Income Taxes (Tables)

12 Months Ended

Dec. 31, 2016

Federal and foreign income tax expense consisted of the following:



	Year Ended December 31
$ in millions	2016			2015			2014
Federal income tax expense:
Current	$	661		$	310		$	701
Deferred	49			472			155
Total federal income tax expense	710			782			856
Foreign income tax expense:
Current	14			21			10
Deferred	(1		)	(3		)	2
Total foreign income tax expense	13			18			12
Total federal and foreign income tax expense	$	723		$	800		$	868

Income tax reconciliation

Income tax expense differs from the amount computed by multiplying the statutory federal income tax rate times earnings before income taxes due to the following:



	Year Ended December 31
$ in millions	2016			2015			2014
Income tax expense at statutory rate	$	1,023		$	976		$	1,028
Stock compensation - excess tax benefits	(85		)	—			—
Research credit	(61		)	(119		)	(43		)
Manufacturing deduction	(58		)	(31		)	(48		)
Settlements with taxing authorities	(40		)	—			(51		)
Repatriation of Non-U.S Earnings	(33		)	—			—
Other, net	(23		)	(26		)	(18		)
Total federal and foreign income taxes	$	723		$	800		$	868

Unrecognized tax benefit rollforward

The change in unrecognized tax benefits during 2016, 2015 and 2014, excluding interest, is as follows:



	December 31
$ in millions	2016			2015			2014
Unrecognized tax benefits at beginning of the year	$	223		$	210		$	241
Additions based on tax positions related to the current year	35			52			62
Additions for tax positions of prior years	2			17			9
Reductions for tax positions of prior years	(40		)	(10		)	(47		)
Settlements with taxing authorities	(84		)	—			(14		)
Other, net	(1		)	(46		)	(41		)
Net change in unrecognized tax benefits	(88		)	13			(31		)
Unrecognized tax benefits at end of the year	$	135		$	223		$	210

Components of deferred tax assets and liabilities

The tax effects of significant temporary differences and carryforwards that gave rise to year-end deferred federal, state and foreign tax balances, as presented in the consolidated statements of financial position, are as follows:



	December 31
$ in millions	2016			2015
Deferred Tax Assets
Retiree benefits	$	2,814		$	2,549
Accrued employee compensation	349			316
Provisions for accrued liabilities	295			347
Inventory	287			227
Stock-based compensation	72			76
Other	72			68
Gross deferred tax assets	3,889			3,583
Less valuation allowance	(31		)	(34		)
Net deferred tax assets	3,858			3,549
Deferred Tax Liabilities
Goodwill	798			788
Property, plant and equipment, net	321			297
Contract accounting differences	1,200			976
Other	77			79
Deferred tax liabilities	2,396			2,140
Total net deferred tax assets	$	1,462		$	1,409