Undistributed earnings of foreign affiliates and associated companies

  
The balance of unrecognized tax benefits, the amount of related interest and penalties we have provided and what we believe to be the range of reasonably possible changes in the next 12 months were:  


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| UNRECOGNIZED TAX BENEFITS December 31 | 2021 | 2020 | 2019 |
| Unrecognized tax benefits | $ | 4,224  |  | $ | 4,191  |  | $ | 4,169  |  |
| Portion that, if recognized, would reduce tax expense and effective tax rate(a) | 3,351  |  | 2,986  |  | 2,701  |  |
| Accrued interest on unrecognized tax benefits | 597  |  | 628  |  | 722  |  |
| Accrued penalties on unrecognized tax benefits | 146  |  | 179  |  | 195  |  |
| Reasonably possible reduction to the balance of unrecognized tax benefitsin succeeding 12 months | 0-250 | 0-350 | 0-700 |
| Portion that, if recognized, would reduce tax expense and effective tax rate(a) | 0-200 | 0-250 | 0-650 |

(a) Some portion of such reduction may be reported as discontinued operations.  


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| UNRECOGNIZED TAX BENEFITS RECONCILIATION | 2021 | 2020 | 2019 |
| Balance at January 1 | $ | 4,191  |  | $ | 4,169  |  | $ | 5,563  |  |
| Additions for tax positions of the current year | 396  |  | 836  |  | 403  |  |
| Additions for tax positions of prior years | 327  |  | 326  |  | 500  |  |
| Reductions for tax positions of prior years(a) | (585) |  | (863) |  | (1,927) |  |
| Settlements with tax authorities | (33) |  | (127) |  | (155) |  |
| Expiration of the statute of limitations | (71) |  | (151) |  | (214) |  |
| Balance at December 31 | $ | 4,224  |  | $ | 4,191  |  | $ | 4,169  |  |

(a)For 2019, reductions included $710 million related to the completion of the 2012-2013 IRS audit and $442 million related to the deconsolidation of Baker Hughes.   
We classify interest on tax deficiencies as interest expense; we classify income tax penalties as provision for income taxes. For the years ended December 31, 2021, 2020 and 2019, $17 million, $(30) million and $(93) million of interest expense (income), respectively, and $(29) million, $(13) million and $20 million of tax expense (income) related to penalties, respectively, were recognized in our Statement of Earnings (Loss).  
DEFERRED INCOME TAXES. As part of the Tax Cuts and Jobs Act of 2017 (U.S. tax reform), the U.S. has enacted a minimum tax on foreign earnings (global intangible low tax income). We have not made an accrual for the deferred tax aspects of this provision. We also have not provided deferred taxes on cumulative net earnings of non-U.S. affiliates and associated companies of approximately $12 billion that have been reinvested indefinitely. Given U.S. tax reform, substantially all of our prior unrepatriated net earnings were subject to U.S. tax and accordingly we expect to have the ability to repatriate available non-U.S. cash without additional federal tax cost, and any foreign withholding tax on a repatriation to the U.S. would potentially be partially offset by a U.S. foreign tax credit. However, because most of these earnings have been reinvested in active non-U.S. business operations, as of December 31, 2021, we have not decided to repatriate these earnings to the U.S. It is not practicable to determine the income tax liability that would be payable if such earnings were not reinvested indefinitely. In December 2021, the Company announced plans to form three public companies focused on aviation, healthcare and energy. Planning for and execution of this separation will result in tax including potentially tax on changes in indefinite reinvestment outside the U.S. The impact of a change in reinvestment will be recorded when there is a specific change in ability and intent to reinvest earnings.  
The following table presents our net deferred tax assets and net deferred tax liabilities attributable to different tax jurisdictions or different tax paying components.  


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|  |  |  |  |  |  |  |  |  |
| DEFERRED INCOME TAXES December 31 | 2021 | 2020 |
| Total assets | $ | 11,587  |  | $ | 14,972  |  |
| Total liabilities | (732) |  | (719) |  |
| Net deferred income tax asset (liability) | $ | 10,855  |  | $ | 14,253  |  |

  
2021 FORM 10-K 73
