Income Taxes |
3 Months Ended |
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Mar. 31, 2026 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | Income TaxesDuring the three months ended March 31, 2026, we recorded a total income tax provision of $105 million on a pre-tax income of $569 million, resulting in an effective tax rate of 18.5% for the quarter. The effective tax rate for this period was primarily impacted by the release of a valuation allowance in the amount of $32 million related to changes in deferred tax asset realizability. During the three months ended March 31, 2025, we recorded a total income tax provision of $103 million on a pre-tax income of $306 million, resulting in an effective tax rate of 33.7% for the quarter. 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. 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 2014. The only significant operating jurisdiction that has tax filings under review or subject to examination by the tax authorities is the United States. As of March 31, 2026, the United States federal income tax filings for tax years 2016 through 2024 are currently under review or remain open for review by the Internal Revenue Service (the IRS). As of March 31, 2026, 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.
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