INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2016

Income Tax Disclosure [Abstract]

Income Before Income Tax Expense by Category

Income from Continuing Operations Before Income Tax Expense by Category

years ended December 31 (in millions)	2016		2015			2014
United States	$	3,906	$	(738	)	$	(803	)
International		1,048		1,166			1,293
Income from continuing operations before income taxes	$	4,954	$	428		$	490

Income Tax Expense

Income Tax Expense Related to Continuing Operations

years ended December 31 (in millions)	2016			2015			2014
Current
United States
Federal	$	10		$	(251	)	$	(305	)
State and local		(3	)		(6	)		(44	)
International		282			345			398
Current income tax expense		289			88			49
Deferred
United States
Federal		(286	)		(9	)		63
State and local		3			(20	)		7
International		(18	)		(24	)		(86	)
Deferred income tax expense		(301	)		(53	)		(16	)
Income tax (benefit) expense	$	(12	)	$	35		$	33

Deferred Tax Assets and Liabilities

Deferred Tax Assets and Liabilities

as of December 31 (in millions)	2016			2015
Deferred tax assets
Accrued expenses	$	377		$	389
Retirement benefits		411			352
Tax credits and net operating losses		747			547
Valuation allowances		(150	)		(135	)
Total deferred tax assets		1,385			1,153
Deferred tax liabilities
Subsidiaries’ unremitted earnings		145			147
Asset basis differences		704			847
Total deferred tax liabilities		849			994
Net deferred tax asset	$	536		$	159

Income Tax Expense Reconciliation

Income Tax Expense Related to Continuing Operations Reconciliation

years ended December 31 (in millions)	2016			2015			2014
Income tax expense at U.S. statutory rate	$	1,734		$	150		$	174
Retained shares tax free exchange gains		(1,587	)		—			—
Tax incentives		(126	)		(133	)		(105	)
State and local taxes		1			(13	)		(24	)
Foreign tax expense (benefit)		5			11			(16	)
Valuation allowances		3			5			7
Contingent tax matters		(48	)		9			(18	)
Branded Prescription Drug Fee		1			1			4
Deferred tax charge on intangible intra-group transfers		13			14			14
R&D tax credit		(2	)		(4	)		(1	)
Puerto Rico excise tax credit		(5	)		(9	)		—
Other factors		(1	)		4			(2	)
Income tax (benefit) expense	$	(12	)	$	35		$	33

Reconciliation of Unrecognized Tax Benefits

The following table is a reconciliation of the company’s unrecognized tax benefits, including those related to discontinued operations for the years ended December 31, 2016, 2015 and 2014.

as of and for the years ended (in millions)	2016			2015			2014
Balance at beginning of the year	$	191		$	206		$	287
Increase associated with tax positions taken during the current year		7			24			41
Decrease associated with tax positions taken during a prior year		(31	)		(26	)		(27	)
Settlements		(75	)		(3	)		(82	)
Decrease associated with lapses in statutes of limitations		(10	)		(10	)		(13	)
Balance at end of the year	$	82		$	191		$	206