SEABOARD CORP /DE/ Income Taxes Disclosure

Note 12 − Income Taxes

Earnings before income taxes were as follows:

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The components of total income taxes were as follows:

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After adoption of the new FASB guidance discussed in Note 1 to the consolidated financial statements, a reconciliation of income taxes for the year ended December 31, 2025, to the amount computed by applying the statutory U.S. federal income tax rate of 21% to earnings before income taxes is as follows:

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Prior to the adoption of the new FASB guidance discussed in Note 1 to the consolidated financial statements, a reconciliation of income taxes to the amount computed by applying the statutory U.S. federal income tax rate of 21% to earnings before income taxes is as follows:

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In July 2025, the U.S. signed into law the One Big Beautiful Bill Act (“OBBBA”). The OBBBA imposed various changes to U.S. federal income tax regulation, including restoring 100% bonus depreciation, removing the requirement to capitalize and amortize domestic research and development expenditures, increasing interest deductibility and reducing certain international deductions. The effective provisions of the OBBBA were reflected in Seaboard’s financial results for the year ended December 31, 2025, and there was no material impact to income tax expense. International provisions are effective beginning in 2026, and Seaboard continues to evaluate the potential impact of the OBBBA on those provisions to its financial statements.

Certain of Seaboard’s foreign operations are subject to no income tax or a tax rate that is lower than the U.S. corporate tax rate. Fluctuation of earnings or losses incurred from certain foreign operations conducting business in these jurisdictions impact the mix of taxable earnings. Additionally, those foreign operations are subject to the GILTI income inclusion in the U.S. which can be offset by foreign tax credits. During 2025 and 2024, Seaboard’s ability to utilize foreign tax credits to offset the GILTI income inclusion was limited by U.S. taxable income. Additionally, several countries in which Seaboard operates have adopted the Pillar Two rules issued by the OECD which are designed to tax earnings at a 15% minimum tax, but the impact was not material during 2025 and 2024. The Pillar Two rules contain an exemption for qualified international shipping activity that applies to certain of Seaboard’s international shipping operations. On January 5, 2026, the OECD released a comprehensive package for a “side-by-side arrangement” with respect to Pillar Two. Notably, once adopted, this new guidance will prevent other countries from imposing tax under the Income Inclusion Rule and the Under Taxed Profits Rule on the U.S. profits of U.S. headquartered multinational enterprise groups.

With the passing of the U.S. Inflation Reduction Act of 2022, the federal blender’s credits expired December 31, 2024, and a new clean fuel production tax credit replaced the federal blender’s credits starting in 2025. Both the production tax credit and the federal blender’s credit result in non-taxable income. Associated with the production tax credits, Seaboard recognized as non-taxable income the offset to cost of sales of $66 million for the year ended December 31, 2025. Seaboard recognized non-taxable income of $125 million and $103 million in net sales for the years ended December 31, 2024 and 2023, respectively related to the federal blender’s credits.

Seaboard has invested in capital expenditures, primarily related to renewable biogas recovery facilities, that generate federal tax credits. As a result, Seaboard generated $10 million, $85 million, and $31 million of transferable federal investment tax credits during 2025, 2024, and 2023, respectively.

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Components of the net deferred income tax asset were as follows:

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The activity within the valuation allowance account was as follows:

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As of December 31, 2025, Seaboard’s U.S. operations were no longer in a historical three-year cumulative loss position after considering U.S. pre-tax book income and the effects of permanent differences. Seaboard considered both positive and negative evidence, including recent operating results, forecasted future taxable income and the reversal of temporary differences and concluded that sufficient positive evidence existed to release substantially all of its U.S. valuation allowance, resulting in an income tax benefit of $170 million for the year ended December 31, 2025. A valuation allowance remains recorded on certain U.S. and foreign deferred tax attributes that are not more likely than not to be realized.  

As of December 31, 2024, Seaboard’s U.S. operations were in a historical three-year cumulative loss position. Under U.S. GAAP, a three-year cumulative loss position is significant objective negative evidence. The presence of a three-year cumulative loss limited Seaboard’s ability to consider other subjective evidence, such as its expectations of future taxable income and projections of growth. Based on the weight of available evidence available, Seaboard determined that it was more likely than not that the benefit of the deferred tax assets would not be realized. Accordingly, during 2024, Seaboard recorded a valuation allowance adjustment totaling $212 million, which was primarily related to its U.S. deferred tax assets, with a corresponding charge to income tax expense.

As of December 31, 2025, Seaboard had state net operating loss carry-forwards of approximately $734 million and foreign net operating loss carry-forwards of approximately $57 million, a portion of which expire in varying amounts between 2026 and 2045, while others have indefinite expiration periods. As of December 31, 2025, Seaboard had federal tax credit carry-forwards of approximately $87 million, which expire between 2042 and 2045, and state tax credit carry-forwards of approximately $92 million, a portion of which expire in varying amounts between 2026 and 2041 with the remainder available for indefinite carry-forward.

Seaboard considers substantially all foreign profits permanently reinvested in its foreign operations, except for previously-taxed undistributed earnings of Seaboard Marine and earnings from certain other foreign subsidiaries. During 2025, Seaboard recorded additional deferred taxes of $1 million related to these certain other foreign subsidiaries for which indefinite reinvestment is no longer asserted. For all other foreign subsidiaries, Seaboard intends to continue permanently reinvesting their funds outside the U.S. as they continue to demonstrate no need to repatriate them to fund Seaboard’s U.S. operations for the foreseeable future.

As of December 31, 2025 and 2024, Seaboard had income taxes receivable of $69 million and $71 million, respectively, primarily related to domestic tax jurisdictions, and had income taxes payable of $29 million and $34 million, respectively, primarily related to foreign tax jurisdictions. Income taxes receivable and income taxes payable are included in other receivables and other current and non-current liabilities in the consolidated balance sheets.

Seaboard’s tax returns are regularly audited by federal, state and foreign tax authorities, which may result in material adjustments. Seaboard’s 2023 U.S. federal income tax return is under Internal Revenue Service (“IRS”) examination. U.S federal tax years prior to 2022 are no longer subject to IRS tax assessment. In the U.S., typically the three most recent tax years are subject to IRS audits, unless an agreement is made to extend the statute of limitations for an audit in progress or the statute is specifically extended by law for certain specialized items. In Seaboard’s major non-U.S. jurisdictions, such as Dominican Republic, Senegal and South Africa, tax years are typically subject to examination for three to six years.

After considering the valuation allowance, as of December 31, 2025 and 2024, Seaboard had $50 million and $20 million, respectively, in total unrecognized tax benefits, which, if recognized, would affect the effective tax rate. The following table is a reconciliation of the beginning and ending amount of unrecognized tax benefits:

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Seaboard accrues interest and penalties related to unrecognized tax benefits in income tax expense and had approximately $11 million and $10 million accrued as of December 31, 2025 and 2024, respectively.

The amounts paid for income taxes, net of tax credit sales proceeds and refunds for the year ended December 31, 2025, were as follows:

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Seaboard disaggregated jurisdictions based on gross income taxes paid excluding the impact of tax credit sales proceeds. Cash paid for income taxes, net of tax credit sales proceeds and refunds for the years ended December 31, 2024 and 2023, were $40 million and $47 million, respectively. Seaboard sold federal and state transferable tax credits and received proceeds of $81 million and $28 million for the years ended December 31, 2025 and 2024, respectively. Proceeds from the sale of tax credits are included within deferred income taxes in the consolidated statement of cash flows.