Annual report pursuant to Section 13 and 15(d)

Income Taxes

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Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES
The jurisdictional components of income (loss) before income taxes and non-controlling interest on our Consolidated Statements of Operations are as follows (in millions):
  Year Ended December 31,
  2023 2022 2021
U.S. $ 11,176  $ (1,575) $ (2,317)
International 3,402  4,669  39 
Total income (loss) before income taxes and non-controlling interest $ 14,578  $ 3,094  $ (2,278)
Income tax provision (benefit) included in our reported net income consisted of the following (in millions): 
Year Ended December 31,
2023 2022 2021
Current:
Federal $ 130  $ 6  $ — 
State 1  2  3 
Foreign (1) 11  5 
Total current 130  19  8 
Deferred:
Federal 2,377  320  (633)
State 15  118  (89)
Foreign (3) 2  1 
Total deferred 2,389  440  (721)
Total income tax provision (benefit) $ 2,519  $ 459  $ (713)
 
Our income tax rates do not bear a customary relationship to statutory income tax rates. A reconciliation of the federal statutory income tax rate of 21% to our effective income tax rate is as follows: 
Year Ended December 31,
2023 2022 2021
U.S. federal statutory tax rate 21.0  % 21.0  % 21.0  %
Income not taxable to Cheniere (3.1) (8.2) 7.2 
State tax, net of federal benefit 0.1  0.5  (2.5)
Foreign-derived intangible income deduction (0.7) (1.2) — 
Valuation allowance —  2.6  5.6 
Other —  0.1  — 
Effective tax rate as reported 17.3  % 14.8  % 31.3  %
Significant components of our deferred tax assets and liabilities are as follows (in millions): 
December 31,
2023 2022
Deferred tax assets    
Net operating loss (“NOL”) carryforwards
Federal $ 915  $ 1,968 
State 163  177 
Federal and state tax credits 33  66 
Derivative instruments 98  1,345 
Operating lease liabilities 550  542 
Other 298  311 
Less: valuation allowance (1) (147) (143)
Total deferred tax assets 1,910  4,266 
Deferred tax liabilities  
Investment in partnerships (309) (211)
Property, plant and equipment (2,564) (2,646)
Operating lease assets (538) (536)
Other (18) (9)
Total deferred tax liabilities (3,429) (3,402)
Net deferred tax assets (liabilities) $ (1,519) $ 864 
(1)Valuation allowance primarily related to state NOL carryforward deferred tax assets and increased by $4 million and $80 million during the years ended December 31, 2023 and 2022, respectively, and decreased by $127 million during year ended December 31, 2021.
NOL and tax credit carryforwards

As of December 31, 2023, we had federal and state NOL carryforwards of approximately $4.3 billion and $2.2 billion, respectively. All of our NOLs have an indefinite carryforward period.

As of December 31, 2023, we had federal and state tax credit carryforwards of $32 million and $1 million, respectively, which will expire between 2028 and 2033. As of December 31, 2023, all of the federal tax credit carryforwards were foreign tax credit carryforwards.

Our NOL and tax credit carryforwards are not subject to, nor impacted by, any prior tax ownership change. We continue to monitor public trading activity in our shares to identify potential tax ownership changes that could impact our timing and ability to utilize such attributes.

Unrecognized Tax Benefits

As of December 31, 2023, we had unrecognized tax benefits of $73 million. If recognized, $66 million of unrecognized tax benefits would affect our effective tax rate in future periods. Interest and penalties related to income tax matters are recognized as part of income tax expense. Interest recognized as part of income tax provision was $4 million and zero as of December 31, 2023 and 2022, respectively, and cumulative accrued interest was $4 million and zero as of December 31, 2023 and 2022, respectively. There were no penalties associated with liabilities for unrecognized tax benefits recorded for the years ended December 31, 2023 and 2022. We do not expect the amount of our existing unrecognized tax benefit to significantly increase or decrease within the next 12 months.

We are subject to tax in the U.S. and various state and foreign jurisdictions and we are subject to periodic audits and reviews by taxing authorities. Federal and United Kingdom tax returns for the years after 2017 and state tax returns for the years after 2019 remain open for examination. Tax authorities may have the ability to review and adjust carryover attributes that were generated prior to these periods if utilized in an open tax year.
A reconciliation of the beginning and ending amounts of our unrecognized tax benefits is as follows (in millions): 
Year Ended December 31,
2023 2022
Balance at beginning of the year $ 74  $ 65 
Additions based on tax positions related to current year —  10 
Reductions for tax positions of prior years (1) (1)
Balance at end of the year $ 73  $ 74