Income Taxes (Tables)

12 Months Ended

Dec. 31, 2018

Schedule of Earnings (Loss) from Continuing Operations Before Tax by Jurisdiction

Earnings (loss) from continuing operations before tax by jurisdiction are as follows:



	Year Ended December 31,
	2018	2017	2016
	(In $ millions)
US	480	262	326
International	1,030	813	704
Total	1,510	1,075	1,030

Schedule of Income Tax Provision (Benefit)

The income tax provision (benefit) consists of the following:



	Year Ended December 31,
	2018		2017		2016
	(In $ millions)
Current
US	(184	)	201		(22	)
International	143		158		60
Total	(41	)	359		38
Deferred
US	314		(110	)	108
International	19		(36	)	(24	)
Total	333		(146	)	84
Total	292		213		122

Schedule of Effective Tax Rate Reconciliation

A reconciliation of the significant differences between the US federal statutory tax rate of 21% (35% for 2017 and 2016) and the effective income tax rate on income from continuing operations is as follows:



	Year Ended December 31,
	2018		2017		2016
	(In $ millions, except percentages)
Income tax provision computed at US federal statutory tax rate	317		376		361
Change in valuation allowance	94		218		(18	)
Equity income and dividends	(48	)	(87	)	(60	)
(Income) expense not resulting in tax impact, net	(51	)	(157	)	(152	)
US tax effect of foreign earnings and dividends	25		521		302
Foreign tax credits	(20	)	(759	)	(293	)
Other foreign tax rate differentials	17		(38	)	(48	)
Legislative changes	(59	)	116		4
State income taxes, net of federal benefit	4		12		8
Other, net	13		11		18
Income tax provision (benefit)	292		213		122

Effective income tax rate	19	%	20	%	12	%

Schedule of Consolidated Deferred Tax Assets and Liabilities

Significant components of the consolidated deferred tax assets and liabilities are as follows:



	As of December 31,
	2018		2017
	(In $ millions)
Deferred Tax Assets
Pension and postretirement obligations	138		143
Accrued expenses	61		50
Inventory	13		10
Net operating loss carryforwards	616		703
Tax credit carryforwards⁽¹⁾	330		478
Other	195		192
Subtotal	1,353		1,576
Valuation allowance⁽²⁾	(899	)	(618	)
Total	454		958
Deferred Tax Liabilities
Depreciation and amortization	375		307
Investments in affiliates	203		427
Other	47		69
Total	625		803
Net deferred tax assets (liabilities)	(171	)	155

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⁽¹⁾	For the year ended December 31, 2018, the tax credit carryforwards decreased primarily due to the consumption of US foreign tax credits resulting from the deemed repatriation tax required by the TCJA.


⁽²⁾	Includes deferred tax asset valuation allowances for the Company's deferred tax assets in the US, Luxembourg, Spain, China, the United Kingdom, Canada and France. These valuation allowances relate primarily to net operating loss carryforward benefits and other net deferred tax assets, all of which may not be realizable.

Schedule of Activity Related to Uncertain Tax Positions

Activity related to uncertain tax positions is as follows:



	Year Ended December 31,
	2018		2017		2016
	(In $ millions)
As of the beginning of the year	119		114		158
Increases in tax positions for the current year	61		14		9
Increases in tax positions for prior years⁽¹⁾	4		4		11
Decreases in tax positions for prior years	(21	)	(7	)	(9	)
Decreases due to settlements	(1	)	(6	)	(55	)
As of the end of the year	162		119		114

Total uncertain tax positions that if recognized would impact the effective tax rate	154		100		87
Total amount of interest expense (benefit) and penalties recognized in the consolidated statements of operations⁽²⁾	1		6		(16	)
Total amount of interest expense and penalties recognized in the consolidated balance sheets	38		38		26

______________________________


⁽¹⁾	Includes uncertain tax positions related to the Nilit acquisition (Note 4) of $4 million for the year ended December 31, 2018.


⁽²⁾	This amount reflects interest on uncertain tax positions and release of certain tax positions as a result of an audit closure that was reflected in the consolidated statements of operations.