OSHKOSH CORPORATION NOTES OF CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2025, the Company had undistributed earnings of $523.4 million from its investment in non-U.S. subsidiaries. The Company has not recognized deferred tax liabilities for temporary differences related to certain of the Company’s foreign operations as the Company considers that a portion of its undistributed earnings in those subsidiaries are intended to be indefinitely reinvested. Should the Company’s undistributed earnings from its investment in those non-U.S. subsidiaries be distributed in the future in the form of dividends or otherwise, the Company may be subject to foreign and domestic income taxes and withholding taxes estimated at $27.4 million, including the impact of the regulations discussed below. On August 21, 2020, the U.S. Treasury Department and the U.S. Internal Revenue Service (IRS) released final regulations related to the Tax Reform Act (the “tax regulations”) and the foreign dividends received deduction and global intangible low ‑ taxed income. The tax regulations contained language that modified certain provisions of the Tax Reform Act and previously issued guidance and are effective retroactively to the Company’s fiscal 2018 tax year and purport to cause certain intercompany transactions the Company engaged in during 2018 to produce U.S. taxable income upon a subsequent distribution from a controlled foreign corporation. The Company has analyzed the tax regulations and concluded that the U.S. Treasury Department exceeded regulatory authority and that the tax regulations are contrary to the congressional intent of the underlying statute. The Company believes it has strong arguments in favor of its position and that it has met the more likely than not recognition threshold that its position will be sustained. The Company intends to vigorously defend its position, however, due to the uncertainty involved in challenging the validity of regulations as well as a potential litigation process, there can be no assurances that the tax regulations will be invalidated, modified or that a court of law will rule in favor of the Company. An unfavorable resolution of this issue would result in $19.2 million of tax liability if the Company were to distribute the earnings to the United States, which is included in the $27.4 million disclosed withholding tax above. A reconciliation of gross unrecognized tax benefits, excluding interest and penalties, was as follows (in millions): Year Ended December 31, 2025 2024 2023 Balance at beginning of period $ 61.6 $ 64.3 $ 98.8 Additions for tax positions related to current year 0.9 2.5 5.0 Additions for tax positions related to prior years 1.0 3.0 0.7 Reductions for tax positions related to prior years (2.1) (5.1) (36.5) Settlements with taxing authority (17.0) — — Foreign currency translation 1.5 (2.2) 0.3 Lapse of statutes of limitations (0.4) (0.9) (4.0) Balance at end of period $ 45.5 $ 61.6 $ 64.3 Settlement with taxing authorities in 2025 related to the resolution of a multi-year federal income tax audit. As of December 31, 2025, net unrecognized tax benefits, excluding interest and penalties, of $34.2 million would affect the Company’s effective tax rate if recognized. The Company recognizes accrued interest and penalties, if any, related to unrecognized tax benefits in the “Provision for income taxes” in the Consolidated Statements of Income. The Company recognized income of $3.3 million, expense of $4.0 million and income of $0.3 million in 2025, 2024 and 2023, respectively, related to interest and penalties on unrecognized tax benefits. The Company had accruals for the payment of interest and penalties of $8.6 million and $11.8 million at December 31, 2025 and 2024, respectively.
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