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Income taxes (Tables)
 12 Months Ended
Dec. 31, 2012
Income Tax Disclosure [Abstract]  
Components of profit (loss) before taxes
The components of profit before taxes were: 
 
 
 
 
 
 
 
 
Years ended December 31,
(Millions of dollars)
 
2012
 
2011
 
2010
U.S.
 
$
4,090

 
$
2,250

 
$
778

Non-U.S.
 
4,146

 
4,475

 
2,972

 
 
$
8,236

 
$
6,725

 
$
3,750

 
 
 
 
 
 
 
Components of the provision (benefit) for income taxes
The components of the provision (benefit) for income taxes were:
 
 
 
 
 
 
 
 
Years ended December 31,
(Millions of dollars)
 
2012
 
2011
 
2010
Current tax provision (benefit):
 
 

 
 

 
 

U.S.
 
$
971

 
$
750

 
$
247

Non-U.S.
 
1,250

 
1,014

 
645

State (U.S.)
 
56

 
72

 
44

 
 
2,277

 
1,836

 
936

 
 
 
 
 
 
 
Deferred tax provision (benefit):
 
 

 
 

 
 

U.S.
 
332

 
2

 
103

Non-U.S.
 
(89
)
 
(92
)
 
(75
)
State (U.S.)
 
8

 
(26
)
 
4

 
 
251

 
(116
)
 
32

Total provision (benefit) for income taxes
 
$
2,528

 
$
1,720

 
$
968

 
 
 
 
 
 
 
 
Reconciliation of the U.S. federal statutory rate to effective rate
Reconciliation of the U.S. federal statutory rate to effective rate:
 
(Millions of dollars)
 
Years ended December 31,
 
 
2012
 
2011
 
2010
Taxes at U.S. statutory rate
 
$
2,882

 
35.0
 %
 
$
2,354

 
35.0
 %
 
$
1,313

 
35.0
 %
(Decreases) increases in taxes resulting from:
 
 

 
 

 
 

 
 

 
 

 
 

Non-U.S. subsidiaries taxed at other than 35%
 
(342
)
 
(4.2
)%
 
(467
)
 
(6.9
)%
 
(339
)
 
(9.0
)%
State and local taxes, net of federal
 
55

 
0.7
 %
 
30

 
0.4
 %
 
27

 
0.7
 %
Interest and penalties, net of tax
 
22

 
0.3
 %
 
25

 
0.4
 %
 
16

 
0.4
 %
U.S. research and production incentives
 
(80
)
 
(1.0
)%
 
(152
)
 
(2.3
)%
 
(74
)
 
(2.0
)%
Other—net
 
(27
)
 
(0.3
)%
 
(7
)
 
(0.1
)%
 
(5
)
 
(0.1
)%
 
 
2,510

 
30.5
 %
 
1,783

 
26.5
 %
 
938

 
25.0
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
Prior year tax and interest adjustments
 
(300
)
 
(3.7
)%
 
41

 
0.6
 %
 
(34
)
 
(0.9
)%
Nondeductible goodwill
 
318

 
3.9
 %
 
33

 
0.5
 %
 
—

 
—
 %
Release of valuation allowances
 
—

 
—
 %
 
(24
)
 
(0.3
)%
 
(26
)
 
(0.7
)%
Non-U.S. earnings reinvestment changes
 
—

 
—
 %
 
(113
)
 
(1.7
)%
 
—

 
—
 %
Tax law change related to Medicare subsidies
 
—

 
—
 %
 
—

 
—
 %
 
90

 
2.4
 %
Provision (benefit) for income taxes
 
$
2,528

 
30.7
 %
 
$
1,720

 
25.6
 %
 
$
968

 
25.8
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deferred income tax assets and liabilities
The amount of deferred income taxes at December 31, included on the following lines in Statement 3, are as follows:
 
 
 
December 31,
(Millions of dollars)
 
2012
 
2011
 
2010
Assets:
 
 

 
 

 
 

Deferred and refundable income taxes
 
$
979

 
$
1,044

 
$
579

Noncurrent deferred and refundable income taxes
 
1,863

 
2,005

 
2,337

 
 
2,842

 
3,049

 
2,916

Liabilities:
 
 

 
 

 
 

Other current liabilities
 
66

 
69

 
8

Other liabilities
 
484

 
559

 
141

Deferred income taxes—net
 
$
2,292

 
$
2,421

 
$
2,767

 
 
 
 
 
 
 
 
Deferred income tax assets and liabilities:
 
 
 
 
 
 
 
 
December 31,
(Millions of dollars)
 
2012
 
2011
 
2010
Deferred income tax assets:
 
 

 
 

 
 

Pension
 
$
2,100

 
$
2,130

 
$
1,065

Postemployment benefits other than pensions
 
1,678

 
1,622

 
1,501

Tax carryforwards
 
663

 
821

 
1,117

Warranty reserves
 
358

 
338

 
253

Stock-based compensation
 
281

 
232

 
215

Inventory
 
195

 
148

 
32

Allowance for credit losses
 
170

 
131

 
111

Post sale discounts
 
141

 
141

 
142

Deferred compensation
 
110

 
102

 
106

Other—net
 
491

 
537

 
404

 
 
6,187

 
6,202

 
4,946

 
 
 
 
 
 
 
Deferred income tax liabilities:
 
 

 
 

 
 

Capital and intangible assets
 
(2,759
)
 
(2,866
)
 
(1,560
)
Bond discount
 
(249
)
 
(37
)
 
(38
)
Translation
 
(173
)
 
(193
)
 
(169
)
Undistributed profits of non-U.S. subsidiaries
 
(128
)
 
(215
)
 
—

 
 
(3,309
)
 
(3,311
)
 
(1,767
)
Valuation allowance for deferred tax assets
 
(586
)
 
(470
)
 
(412
)
Deferred income taxes—net
 
$
2,292

 
$
2,421

 
$
2,767

 
 
 
 
 
 
 
 
Summary of net operating loss carryforwards
At December 31, 2012, amounts and expiration dates of net operating loss carryforwards in various non-U.S. taxing jurisdictions were:
 
(Millions of dollars)
2013
 
2014
 
2015
 
2016
 
2017-2033
 
Unlimited
 
Total
$
6

 
$
11

 
$
10

 
$
8

 
$
576

 
$
1,135

 
$
1,746

 
Reconciliation of unrecognized tax benefits
Reconciliation of unrecognized tax benefits: 1
 
 
 
 
 
 
 
 
Years ended December 31,
(Millions of dollars)
 
2012
 
2011
 
2010
Balance at January 1,
 
$
958

 
$
789

 
$
761

 
 
 
 
 
 
 
Additions for tax positions related to current year
 
64

 
118

 
21

Additions for tax positions related to prior years
 
178

 
108

 
59

Reductions for tax positions related to prior years
 
(266
)
 
(30
)
 
(49
)
Reductions for settlements 2 
 
(191
)
 
—

 
—

Reductions for expiration of statute of limitations
 
(28
)
 
(27
)
 
(3
)
 
 
 
 
 
 
 
Balance at December 31,
 
$
715

 
$
958

 
$
789

 
 
 
 
 
 
 
Amount that, if recognized, would impact the effective tax rate
 
$
669

 
$
835

 
$
667

 
1 
Foreign currency translation amounts are included within each line as applicable.
2 
Includes cash payment or other reduction of assets to settle liability.