Owens Corning

21. INCOME TAXES

The following table summarizes our Earnings before taxes and Income tax expense:

The reconciliation between the United States federal statutory rate and the Company’s effective income tax rate from continuing operations is:

The Company continues to assert indefinite reinvestment on the majority of its foreign subsidiaries and affiliates in accordance with ASC 740 based on the laws as of enactment of the Tax Act. During the fourth quarter of 2024, the Company removed the permanent reinvestment assertion related to certain business divestitures including the business operations that are subject to Held for Sale accounting. The Company accrued deferred tax liabilities of $8 million as a result of the current year changes. As of December 31, 2024, the Company has not provided for withholding or income taxes on approximately $1.4 billion of undistributed reserves of the foreign subsidiaries and affiliates that are considered by management to be permanently reinvested. Quantification of the deferred tax liability associated with these undistributed reserves is not practicable.

21. INCOME TAXES (continued)

The cumulative temporary differences giving rise to the deferred tax assets and liabilities are as follows:

The following table summarizes the amount and expiration dates of our deferred tax assets related to operating loss and tax credit carryforwards and foreign tax credit carryforwards at December 31, 2024:

(a)The use of certain of the Company's domestic loss carryforwards is limited pursuant to Internal Revenue Code (IRC) Section 382. IRC Section 382 imposes an annual limitation on a corporation's ability to use loss carryforwards that arose before a change in control. A change in control is generally defined as a cumulative change of more than 50% in the ownership positions of certain stockholders during a rolling three-year period. The Company believes that these limitations will not result in the loss of any of the loss carryforwards.

(b)The foreign net operating losses ("NOLs") are related to various jurisdictions that provide for both indefinite carryforward periods and others with carryforward periods that range from the tax years 2025 to 2035.

The following is a rollforward of the valuation allowances for deferred taxes:

21. INCOME TAXES (continued)

Deferred income taxes are provided for temporary differences between amounts of assets and liabilities for financial reporting purposes and the basis of such assets and liabilities as measured under enacted tax laws and regulations, as well as NOLs, tax credits and other tax carryforwards. We have a variety of deferred tax assets in numerous tax jurisdictions. These deferred tax assets are subject to periodic assessment as to recoverability and if it is determined that it is more likely than not that the benefits will not be realized, valuation allowances are recognized. In evaluating whether it is more likely than not that we would recover these deferred tax assets, future taxable income, the reversal of existing temporary differences and tax planning strategies are considered.

We believe that our estimates for the valuation allowances recorded against deferred tax assets are appropriate based on current facts and circumstances. During the fourth quarter of 2024, we recorded $76 million of valuation allowances related to the announced business divestitures. As of December 31, 2024 we had $213 million of valuation allowances on deferred tax assets, on a tax-effected basis, primarily related to U.S. federal foreign tax credit carryforwards and certain foreign deferred tax attributes as it is more likely than not that some portion or all of these tax attributes will not be realized.

We file a consolidated federal income tax return in the United States as well as tax returns in multiple state, local and foreign jurisdictions. In the normal course of business, the Company is subject to examination by the taxing authorities in each of the jurisdictions where we file tax returns. During 2024, the U.S. Internal Revenue Service (“IRS”) initiated an audit of the Company’s 2021 consolidated federal income tax return. The IRS also initiated an audit of Masonite International Corporation’s pre-acquisition amended U.S. income tax filings. The Company is no longer subject to U.S. federal tax examinations for years before 2021 or state and foreign examinations for years before 2014.

We have on-going audits in various stages of completion in several state and foreign jurisdictions, one or more of which may conclude within the next 12 months. Such settlements could involve some or all of the following: the payment of additional taxes, the adjustment of certain deferred taxes and/or the recognition of unrecognized tax benefits. The resolution of these matters, in combination with the expiration of certain statutes of limitations in various jurisdictions, make it reasonably possible that our unrecognized tax benefits may decrease as a result of either payment or recognition by up to $10 million in the next 12 months, excluding interest.

A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:

During 2024, we recognized uncertain tax benefits of $47 million related primarily to the expiration of the statute of limitations in the U.S. for the 2020 tax year for both the Company and Masonite.

If these unrecognized tax benefits as of December 31, 2024, were to be recognized in the future, they would decrease the Company’s income tax expense by about $28 million.

The Company recognizes all interest and penalties related to unrecognized tax benefits as a component of income tax expense. Accrued interest and penalties, which are not presented in the rollforward table above, were $6 million, $9 million and $7 million as of December 31, 2024, 2023 and 2022, respectively. Related to interest and penalties, we recognized an income tax benefit of $5 million as of December 31, 2024. As of December 31, 2023 and 2022, we recognized income tax expense of $2 million and $1 million, respectively.