Annual report pursuant to Section 13 and 15(d)

INCOME TAXES (Tables)

v3.19.3.a.u2
INCOME TAXES (Tables)
12 Months Ended
Dec. 31, 2019
Income Tax Disclosure [Abstract]  
Income Tax Expense Benefit
The income tax expense (benefit) for the years ended December 31, 2019, 2018 and 2017 consists of the following (in millions):
 
2019
 
2018
 
2017
Current:
 
 
 
 
 
U.S. Federal
$
570

 
$
89

 
$
671

U.S. State and Local
183

 
7

 
49

Non-U.S.
359

 
374

 
288

Total Current
1,112

 
470

 
1,008

Deferred:
 
 
 
 
 
U.S. Federal
255

 
668

 
1,115

U.S. State and Local
(93
)
 
75

 
118

Non-U.S.
(62
)
 
15

 
(9
)
Total Deferred
100

 
758

 
1,224

Total Income Tax Expense
$
1,212

 
$
1,228

 
$
2,232


Income Before Income Taxes
Income before income taxes includes the following components (in millions):
 
2019
 
2018
 
2017
United States
$
3,972

 
$
4,307

 
$
5,987

Non-U.S.
1,680

 
1,712

 
1,150

Total Income Before Income Taxes:
$
5,652

 
$
6,019

 
$
7,137


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, 2019, 2018 and 2017 consists of the following:
 
2019
 
2018
 
2017
Statutory U.S. federal income tax rate
21.0
 %
 
21.0
 %
 
35.0
 %
U.S. state and local income taxes (net of federal benefit)
1.4

 
1.4

 
1.5

Non-U.S. tax rate differential
0.3

 
0.2

 
(2.0
)
U.S. federal tax credits
(1.4
)
 
(1.1
)
 
(1.8
)
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

Non-U.S. valuation allowance release
(1.2
)
 

 

Other
1.3

 
(1.1
)
 
0.7

Effective income tax rate
21.4
 %
 
20.4
 %
 
31.3
 %

Deferred Tax Liabilities and Assets
Deferred income tax assets and liabilities are comprised of the following at December 31, 2019 and 2018 (in millions):
 
2019
 
2018
Fixed assets and capitalized software
$
(4,720
)
 
$
(4,010
)
Operating lease right-of-use assets
(685
)
 

Other
(538
)
 
(493
)
Deferred tax liabilities
(5,943
)
 
(4,503
)
 
 
 
 
Pension and postretirement benefits
2,522

 
1,743

Loss and credit carryforwards
328

 
298

Insurance reserves
413

 
437

Stock compensation
249

 
189

Accrued employee compensation
287

 
274

Operating lease liabilities
691

 

Other
205

 
196

Deferred tax assets
4,695

 
3,137

Deferred tax assets valuation allowance
(54
)
 
(112
)
Deferred tax asset (net of valuation allowance)
4,641

 
3,025

 
 
 
 
Net deferred tax asset (liability)
$
(1,302
)
 
$
(1,478
)
 
 
 
 
Amounts recognized in the consolidated balance sheets:
 
 
 
Deferred tax assets
$
330

 
$
141

Deferred tax liabilities
(1,632
)
 
(1,619
)
Net deferred tax asset (liability)
$
(1,302
)
 
$
(1,478
)

U.S. State and Local Operating Loss and Credit Carryforwards , we have U.S. state and local operating loss and credit carryforwards as follows (in millions):
 
2019
 
2018
U.S. state and local operating loss carryforwards
$
1,374

 
$
1,014

U.S. state and local credit carryforwards
$
110

 
$
80


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, 2017
$
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

Additions for tax positions of the current year
6

 

 

Additions for tax positions of prior years
51

 
13

 

Reductions for tax positions of prior years for:
 
 
 
 
 
Changes based on facts and circumstances
(45
)
 
(4
)
 
(1
)
Settlements during the period
(3
)
 
(1
)
 

Lapses of applicable statute of limitations
(4
)
 

 

Balance at December 31, 2019
$
172

 
$
52

 
$
4