Income Taxes	9 Months Ended
Sep. 30, 2015
Income Taxes
Income Taxes	Note 11Income Taxes The effective tax rate was 25 percent and 23 percent for the three and nine months ended September 30, 2015, respectively, and 26 percent and 24 percent for the three and nine months ended September 30, 2014, respectively. The effective tax rate in each period differs from the statutory tax rate of 35 percent primarily due to the benefit from foreign operations, which reflects the impact of lower statutory tax rates in locations outside the United States, tax exemptions and incentives in Puerto Rico and other foreign tax jurisdictions, and business development activities together with the cost of repatriation decisions. The decrease in the effective tax rate for the three and nine months ended September 30, 2015 over the prior year was principally due to changes in the jurisdictional mix of earnings, as well as certain discrete factors and events. Additionally, the nine months ended September 30, 2015 includes the reversal of previously recognized state valuation allowances of $103 million recorded during the second quarter of 2015 in connection with the acquisition of Pharmacyclics. Due to the potential for resolution of federal, state, and foreign examinations, and the expiration of various statutes of limitations, it is reasonably possible that the company’s gross unrecognized tax benefits balance may change within the next twelve months up to $22 million. AbbVie and Abbott entered into a tax sharing agreement effective on the date of separation, which provides that Abbott is liable for and has indemnified AbbVie against all income tax liabilities for periods prior to the separation. Accordingly, Abbott will indemnify and hold AbbVie harmless if the tax positions are settled for amounts in excess of recorded liabilities, and AbbVie will not benefit if prior tax positions are resolved more favorably than recorded amounts.

Income Taxes

9 Months Ended

Sep. 30, 2015

Note 11Income Taxes

The effective tax rate was 25 percent and 23 percent for the three and nine months ended September 30, 2015, respectively, and 26 percent and 24 percent for the three and nine months ended September 30, 2014, respectively. The effective tax rate in each period differs from the statutory tax rate of 35 percent primarily due to the benefit from foreign operations, which reflects the impact of lower statutory tax rates in locations outside the United States, tax exemptions and incentives in Puerto Rico and other foreign tax jurisdictions, and business development activities together with the cost of repatriation decisions. The decrease in the effective tax rate for the three and nine months ended September 30, 2015 over the prior year was principally due to changes in the jurisdictional mix of earnings, as well as certain discrete factors and events. Additionally, the nine months ended September 30, 2015 includes the reversal of previously recognized state valuation allowances of $103 million recorded during the second quarter of 2015 in connection with the acquisition of Pharmacyclics.

Due to the potential for resolution of federal, state, and foreign examinations, and the expiration of various statutes of limitations, it is reasonably possible that the company’s gross unrecognized tax benefits balance may change within the next twelve months up to $22 million. AbbVie and Abbott entered into a tax sharing agreement effective on the date of separation, which provides that Abbott is liable for and has indemnified AbbVie against all income tax liabilities for periods prior to the separation. Accordingly, Abbott will indemnify and hold AbbVie harmless if the tax positions are settled for amounts in excess of recorded liabilities, and AbbVie will not benefit if prior tax positions are resolved more favorably than recorded amounts.