Deferred Tax Assets, Operating Loss Carryforwards, Foreign

[Table of Contents](#i5ec3aabfaa534f9c8fa2d2a5b7677d19_7)  
Deferred Income TaxesThe Company accounts for income taxes and the related accounts under the liability method. Deferred income tax assets and liabilities reflect the impact of temporary differences between amounts of assets and liabilities for financial reporting purposes and the bases of such assets and liabilities as measured by tax laws. Significant components of the deferred tax assets and liabilities are as follows:

|  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |
|   | December 31, |
|   | 2021 |  | 2020 |
|   | (in millions) |
| Deferred tax assets: |  |  |  |
| Pension | $ | 76  |  |  | $ | 106  |  |
| Employee benefits | 30  |  |  | 29  |  |
| Net operating loss carryforwards | 699  |  |  | 746  |  |
| Warranty and other liabilities | 77  |  |  | 69  |  |
| Operating lease right-of-use assets | 78  |  |  | 77  |  |
| Other | 184  |  |  | 171  |  |
| Total gross deferred tax assets | 1,144  |  |  | 1,198  |  |
| Less: valuation allowances | (766) |  |  | (832) |  |
| Total deferred tax assets (1) | $ | 378  |  |  | $ | 366  |  |
| Deferred tax liabilities: |  |  |  |
| Fixed assets | $ | 55  |  |  | $ | 57  |  |
| Tax on unremitted profits of certain foreign subsidiaries | 65  |  |  | 64  |  |
| Intangibles | 174  |  |  | 201  |  |
| Operating lease liabilities | 78  |  |  | 77  |  |
| Total gross deferred tax liabilities | 372  |  |  | 399  |  |
| Net deferred tax assets (liabilities) | $ | 6  |  |  | $ | (33) |  |

(1)Reflects gross amount before jurisdictional netting of deferred tax assets and liabilities.Deferred tax assets and liabilities are classified as long-term in the consolidated balance sheets. Net deferred tax assets and liabilities are included in the consolidated balance sheets as follows:

|  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |
|   | December 31, |
|   | 2021 |  | 2020 |
|   | (in millions) |
|  |  |  |  |
|  |  |  |  |
| Long-term assets | $ | 159  |  |  | $ | 174  |  |
| Long-term liabilities | (153) |  |  | (207) |  |
| Total deferred tax asset (liability) | $ | 6  |  |  | $ | (33) |  |

The net deferred tax asset of $6 million as of December 31, 2021 is primarily comprised of deferred tax assets in Mexico, Germany, the U.K. and the U.S. offset by deferred tax liability amounts primarily in Korea, China, Singapore and Japan.Net Operating Loss and Tax Credit CarryforwardsAs of December 31, 2021, the Company has gross deferred tax assets of approximately $695 million for non-U.S. net operating loss (“NOL”) carryforwards with recorded valuation allowances of $640 million. These NOLs are available to offset future taxable income and realization is dependent on generating sufficient taxable income prior to expiration of the loss carryforwards. The NOLs primarily relate to Luxembourg, Poland, Germany, the U.K., Ireland and France. The NOL carryforwards have expiration dates ranging from one year to an indefinite period.Deferred tax assets include $87 million and $93 million of tax credit carryforwards with recorded valuation allowances of $71 million and $86 million at December 31, 2021 and 2020, respectively. These tax credit carryforwards expire at various times from 2022 through 2041.97
