Company: CNDT
Filing Date: 2025-02-19
Form Type: 10-K
Source: 0001677703-25-000029
Chunk: 76

Company: CONDUENT Inc
Filing Date: 2025-02-19
Form: 10-K
Item: Item 7
Chunk 76
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ed long-term business model and consider our historical results as well as the current economic environment and markets that we serve. The most significant assumptions used in the goodwill analysis relate to discount rates and long-term organic growth rates.

Based on our quantitative assessments, we concluded that the fair value of our Government reporting unit exceeded its carrying value and, accordingly, we did not record any goodwill impairment charge as a result of our annual quantitative impairment test of goodwill for this reporting unit. If we used different assumptions for discount rates or long-term organic growth rates in this annual assessment, our calculated fair values of our Government reporting unit could be higher or lower which could result in a goodwill impairment. Refer to Note 7 – Goodwill and Intangible Assets, Net to the Consolidated Financial Statements for additional information on the impairment of the remaining goodwill in our Transportation reporting unit. 

Income Taxes 

We are subject to income taxes in the United States and numerous foreign jurisdictions. The determination of our provision for income taxes requires significant judgment, the use of estimates and the interpretation and application of complex tax laws. Our provision is based on nonrecurring events as well as recurring factors, including the taxation of foreign income. In addition, our provision will change based on discrete or other nonrecurring events such as audit settlements, tax law changes, changes in valuation allowances and other factors, that may not be predictable. In the event there is a significant unusual or one-time item recognized in our operating results, the taxes attributable to that item would be separately calculated and recorded at the same time as the unusual or one-time item. 

We record the estimated future tax effects of temporary differences between the tax bases of assets and liabilities and amounts reported in our Consolidated Balance Sheets, as well as operating loss and tax credit carryforwards. We follow very specific and detailed guidelines in each tax jurisdiction regarding the recoverability of any tax assets recorded in our Consolidated Balance Sheets and provide valuation allowances as required. We regularly review our deferred tax assets for recoverability considering historical profitability, projected future taxable income, the expected timing of the reversals of existing temporary differences and tax planning strategies. Gross deferred tax assets of $241 million and $253 million had valuation allowances of $95 million and $100 million at December 31, 2024 and 2023, respectively.

We are subject to ongoing tax examinations and assessments in various jurisdictions. Accordingly, we may incur additional tax expense based upon our assessment of the more-likely-than-not outcomes of such matters. In addition, when applicable, we adjust previously recorded tax