Potential impact on disallowance of interest deductions

  


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| PROVISION (BENEFIT) FOR INCOME TAXES | 2021 | 2020 | 2019 |
| Current |  |  |  |
| U.S. Federal | $ | (1,347) |  | $ | 865  |  | $ | (22) |  |
| Non - U.S. | 1,154  |  | 1,276  |  | 1,832  |  |
| U.S. State | (85) |  | 152  |  | (373) |  |
| Deferred |  |  |  |
| U.S. Federal | (567) |  | (1,898) |  | (1,047) |  |
| Non - U.S. | 608  |  | (810) |  | 59  |  |
| U.S. State | (50) |  | (72) |  | 103  |  |
| Total | $ | (286) |  | $ | (487) |  | $ | 552  |  |

  
Income taxes paid were $1,330 million, $1,291 million and $2,228 million for the years ended December 31, 2021, 2020 and 2019, respectively, including payments reported in discontinued operations.  


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| RECONCILIATION OF U.S. FEDERAL STATUTORY INCOME TAX RATE TO ACTUAL INCOME TAX RATE | 2021 | 2020 | 2019 |
| Amount | Rate | Amount | Rate | Amount | Rate |
| U.S. federal statutory income tax rate | $ | (773) |  | 21.0  | % | $ | 1,254  |  | 21.0  | % | $ | (11) |  | 21.0  | % |
| Tax on global activities including exports | 155  |  | (4.2) |  | (47) |  | (0.8) |  | 505  |  | (935.2) |  |
| U.S. business credits(a) | (189) |  | 5.1  |  | (169) |  | (2.8) |  | (259) |  | 479.6  |  |
| Debt tender and related valuation allowances | 940  |  | (25.5) |  | —  |  | —  |  | —  |  | —  |  |
| Deductible stock and restructuring losses | (583) |  | 15.8  |  | (203) |  | (3.4) |  | (144) |  | 266.7  |  |
| Sale of Biopharma business | (5) |  | 0.1  |  | (1,447) |  | (24.2) |  | 633  |  | (1,172.2) |  |
| Goodwill impairments | —  |  | —  |  | 184  |  | 3.1  |  | 299  |  | (553.7) |  |
| All other – net(b)(c) | 169  |  | (4.5) |  | (59) |  | (1.1) |  | (471) |  | 871.6  |  |
|  | 487  |  | (13.2) |  | (1,741) |  | (29.2) |  | 563  |  | (1,043.2) |  |
| Actual income tax rate | $ | (286) |  | 7.8  | % | $ | (487) |  | (8.2) | % | $ | 552  |  | (1,022.2) | % |

(a)U.S. general business credits, primarily the credit for energy produced from renewable sources and the credit for research performed in the U.S. (b)For the year ended December 31, 2020, included $(140) million for the resolution of the IRS audit of our consolidated U.S. income tax returns for 2014-2015. For the year ended December 31, 2019, included $(378) million for the resolution of the IRS audit of our consolidated U.S. income tax returns for 2012-2013.(c)Included for each period, the expense or benefit for U.S. state taxes reported above in the consolidated (benefit) provision for income taxes, net of 21.0% federal effect.   
UNRECOGNIZED TAX POSITIONS. Annually, we file over 3,000 income tax returns in over 270 global taxing jurisdictions. We are under examination or engaged in tax litigation in many of these jurisdictions. The IRS is currently auditing our consolidated U.S. income tax returns for 2016-2018. In December 2020, the IRS completed the audit of our consolidated U.S. income tax returns for 2014-2015. The Company recognized a continuing operations benefit of $140 million plus an additional net interest benefit of $96 million. In addition, the Company recorded a benefit in discontinued operations of $130 million of tax benefits and $25 million of net interest benefits. In June 2019, the IRS completed the audit of our consolidated U.S. income tax returns for 2012-2013. The Company recognized a continuing operations tax benefit of $378 million plus an additional net interest benefit of $107 million. The Company recorded an additional non-cash benefit in discontinued operations of $332 million of tax benefits and $46 million of net interest benefits. See Note 2 for further information.   
In September 2021, GE resolved its dispute with the United Kingdom tax authority, HM Revenue & Customs (HMRC) in connection with interest deductions claimed by GE Capital for the years 2004-2015. As previously disclosed, HMRC had proposed to disallow interest deductions with a potential impact of approximately $1,100 million, which included a possible assessment of tax and reduction of deferred tax assets, not including interest and penalties. As part of the settlement, GE and HMRC agreed that a portion of the interest deductions claimed were disallowed, with no fault or blame attributed to either party. The resolution concluded the dispute in its entirety without interest or penalties. The adjustments result in no current tax payment to HMRC, but a deferred tax charge of $112 million as part of discontinued operations as a result of a reduction of available tax attributes, which had previously been recorded as deferred tax assets.   
  
2021 FORM 10-K 72
