INCOME TAXES

9 Months Ended

Sep. 30, 2020

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

INCOME TAXES

	Three Months Ended September 30,						Nine Months Ended September 30,
Dollars in Millions	2020			2019			2020			2019
Earnings Before Income Taxes	$	2,257		$	1,349		$	3,580		$	5,104
Provision/(Benefit) for Income Taxes	379			(17)			2,548			584
Effective Tax Rate	16.8		%	(1.3)		%	71.2		%	11.4		%

An $853 million deferred tax charge resulting from an internal transfer of certain intangible assets to the U.S. and an additional $266 million GILTI tax charge upon finalization of the Otezla* divestiture tax consequences with tax authorities increased the effective tax rate by 31.3% for the nine months ended September 30, 2020. The tax impact of low jurisdictional tax rates attributed to inventory and intangible asset purchase price adjustments increased the effective tax rate and non-taxable fair value adjustments to contingent value rights decreased the effective tax rate for the nine months ended September 30, 2020. The tax impact of high jurisdictional tax rates attributed to pension settlement charges and gain on sale of the UPSA business divestiture decreased the effective tax rate in the prior periods. The tax impact of discrete items are reflected immediately and not considered in estimating the annual effective tax rate. Additional changes to the effective tax rate may occur in future periods due to various reasons including pretax earnings mix, tax reserves, cash repatriations and revised interpretations of the relevant tax code.

BMS is currently under examination by a number of tax authorities, which have proposed or are considering proposing material adjustments to tax positions for issues such as transfer pricing, certain tax credits and the deductibility of certain expenses. BMS received several notices of proposed adjustments from the IRS related to transfer pricing and other tax positions for the 2008-2012 tax years. It is reasonably possible that new issues will be raised by tax authorities, which may require adjustments to the amount of unrecognized tax benefits; however, an estimate of such adjustments cannot reasonably be made at this time. Tax reserve releases due to lapse of statutes was $81 million in the three months ended September 30, 2019.

It is also reasonably possible that the total amount of unrecognized tax benefits at September 30, 2020 could decrease in the range of approximately $350 million to $390 million in the next twelve months as a result of the settlement of certain tax audits and other events. The expected change in unrecognized tax benefits may result in the payment of additional taxes, adjustment of certain deferred taxes and/or recognition of tax benefits. It is reasonably possible that new issues will be raised by tax authorities that may increase unrecognized tax benefits; however, an estimate of such increases cannot reasonably be made at this time. BMS believes that it has adequately provided for all open tax years by tax jurisdiction.