Company: CNDT
Filing Date: 2025-02-19
Form Type: 10-K
Source: 0001677703-25-000029
Chunk: 124

Company: CONDUENT Inc
Filing Date: 2025-02-19
Form: 10-K
Item: Item 8
Chunk 124
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 implemented an internal reorganization in which it sold a portion of its top tier foreign holding company to a lower tier subsidiary. This transaction and a subsequent tax election to treat the holding company as a partnership resulted in recognition of a built-in capital loss for tax purposes that offset capital gains from divestitures, resulting in net tax savings of $59 million. The determination of the tax characteristic of this transaction requires management to make judgments about the application of tax laws and regulations. The United States Internal Revenue Service could determine a different tax treatment that would have an adverse impact on the Company. As of December 31, 2024, the Company had $19 million of unrecognized tax benefits that, if recognized, would impact the Company's effective tax rate. Of this amount, $17 million is related to the valuation of the Company's foreign operations used in the calculation of the loss on the internal reorganization mentioned above.

CNDT 2024 Annual Report81

A reconciliation of the beginning and ending amount of unrecognized tax benefits was as follows: (in millions)202420232022Balance at January 1$10 $12 $23 Additions related to current year17 — — Additions related to prior years positions2 — 1 Reductions related to prior years positions(9)(1)(2)Settlements with taxing authorities(1)(1)(5)Lapse of Statute of limitations— — (5)Balance at December 31$19 $10 $12 The Company maintains offsetting benefits from other jurisdictions of $2 million, $1 million and $1 million, at December 31, 2024, 2023 and 2022, respectively. The Company recognized interest and penalties accrued on unrecognized tax benefits within income tax expense. The Company had $1 million, $2 million and $3 million accrued for the payment of interest and penalties associated with unrecognized tax benefits at December 31, 2024, 2023 and 2022, respectively. We are subject to federal income tax examinations in the U.S. and to income tax examinations in various states and foreign jurisdictions. In the U.S., the Company is no longer subject to U.S. federal income tax examinations for years before 2021. With limited exceptions, as of December 31, 2024, we are no longer subject to state, local or foreign examinations by tax authorities for years before 2020. Deferred Income TaxesThe Company is indefinitely reinvested in