Income Taxes (Tables)

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Income tax expense

Federal and foreign income tax expense consisted of the following:

	Year Ended December 31
$ in millions	2020		2019		2018
Federal income tax expense:
Current	$	246	$	758	$	292
Deferred	288		(474)		213
Total federal income tax expense	534		284		505
Foreign income tax expense:
Current	3		10		7
Deferred	2		6		1
Total foreign income tax expense	5		16		8
Total federal and foreign income tax expense	$	539	$	300	$	513

Income tax reconciliation

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

	Year Ended December 31
$ in millions	2020				2019				2018
Income tax expense at statutory rate	$	783	21.0	%	$	535	21.0	%	$	786	21.0	%
Research credit	(206)		(5.5)		(216)		(8.5)		(186)		(5.0)
Foreign derived intangible income	(55)		(1.5)		(28)		(1.1)		(16)		(0.4)
Stock compensation - excess tax benefits	(10)		(0.2)		(14)		(0.5)		(27)		(0.7)
Impacts related to the 2017 Tax Act	—		—		—		—		(84)		(2.2)
Other, net	27		0.7		23		0.9		40		1.0
Total federal and foreign income taxes	$	539	14.5	%	$	300	11.8	%	$	513	13.7	%

Unrecognized tax benefit rollforward

The change in unrecognized tax benefits during 2020, 2019 and 2018, excluding interest, is as follows:

	December 31
$ in millions	2020		2019		2018
Unrecognized tax benefits at beginning of the year	$	1,223	$	748	$	283
Additions based on tax positions related to the current year	187		158		293
Additions for tax positions of prior years	270		400		207
Reductions for tax positions of prior years	(190)		(65)		(23)
Settlements with taxing authorities	(7)		(15)		(7)
Other, net	(2)		(3)		(5)
Net change in unrecognized tax benefits	258		475		465
Unrecognized tax benefits at end of the year	$	1,481	$	1,223	$	748

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	2020		2019
Deferred Tax Assets
Retiree benefits	$	1,738	$	1,827
Accrued employee compensation	360		336
Provisions for accrued liabilities	232		166
Inventory	849		684
Stock-based compensation	40		38
Operating lease liabilities	435		411
Tax credits	343		166
Other	112		73
Gross deferred tax assets	4,109		3,701
Less: valuation allowance	(307)		(160)
Net deferred tax assets	3,802		3,541
Deferred Tax Liabilities
Goodwill	533		515
Purchased intangibles	201		262
Property, plant and equipment, net	737		584
Operating lease right-of-use assets	423		404
Contract accounting differences	1,513		1,225
Other	84		43
Deferred tax liabilities	3,491		3,033
Total net deferred tax assets	$	311	$	508