Annual report [Section 13 and 15(d), not S-K Item 405]

Income Taxes

v3.26.1
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes
(8) Income Taxes
Income tax benefit (expense) consists of:
Years ended December 31,
2025 2024 2023
amounts in millions
Current:
Federal $ 8  (86) (8)
State and local 19  (6) 12 
Foreign (72) (78) (84)
(45) (170) (80)
Deferred:
Federal 210  172  (50)
State and local 23  42  (3)
Foreign (3) (3) (27)
230  211  (80)
Income tax benefit (expense) $ 185  41  (160)
The following table presents a summary of our domestic and foreign earnings (losses) from continuing operations before income taxes:
Years ended December 31,
2025 2024 2023
amounts in millions
Domestic $ (2,757) (1,525) (236)
Foreign 174  234  302 
Total $ (2,583) (1,291) 66 
Total Income tax benefit (expense) differs from the amounts computed by applying the U.S. federal income tax rate of 21% in 2025 as a result of the following:
Year ended December 31, 2025
amounts in millions percent
US Federal statutory income tax rate $ 542  21.0  %
Domestic federal
Tax credits 5 0.2%
Nontaxable and non-deductible items, net
   Goodwill impairment (310) (12)%
   Other non-deductible items (36) (1.4)%
Cross-border tax laws (23) (0.9)%
Valuation Allowance - FTC C/F (11) (0.4)%
Other 6 0.2%
Domestic state and local income taxes, net of federal tax effect (1) 25  1.0  %
Foreign tax effects (13) (0.5) %
Worldwide changes in unrecognized tax benefits —  —  %
Total tax benefit (expense) $ 185  7.2  %
(1) The following jurisdictions make up greater than 50% of the state income tax expense for 2025: California and New York.
For the year ended December 31, 2025, income tax benefit differs from the U.S. statutory rate of 21% due to an impairment of goodwill that is not deductible for tax purposes (see note 5).
Total Income tax benefit (expense) for 2024 and 2023 differs from the amounts computed by applying the U.S. federal income tax rate of 21% as a result of the following:
Years ended December 31,
2024 2023
amounts in millions
Computed expected tax benefit (expense) $ 271  (14)
State and local income taxes, net of federal income taxes 24  (21)
Tax on foreign earnings, net of federal tax benefits 210  (24)
Change in valuation allowance affecting tax expense (236) — 
Impairment of non-deductible goodwill (189) (68)
Non-deductible interest on Preferred Stock (21) (21)
Stock compensation (6) (17)
Executive compensation (6) (4)
Change in tax rate (2) 16 
Non-deductible equity distribution (1) — 
Other, net (3) (7)
Income tax benefit (expense) $ 41  (160)

For the year ended December 31, 2024, income tax benefit differs from the U.S. statutory rate of 21% due to an impairment of goodwill that is not deductible for tax purposes (see note 5).
For the year ended December 31, 2023, income tax expense was greater than the U.S. statutory rate of 21% due to state income tax expense, foreign income tax expense, the impairment of goodwill that is not deductible for tax purposes, non-deductible interest expense related to Preferred Stock, and stock compensation, partially offset by tax benefits from a decrease in effective tax rate used to measure deferred taxes.
The tax effects of temporary differences that give rise to significant portions of the deferred income tax assets and deferred income tax liabilities are presented below:
December 31,
2025 2024
amounts in millions
Deferred tax assets:
Tax losses and credit carryforwards $ 772  594 
Foreign tax credit carryforwards 102  101 
Operating lease liability 152  123 
Other accrued liabilities 25  35 
Prepaid royalty 23  43 
Other —  15 
Deferred tax assets 1,074  911 
Valuation allowance (535) (500)
Net deferred tax assets 539  411 
Deferred tax liabilities:
Intangible assets 304  540 
Fixed assets 36  22 
Discount on exchangeable debentures 1,275  1,136 
Other 46  — 
Deferred tax liabilities 1,661  1,698 
Net deferred tax liabilities $ 1,122  1,287 
As of December 31, 2025, the Company had a deferred tax asset of $772 million for net operating losses and interest expense carryforwards. If not utilized to reduce income tax liabilities in future periods, $378 million of these loss carryforwards will expire at various times between 2026 and 2044. The remaining $394 million of losses and interest expense carryforwards may be carried forward indefinitely. These carryforwards are expected to be utilized by the Company, except for $441 million which, based on current projections, will not be utilized in the future and are subject to a valuation allowance.
As of December 31, 2025, the Company had a deferred tax asset of $102 million for foreign tax credit carryforwards. If not utilized to reduce income tax liabilities in future periods, these foreign tax credit carryforwards will expire at various times between 2026 and 2034. The Company estimates that $94 million of its foreign tax credit carryforward will expire without utilization and are subject to a valuation allowance.
A reconciliation of unrecognized tax benefits is as follows:
Years ended December 31,
2025 2024 2023
amounts in millions
Balance at beginning of year $ 61  67  97 
Additions based on tax positions related to the current year 3  3  5 
Additions for tax positions of prior years 8  —  1 
Reductions for tax positions of prior years (10) (3) (3)
Lapse of statute and settlements (3) (6) (33)
Balance at end of year $ 59  61  67 
Income taxes paid during 2025 by taxing jurisdiction are as follows:
Year ended December 31,
2025
amounts in millions
US Federal $ 27 
US state and local 9 
Foreign
   Japan 51 
   Other 19 
Total $ 106 
As of December 31, 2025, the Company's tax years prior to 2022 are closed for federal income tax purposes, and the Internal Revenue Service (“IRS”) has completed its examination of the Company's 2022 and 2023 tax years. However, 2022 and 2023 remain open until the statute of limitations lapses on October 15 of 2026 and 2027, respectively. The Company's 2024 and 2025 tax years are being examined currently as part of the IRS's Compliance Assurance Process ("CAP") program. As of December 31, 2025, the Company was under examination in Arizona, Massachusetts, Minnesota, Pennsylvania, Texas, Utah, Wisconsin, New York City, and Germany.
The Company recorded $8 million of accrued interest and penalties related to uncertain tax positions for each of the years ended December 31, 2025 and 2024, and $6 million for the year ended December 31, 2023.