Debt Securities, Available-for-sale

[Table of Contents](#ib75a44f638b042a5a7472d3f3be80b22_7)NOTE 6. INCOME TAXESOur effective tax rates for the three and nine months ended September 30, 2022, were 32.7 percent and 24.6 percent, respectively. Our effective tax rates for the three and nine months ended October 3, 2021, were 19.9 percent and 21.1 percent, respectively. The three months ended September 30, 2022, contained unfavorable discrete tax items of $57 million, primarily due to $51 million of unfavorable tax costs associated with internal restructuring ahead of the planned separation of our filtration business and $10 million of unfavorable return to provision adjustments, partially offset by $4 million of net favorable other discrete tax items.The nine months ended September 30, 2022, contained unfavorable net discrete tax items of $52 million, primarily due to $69 million of unfavorable tax costs associated with internal restructuring ahead of the planned separation of our filtration business and $10 million of unfavorable return to provision adjustments, partially offset by $27 million of favorable changes in tax reserves. The three months ended October 3, 2021, contained favorable discrete items of $11 million, primarily due to a $16 million favorable release of tax reserves associated with the settlement of tax positions, partially offset by $5 million of unfavorable return to provision adjustments.The nine months ended October 3, 2021, contained favorable discrete items of $8 million, primarily due to an $18 million favorable release of tax reserves associated with the settlement of tax positions, partially offset by $10 million of unfavorable statutory changes in tax rates (mostly in the U.K.).NOTE 7. MARKETABLE SECURITIESA summary of marketable securities, all of which were classified as current, was as follows:

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|   |  | September 30,2022 |  | December 31,2021 |
| In millions |  | Cost |  | Gross unrealized gains/(losses)(1) |  | Estimatedfair value |  | Cost |  | Gross unrealized gains/(losses)(1) |  | Estimatedfair value |
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| Equity securities |  |   |  |   |  |   |  |   |  |   |  |   |
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| Certificates of deposit |  | $ | 229  |  |  | $ | —  |  |  | $ | 229  |  |  | $ | 299  |  |  | $ | —  |  |  | $ | 299  |  |
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| Debt mutual funds |  | 215  |  |  | (7) |  |  | 208  |  |  | 254  |  |  | 2  |  |  | 256  |  |
| Equity mutual funds |  | 28  |  |  | 1  |  |  | 29  |  |  | 29  |  |  | 10  |  |  | 39  |  |
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| Debt securities |  | —  |  |  | —  |  |  | —  |  |  | 1  |  |  | —  |  |  | 1  |  |
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| Total marketable securities |  | $ | 472  |  |  | $ | (6) |  |  | $ | 466  |  |  | $ | 583  |  |  | $ | 12  |  |  | $ | 595  |  |
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| (1) Unrealized gains and losses for debt securities are recorded in other comprehensive income while unrealized gains and losses for equity securities are recorded in other income, net in our Condensed Consolidated Statements of Net Income.  |
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All debt securities are classified as available-for-sale. All marketable securities presented use a Level 2 fair value measure. The fair value of Level 2 securities is estimated using actively quoted prices for similar instruments from brokers and observable inputs where available, including market transactions and third-party pricing services, or net asset values provided to investors. We do not currently have any Level 3 securities, and there were no transfers between Level 2 or 3 during the nine months ended September 30, 2022, or the year ended December 31, 2021.  
A description of the valuation techniques and inputs used for our Level 2 fair value measures is as follows: •Certificates of deposit — These investments provide us with a contractual rate of return and generally range in maturity from three months to five years. The counterparties to these investments are reputable financial institutions with investment grade credit ratings. Since these instruments are not tradable and must be settled directly by us with the respective financial institution, our fair value measure is the financial institution's month-end statement.•Debt mutual funds — The fair value measures for the vast majority of these investments are the daily net asset values published on a regulated governmental website. Daily quoted prices are available from the issuing brokerage and are used on a test basis to corroborate this Level 2 input measure.•Equity mutual funds — The fair value measures for these investments are the net asset values published by the issuing brokerage. Daily quoted prices are available from reputable third-party pricing services and are used on a test basis to corroborate this Level 2 input measure. 15
