorded a total income tax provision of $234 million on a pre-tax income of $917 million, resulting in an effective tax rate of 25.5% for the period. The effective tax rate for this period was primarily impacted by the additional valuation allowance recognized on our deferred tax assets, which resulted from the pre-tax $356 million of impairments and other charges. During the six months ended June 30, 2024, we recorded a total income tax provision of $385 million on a pre-tax income of $1.7 billion, resulting in an effective tax rate of 22.6% for the period. Our tax returns are subject to review by the taxing authorities in the jurisdictions where we file tax returns. In most cases we are no longer subject to examination by tax authorities for years before 2013. The only significant operating jurisdiction that has tax filings under review or subject to examination by the tax authorities is the United States. The United States federal income tax filings for tax years 2016 through 2023 are currently under review or remain open for review by the Internal Revenue Service (the IRS). As of June 30, 2025, the primary unresolved issue for the IRS audit for 2016 relates to the classification of the $3.5 billion ordinary deduction that we claimed for the termination fee we paid to Baker Hughes in the second quarter of 2016 for which we received a Notice of Proposed Adjustment (NOPA) from the IRS on September 28, 2023. We regularly assess the likelihood of adverse outcomes resulting from tax examinations to determine the adequacy of our tax reserves, and we believe our income tax reserves are appropriately provided for all open tax years. We do not expect a final resolution of this issue in the next twelve months. Based on the information currently available, we do not anticipate a significant increase or decrease to our tax contingencies within the next twelve months. In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires greater disaggregation of income tax disclosures. The new standard requires additional information to be disclosed with respect to the income tax rate reconciliation and income taxes paid disaggregated by jurisdiction. This ASU should be applied prospectively for fiscal years beginning after December 15, 2024, with retrospective application permitted. The Company will adopt this standard for the Form 10-K for the year ending December 31, 2025, on a prospective basis and has implemented custom reporting processes and internal workflows to support the new disclosure requirements. The adoption of ASU 2023-09 is not expected to have a material impact on our consolidated financial statements.
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