Income Taxes |
6 Months Ended |
|---|---|
Jun. 30, 2025 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | INCOME TAXES For interim periods, income tax expense is recognized by applying the estimated annual effective tax rate to year-to-date results, unless doing so does not yield a reliable estimate. Each period, the income tax accrual is updated based on the latest estimate, and any difference from the previously accrued year-to-date balance is recorded in the current quarter. Changes in profitability estimates across jurisdictions may affect quarterly effective tax rates. The provision for income taxes for the six months ended June 30, 2025, and 2024, reflected estimated annual effective tax rates of 26% and 25%, respectively, excluding discrete items discussed below. The total tax provision for the three and six months ended June 30, 2025, was $19 million and $45 million, respectively, compared to $53 million and $94 million for the corresponding periods in 2024, respectively. The effective tax rate, including discrete items, for the three and six months ended June 30, 2025, was 26% and 24%, respectively, compared to 25% and 26% for the comparable periods in 2024. During the six months ended June 30, 2025, a net discrete tax benefit of $4 million was recognized, compared to a net discrete tax expense of $4 million for the same period in 2024. The benefit in the current year was primarily attributable to inflationary and foreign currency exchange-related effects, as well as stock-based compensation. The prior year's expense was mainly driven by similar inflationary and foreign currency exchange-related impacts. In 2021, the Organization for Economic Cooperation and Development (OECD) announced an Inclusive Framework on Base Erosion and Profit Shifting, including the Pillar Two Model Rules (Pillar Two), applicable to large multinational corporations. These rules establish a global per-country minimum tax of 15%. Although, the United States has not enacted legislation to adopt the Pillar Two framework, and future adoption remains uncertain, certain countries where operations are conducted have enacted such legislation. Specifically, the Canadian government enacted legislation in 2024 implementing aspects of the OECD’s minimum tax rules under the Pillar Two framework, effective for the 2024 fiscal year, and proposed additional legislation to implement further aspects effective in the 2025 fiscal year. Additionally, in 2024, the Brazilian Congress approved legislation-effective in 2025-that is largely aligned with certain aspects of the OECD’s minimum tax rules under the Pillar Two framework. To date, no other jurisdictions in which LP operates have enacted Pillar Two legislation. At this time, Pillar Two legislation is not expected to have a material impact on the Company's effective tax rate, consolidated results of operations, financial position, or cash flows. The Company will continue to monitor future developments related to Pillar Two legislation to assess any potential impact in the relevant jurisdictions. On July 4, 2025, H.R. 1, a bill to provide for reconciliation pursuant to title II of H. Con. Res. 14, informally known as the “One Big Beautiful Bill Act” (OBBBA) was enacted in the U.S. The OBBBA includes significant provisions, such as permanent extension of certain expiring elements of the Tax Cuts and Jobs Act of 2017, modifications to the international tax framework, and the restoration of favorable tax treatment for specific business provisions. Certain provisions are effective in 2025, while others will be implemented through 2027. Given that the legislation was signed into law after the close of the second quarter, its impacts are not included in the operating results for the six months ended June 30, 2025. The potential effects on the consolidated financial statements are currently under evaluation.
|