Annual report pursuant to Section 13 and 15(d)

INCOME TAXES (Tables)

v3.10.0.1
INCOME TAXES (Tables)
12 Months Ended
Dec. 31, 2018
Income Tax Disclosure [Abstract]  
Income Tax Expense Benefit
The income tax expense (benefit) for the years ended December 31, 2018, 2017 and 2016 consists of the following (in millions):
 
2018
 
2017
 
2016
Current:
 
 
 
 
 
U.S. Federal
$
89

 
$
671

 
$
1,338

U.S. State and Local
7

 
49

 
67

Non-U.S.
374

 
288

 
177

Total Current
470

 
1,008

 
1,582

Deferred:
 
 
 
 
 
U.S. Federal
668

 
1,115

 
98

U.S. State and Local
75

 
118

 
30

Non-U.S.
15

 
(9
)
 
(11
)
Total Deferred
758

 
1,224

 
117

Total Income Tax Expense
$
1,228

 
$
2,232

 
$
1,699

Income Before Income Taxes
Income before income taxes includes the following components (in millions):
 
2018
 
2017
 
2016
United States
$
4,307

 
$
5,987

 
$
4,307

Non-U.S.
1,712

 
1,150

 
814

Total Income Before Income Taxes:
$
6,019

 
$
7,137

 
$
5,121

Reconciliation of Statutory Federal Income Tax Rate to Effective Income Tax Rate
A reconciliation of the statutory federal income tax rate to the effective income tax rate for the years ended December 31, 2018, 2017 and 2016 consists of the following:
 
2018
 
2017
 
2016
Statutory U.S. federal income tax rate
21.0
 %
 
35.0
 %
 
35.0
 %
U.S. state and local income taxes (net of federal benefit)
1.4

 
1.5

 
1.5

Non-U.S. tax rate differential
0.2

 
(2.0
)
 
(2.4
)
U.S. federal tax credits
(1.1
)
 
(1.8
)
 
(1.2
)
Income tax benefit from the Tax Cuts and Jobs Act and other non-U.S. tax law changes

 
(3.6
)
 

Defined benefit plans mark-to-market charge tax rate differential (1)

 
1.5

 

Other
(1.1
)
 
0.7

 
0.3

Effective income tax rate
20.4
 %
 
31.3
 %
 
33.2
 %
Deferred Tax Liabilities and Assets
Deferred income tax assets and liabilities are comprised of the following at December 31, 2018 and 2017 (in millions):
 
2018
 
2017
Fixed assets and capitalized software
$
(4,010
)
 
$
(3,288
)
Other
(493
)
 
(532
)
Deferred tax liabilities
(4,503
)
 
(3,820
)
 
 
 
 
Pension and postretirement benefits
1,743

 
1,877

Loss and credit carryforwards
298

 
323

Insurance reserves
437

 
449

Stock compensation
189

 
182

Accrued employee compensation
274

 
266

Other
196

 
359

Deferred tax assets
3,137

 
3,456

Deferred tax assets valuation allowance
(112
)
 
(126
)
Deferred tax asset (net of valuation allowance)
3,025

 
3,330

 
 
 
 
Net deferred tax asset (liability)
$
(1,478
)
 
$
(490
)
 
 
 
 
Amounts recognized in the consolidated balance sheets:
 
 
 
Deferred tax assets
$
141

 
$
266

Deferred tax liabilities
(1,619
)
 
(756
)
Net deferred tax asset (liability)
$
(1,478
)
 
$
(490
)
U.S. State and Local Operating Loss and Credit Carryforwards
In addition, we have U.S. state and local operating loss and credit carryforwards as follows (in millions):
 
2018
 
2017
U.S. state and local operating loss carryforwards
$
1,014

 
$
1,215

U.S. state and local credit carryforwards
$
80

 
$
83

Summarized Activity Related to Unrecognized Tax Benefits
The following table summarizes the activity related to our uncertain tax positions (in millions):
 
Tax
 
Interest
 
Penalties
Balance at January 1, 2016
$
148

 
$
53

 
$
6

Additions for tax positions of the current year
17

 

 

Additions for tax positions of prior years
20

 
10

 

Reductions for tax positions of prior years for:
 
 
 
 
 
Changes based on facts and circumstances
(41
)
 
(13
)
 

Settlements during the period

 

 

Lapses of applicable statute of limitations

 

 

Balance at December 31, 2016
144

 
50

 
6

Additions for tax positions of the current year
16

 

 

Additions for tax positions of prior years
33

 
14

 
3

Reductions for tax positions of prior years for:
 
 
 
 
 
Changes based on facts and circumstances
(24
)
 
(18
)
 

Settlements during the period
(6
)
 
(3
)
 

Lapses of applicable statute of limitations
(3
)
 

 

Balance at December 31, 2017
160

 
43

 
9

Additions for tax positions of the current year
47

 

 
1

Additions for tax positions of prior years
7

 
10

 

Reductions for tax positions of prior years for:
 
 
 
 
 
Changes based on facts and circumstances
(43
)
 
(8
)
 
(5
)
Settlements during the period
(1
)
 
(1
)
 

Lapses of applicable statute of limitations
(3
)
 

 

Balance at December 31, 2018
$
167

 
$
44

 
$
5