Provision (Benefit) for Income Taxes

6 Months Ended

Jun. 30, 2011

Provision (Benefit) for Income Taxes [Abstract]

Provision (Benefit) for Income Taxes

Note 5. Provision (Benefit) for Income Taxes

     The provision (benefit) for income taxes includes:

	Three months ended				Six months ended
	June 30,				June 30,
	2011		2010		2011			2010
	(Millions)				(Millions)
Current:
Federal	$	30	$	70	$	47		$	(43	)
State		2		5		3			(9	)
Foreign		16		8		(2	)		13
		48		83		48			(39	)
Deferred:
Federal		86		15		78			38
State		7		3		8			6
Foreign		4		3		5			5
		97		21		91			49
Total provision (benefit)	$	145	$	104	$	139		$	10

     The effective income tax rates for the total provision for the three months ended June 30, 2011 and 2010 are less than the federal statutory rate primarily due to the impact of nontaxable noncontrolling interests and taxes on foreign operations, partially offset by the effect of state income taxes.

     The effective income tax rate for the total provision for the six months ended June 30, 2011 is less than the federal statutory rate primarily due to federal settlements and an international revised assessment, the impact of nontaxable noncontrolling interests and taxes on foreign operations, partially offset by the effect of state income taxes.

     The effective income tax rate for the total provision for the six months ended June 30, 2010 is less than the federal statutory rate primarily due to the impact of nontaxable noncontrolling interests, partially offset by the reduction of tax benefits on the Medicare Part D federal subsidy due to enacted health care legislation.

     During the first quarter of 2011, we finalized settlements for 1997 through 2008 on certain contested matters with the Internal Revenue Service (IRS) and also received a revised assessment on an international matter. These settlements and revised assessment resulted in a net tax benefit of approximately $124 million during the first quarter of 2011. As a result of these settlements and revised assessment, we have decreased our unrecognized tax benefits by approximately $62 million. In July 2011, we made an $82 million cash payment with respect to the settlements to the IRS and we anticipate making an additional $85 million to $90 million of cash payments to taxing authorities related to these items in 2011.

     During the next twelve months, we do not expect ultimate resolution of any uncertain tax position will result in a significant increase or decrease of our unrecognized tax benefit.