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Income taxes (Tables)
12 Months Ended
Dec. 31, 2016
Income Tax Disclosure [Abstract]  
Components of profit (loss) before taxes
The components of profit before taxes were: 
 
 
 
 
 
 
 
 
Years ended December 31,
(Millions of dollars)
 
2016
 
2015
 
2014
U.S.
 
$
(2,053
)
 
$
636

 
$
276

Non-U.S.
 
2,192

 
2,803

 
2,876

 
 
$
139

 
$
3,439

 
$
3,152

 
 
 
 
 
 
 
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)
 
2016
 
2015
 
2014
Current tax provision (benefit):
 
 

 
 

 
 

U.S.1
 
$
(90
)
 
$
525

 
$
715

Non-U.S.
 
718

 
656

 
883

State (U.S.)
 
(5
)
 
42

 
48

 
 
623

 
1,223

 
1,646

 
 
 
 
 
 
 
Deferred tax provision (benefit):
 
 

 
 

 
 

U.S.1
 
(544
)
 
(367
)
 
(763
)
Non-U.S.
 
(108
)
 
66

 
(116
)
State (U.S.)
 
221

 
(6
)
 
(75
)
 
 
(431
)
 
(307
)
 
(954
)
Total provision (benefit) for income taxes
 
$
192

 
$
916

 
$
692

1 Includes U.S. taxes related to non-U.S. profits.
 
 
 
 
 
 
 
Reconciliation of the U.S. federal statutory rate to effective rate
Reconciliation of the U.S. federal statutory rate to effective rate:
 
 
Years ended December 31,
(Millions of dollars)
 
2016
 
2015
 
2014
Taxes at U.S. statutory rate
 
$
49

 
35.0
 %
 
$
1,203

 
35.0
 %
 
$
1,103

 
35.0
 %
(Decreases) increases resulting from:
 
 

 
 

 
 

 
 

 
 

 
 

Non-U.S. subsidiaries taxed at other than 35%
 
(119
)
 
(85.6
)%
 
(236
)
 
(6.9
)%
 
(223
)
 
(7.1
)%
Nondeductible goodwill
 
191

 
137.4
 %
 

 
 %
 

 
 %
State and local taxes, net of federal
 
(1
)
 
(0.7
)%
 
24

 
0.7
 %
 
(17
)
 
(0.5
)%
Interest and penalties, net of tax
 
24

 
17.2
 %
 
12

 
0.4
 %
 
12

 
0.4
 %
U.S. research and production incentives
 
(52
)
 
(37.4
)%
 
(95
)
 
(2.7
)%
 
(125
)
 
(4.0
)%
ESOP dividend tax benefit
 
(27
)
 
(19.4
)%
 
(27
)
 
(0.8
)%
 
(25
)
 
(0.8
)%
Other—net
 
(14
)
 
(10.1
)%
 
(7
)
 
(0.2
)%
 
11

 
0.4
 %
 
 
51

 
36.4
 %
 
874

 
25.5
 %
 
736

 
23.4
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
Prior year tax and interest adjustments
 

 
 %
 
42

 
1.2
 %
 
(21
)
 
(0.7
)%
Valuation allowances
 
141

 
101.4
 %
 

 
 %
 
(23
)
 
(0.7
)%
Provision (benefit) for income taxes
 
$
192

 
137.8
 %
 
$
916

 
26.7
 %
 
$
692

 
22.0
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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)
 
2016
 
2015
Assets:
 
 

 
 

Noncurrent deferred and refundable income taxes
 
2,683

 
2,367

Liabilities:
 
 

 
 

Other liabilities
 
237

 
335

Deferred income taxes—net
 
$
2,446

 
$
2,032

 
 
 
 
 
 
Deferred income tax assets and liabilities:
 
 
 
 
 
 
December 31,
(Millions of dollars)
 
2016
 
2015
Deferred income tax assets:
 
 

 
 

Pension
 
$
1,887

 
$
1,694

Postemployment benefits other than pensions
 
1,318

 
1,339

Tax carryforwards
 
1,999

 
1,098

Warranty reserves
 
339

 
359

Stock-based compensation
 
316

 
356

Inventory
 
93

 
129

Allowance for credit losses
 
209

 
203

Post sale discounts
 
207

 
185

Other employee compensation and benefits
 
262

 
269

Other—net
 
476

 
427

 
 
7,106

 
6,059

 
 
 
 
 
Deferred income tax liabilities:
 
 

 
 

Capital and intangible assets
 
(2,455
)
 
(2,561
)
Bond discount
 
(223
)
 
(225
)
Translation
 
(368
)
 
(343
)
Other outside basis differences
 
(227
)
 

Undistributed profits of non-U.S. subsidiaries
 
(285
)
 
(82
)
 
 
(3,558
)
 
(3,211
)
Valuation allowance for deferred tax assets
 
(1,102
)
 
(816
)
Deferred income taxes—net
 
$
2,446

 
$
2,032

 
 
 
 
 
 
Summary of net operating loss carryforwards
At December 31, 2016, amounts and expiration dates of net operating loss carryforwards in various non-U.S. taxing jurisdictions were:
 
(Millions of dollars)
2017
 
2018
 
2019
 
2020-2022
 
2023-2037
 
Unlimited
 
Total
$
3

 
$
64

 
$
159

 
$
470

 
$
168

 
$
3,191

 
$
4,055

 
Reconciliation of unrecognized tax benefits
Reconciliation of unrecognized tax benefits: 1
 
 
 
 
 
 
Years ended December 31,
(Millions of dollars)
 
2016
 
2015
Balance at January 1,
 
$
968

 
$
846

 
 
 
 
 
Additions for tax positions related to current year
 
73

 
73

Additions for tax positions related to prior years
 
55

 
118

Reductions for tax positions related to prior years
 
(36
)
 
(30
)
Reductions for settlements 2 
 
(24
)
 
(30
)
Reductions for expiration of statute of limitations
 
(4
)
 
(9
)
 
 
 
 
 
Balance at December 31,
 
$
1,032

 
$
968

 
 
 
 
 
Amount that, if recognized, would impact the effective tax rate
 
$
963

 
$
934


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