Note 7—Income Taxes

The effective tax rate was (1.6)% and 8.0% for the three and six months ended June 30, 2026, compared to 1.3% and 3.0% for the three and six months ended June 30, 2025. The change in these rates was primarily from changes in results of operations, primarily due to the tax impact of the completion of the Balance Sheet Optimization Transaction in the second quarter of 2026, and the tax treatment associated with the $80 million transaction breakage fee recorded in the second quarter of 2025.

The liability for unrecognized tax benefits was $33 million and $49 million at June 30, 2026 and December 31, 2025. Included in the liability at June 30, 2026 and December 31, 2025 were no tax positions for which ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. The deferred tax

asset balance within other assets, net on our condensed consolidated balance sheet was $135 million and $78 million at June 30, 2026 and December 31, 2025.

On August 26, 2020, we received a Notice of Proposed Adjustment (NOPA) from the Internal Revenue Service (IRS) regarding our 2015 and 2016 consolidated income tax returns. On June 30, 2021, we received a NOPA from the IRS regarding our 2017 and 2018 consolidated income tax returns. Within the NOPAs, the IRS has asserted that our taxable income for the aforementioned years should be higher based on their assessment of the appropriate amount of taxable income that we should report in the U.S. in connection with the sourcing of products by our former foreign subsidiaries for sale in the U.S. by our former domestic subsidiaries. These former foreign and domestic subsidiaries were sold as part of the P&HS Sale. The transfer pricing methodology was consistently applied for all years subject to the NOPAs and 2019 into 2022, but is no longer employed.

In June 2024, the IRS and the relevant foreign taxing authority mutually agreed to proposed adjustments to our 2015 through 2018 consolidated tax returns. As a result, we remeasured the uncertain tax position for the 2015 through 2018 tax years, as well as the affected 2019 through 2022 tax years, to the amount expected to be paid upon a final agreement with the IRS. In June 2025, we received the final assessment from the IRS for the 2015 through 2018 tax years, including interest. The uncertain tax position for these years and related accrued interest have been remeasured to reflect the final amount to be paid. This matter does not impact any tax years subsequent to 2022. In March 2026, we paid $19 million to the IRS to settle the 2015 through 2018 audit years, inclusive of $5.8 million of accrued interest. As of June 30, 2026, the remaining amount owed associated with the transfer pricing matter was $16 million, which includes $5.3 million of interest accrued on the matter through June 30, 2026. The balance sheet classification and amount owed may be subject to change depending on the timing of a final assessment from the IRS for the 2019-2022 audit years.

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On July 4, 2025, the U.S. Congress enacted budget reconciliation bill H.R. 1, referred to as the One Big Beautiful Bill (OBBB). The OBBB contains several changes to corporate taxation including modification to limitations on deductions for interest expense and accelerated fixed asset depreciation. We expect the legislation to decrease future U.S. cash taxes with no material impact to the effective tax rate.