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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2011

Income (loss) from continuing operations before income tax expense (benefit) from domestic and foreign operations

Income (loss) from continuing operations before income tax expense (benefit) from U.S. and international operations was as follows (in millions):



	Year Ended December 31,
	2011		2010		2009
U.S. operations	$	3,190	$	1,436	$	(371	)
International operations	132		62		55
Income (loss) from continuing operations before income tax expense (benefit)	$	3,322	$	1,498	$	(316	)

Reconciliation of income tax expense (benefit) related to income (loss) from continuing operations before income tax expense (benefit)

The following is a reconciliation of income tax expense (benefit) related to continuing operations to income taxes computed by applying the U.S. statutory federal income tax rate (35 percent for all years presented) to income (loss) from continuing operations before income tax expense (benefit) (in millions):



	Year Ended December 31,
	2011			2010			2009
Federal income tax expense (benefit) at the U.S. statutory rate	$	1,163		$	524		$	(111	)
U.S. state income tax expense (benefit), net of U.S. federal income tax effect	29			(21		)	(2		)
U.S. manufacturing deduction	(28		)	5			7
International operations	46			27			75
Permanent differences	8			8			(7		)
Change in tax law	—			16			—
Other, net	8			16			(5		)
Income tax expense (benefit)	$	1,226		$	575		$	(43	)

Components of income tax expense (benefit) related to continuing operations

Components of income tax expense (benefit) related to continuing operations were as follows (in millions):



	Year Ended December 31,
	2011			2010			2009
Current:
U.S. federal	$	562		$	(75	)	$	(309	)
U.S. state	13			(13		)	(16		)
International	186			22			142
Total current	761			(66		)	(183		)

Deferred:
U.S. federal	527			634			181
U.S. state	32			(19		)	12
International	(94		)	26			(53		)
Total deferred	465			641			140
Income tax expense (benefit)	$	1,226		$	575		$	(43	)

Deferred income tax assets and liabilities

The tax effects of significant temporary differences representing deferred income tax assets and liabilities were as follows (in millions):



	December 31,
	2011			2010
Deferred income tax assets:
Tax credit carryforwards	$	158		$	99
Net operating losses (NOL)	300			265
Compensation and employee benefit liabilities	324			286
Environmental liabilities	78			85
Inventories	273			170
Property, plant and equipment	14			—
Other	160			184
Total deferred income tax assets	1,307			1,089
Less: Valuation allowance	(295		)	(270		)
Net deferred income tax assets	1,012			819

Deferred income tax liabilities:
Turnarounds	(310		)	(256		)
Property, plant and equipment	(5,292		)	(4,835		)
Inventories	(274		)	(260		)
Other	(119		)	(65		)
Total deferred income tax liabilities	(5,995		)	(5,416		)
Net deferred income tax liabilities	$	(4,983	)	$	(4,597	)

Income tax credit and loss carryforwards

We had the following income tax credit and loss carryforwards as of December 31, 2011 (in millions):



	Amount		Expiration
U.S. state income tax credits	$	63	2013 through 2027
U.S. state income tax credits	42		Unlimited
U.S. foreign tax credits	30		2012
U.S. state NOL (gross amount)	5,431		2012 through 2031
International NOL	249		Unlimited
U.S. alternative minimum tax credit	59		Unlimited

Subsequently recognized tax benefits related to the valuation allowance for deferred income tax assets

Subsequently recognized tax benefits related to the valuation allowance for deferred income tax assets as of December 31, 2011 will be allocated as follows (in millions):



Income tax benefit	$	286
Additional paid-in capital	9
Total	$	295

Reconciliation of the change in unrecognized tax benefits, excluding the effect of related penalties and interest and the U.S. federal tax effect of U.S. state unrecognized tax benefit

The following is a reconciliation of the change in unrecognized tax benefits, excluding the effect of related penalties and interest and the U.S. federal tax effect of U.S. state unrecognized tax benefits (in millions):



	Year Ended December 31,
	2011			2010			2009
Balance as of beginning of year	$	330		$	484		$	238
Additions based on tax positions related to the current year	14			4			158
Additions for tax positions related to prior years	55			49			106
Reductions for tax positions related to prior years	(66		)	(203		)	(6		)
Reductions for tax positions related to the lapse of applicable statute of limitations	(3		)	(4		)	(1		)
Settlements	(4		)	—			(11		)
Balance as of end of year	$	326		$	330		$	484

- Definition

Tabular disclosure of tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities (i.e., uncertain tax positions) and other types of income tax contingencies, including: (1) the policy on classification of interest and penalties; (2) a tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period; the total amount(s) of: (3) unrecognized tax benefits that, if recognized, would affect the effective tax rate, and (4) interest and penalties recognized in each of the income statement and balance sheet; (5) for positions for which it is reasonably possible that the total amounts unrecognized will significantly change within 12 months of the reporting date the: (i) nature of the uncertainty, (ii) nature of the event that could occur that would cause the change, and (iii) an estimate of the range of the reasonably possible change or a statement that an estimate of the range cannot be made; and (6) a description of tax years that remain subject to examination by major tax jurisdictions.

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- Definition

Tabular disclosure of valuation allowances to reduce deferred tax assets to net realizable value, including identification of the deferred tax asset more likely than not will not be fully realized and the corresponding amount of the valuation allowance.

+ References+ Details