INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2017

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)	2017			2016		2015
United States	$	(291	)	$	3,906	$	(738	)
International		1,508			1,048		1,166
Income from continuing operations before income taxes	$	1,217		$	4,954	$	428

Income Tax Expense

Income Tax Expense Related to Continuing Operations

years ended December 31 (in millions)	2017			2016			2015
Current
United States
Federal	$	8		$	10		$	(251	)
State and local		18			(3	)		(6	)
International		273			282			345
Current income tax expense		299			289			88
Deferred
United States
Federal		233			(286	)		(9	)
State and local		(7	)		3			(20	)
International		(32	)		(18	)		(24	)
Deferred income tax expense		194			(301	)		(53	)
Income tax expense (benefit)	$	493		$	(12	)	$	35

Deferred Tax Assets and Liabilities

Deferred Tax Assets and Liabilities

as of December 31 (in millions)	2017			2016
Deferred tax assets
Accrued expenses	$	269		$	377
Retirement benefits		248			411
Tax credits and net operating losses		834			747
Valuation allowances		(483	)		(150	)
Total deferred tax assets		868			1,385
Deferred tax liabilities
Subsidiaries’ unremitted earnings		35			145
Asset basis differences		705			704
Total deferred tax liabilities		740			849
Net deferred tax asset	$	128		$	536

Income Tax Expense Reconciliation

Income Tax Expense Related to Continuing Operations Reconciliation

years ended December 31 (in millions)	2017			2016			2015
Income tax expense at U.S. statutory rate	$	424		$	1,734		$	150
Retained shares tax free exchange gains		—			(1,587	)		—
Tax incentives		(140	)		(126	)		(133	)
State and local taxes		(6	)		1			(13	)
Foreign tax expense (benefit)		(80	)		5			11
Valuation allowances		4			3			5
Contingent tax matters		(1	)		(48	)		9
Branded Prescription Drug Fee		—			1			1
Deferred tax charge on intangible intra-group transfers		14			13			14
R&D tax credit		(4	)		(2	)		(4	)
Puerto Rico excise tax credit		(2	)		(5	)		(9	)
Deferred Tax Revaluation due to 2017 Tax Act		(283	)		—			—
Transition Tax due to 2017 Tax Act		529			—			—
U.S. Valuation Allowance due to 2017 Tax Act		339			—			—
Stock options windfall tax benefits		(56	)		—			—
Foreign tax credits generated		(246	)		—			—
Other factors		1			(1	)		4
Income tax expense (benefit)	$	493		$	(12	)	$	35

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, 2017, 2016 and 2015.

as of and for the years ended (in millions)	2017			2016			2015
Balance at beginning of the year	$	82		$	191		$	206
Increase associated with tax positions taken during the current year		33			7			24
Increase (decrease) associated with tax positions taken during a prior year		2			(31	)		(26	)
Settlements		(6	)		(75	)		(3	)
Decrease associated with lapses in statutes of limitations		(3	)		(10	)		(10	)
Balance at end of the year	$	108		$	82		$	191