Income taxes (Tables)

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

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)	2019					2018					2017
Taxes at U.S. statutory rate	$	1,641		21.0	%	$	1,643		21.0	%	$	1,429		35.0	%
(Decreases) increases resulting from:
Non-U.S. subsidiaries taxed at other than the U.S. rate	365			4.7	%	282			3.6	%	(282		)	(6.9	)%
State and local taxes, net of federal 1	59			0.8	%	22			0.3	%	27			0.7	%
Interest and penalties, net of tax	34			0.4	%	33			0.4	%	28			0.7	%
U.S. tax incentives	(149		)	(1.9	)%	(106		)	(1.3	)%	(52		)	(1.3	)%
Net excess tax benefits from stock-based compensation	(41		)	(0.5	)%	(56		)	(0.7	)%	(64		)	(1.6	)%
Mandatory deemed repatriation of non-U.S. earnings	(178		)	(2.3	)%	50			0.7	%	1,775			43.5	%
U.S. deferred tax rate change	—			—	%	(154		)	(2.0	)%	596			14.6	%
Valuation allowances	—			—	%	(29		)	(0.4	)%	(111		)	(2.7	)%
Other—net	15			0.2	%	13			0.1	%	(7		)	(0.2	)%
Provision (benefit) for income taxes	$	1,746		22.4	%	$	1,698		21.7	%	$	3,339		81.8	%
1 Excludes amounts included in valuation allowances and mandatory deemed repatriation of non-U.S. earnings.

Components of profit (loss) before taxes

The components of profit (loss) before taxes were:
	Years ended December 31,
(Millions of dollars)	2019		2018		2017
U.S.	$	2,888	$	2,131	$	240
Non-U.S.	4,924		5,691		3,842
	$	7,812	$	7,822	$	4,082

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)	2019			2018			2017
Current tax provision (benefit):
U.S.1	$	405		$	179		$	963
Non-U.S.	1,261			1,291			1,124
State (U.S.)	52			8			39
	1,718			1,478			2,126
Deferred tax provision (benefit):
U.S.1	17			298			1,385
Non-U.S.	(7		)	4			(17		)
State (U.S.)	18			(82		)	(155		)
	28			220			1,213
Total provision (benefit) for income taxes	$	1,746		$	1,698		$	3,339
1 Includes U.S. taxes related to non-U.S. earnings. We account for U.S. taxes on global intangible low-taxed income as a period cost.

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)	2019		2018
Assets:
Noncurrent deferred and refundable income taxes	$	1,324	$	1,363
Liabilities:
Other liabilities	414		331
Deferred income taxes—net	$	910	$	1,032

The components of deferred tax assets and liabilities were:
	December 31,
(Millions of dollars)	2019			2018
Deferred income tax assets:
Tax carryforwards	$	1,218		$	1,312
Postemployment benefits other than pensions	876			793
Pension	445			785
Warranty reserves	263			237
Research expenditures	219			—
Allowance for credit losses	171			155
Post sale discounts	200			158
Other employee compensation and benefits	197			186
Lease obligations	157			—
Stock-based compensation	107			121
Other—net	250			298
	4,103			4,045
Deferred income tax liabilities:
Capital and intangible assets, including lease basis differences	(1,574		)	(1,381		)
Bond discount	(122		)	(127		)
Translation	(194		)	(190		)
Other outside basis differences	(257		)	(271		)
Undistributed profits of non-U.S. subsidiaries	(118		)	(129		)
	(2,265		)	(2,098		)
Valuation allowance for deferred tax assets	(928		)	(915		)
Deferred income taxes—net	$	910		$	1,032

Summary of net operating loss carryforwards

At December 31, 2019, amounts and expiration dates of net operating loss and interest carryforwards in various non-U.S. taxing jurisdictions were:

(Millions of dollars)
2020		2021		2022		2023-2025		2026-2040		Unlimited		Total
$	104	$	53	$	81	$	59	$	451	$	3,627	$	4,375

Reconciliation of unrecognized tax benefits

Reconciliation of unrecognized tax benefits: 1
	Years ended December 31,
(Millions of dollars)	2019			2018			2017
Balance at January 1,	$	1,796		$	1,286		$	1,032
Additions for tax positions related to current year	72			61			270
Additions for tax positions related to prior years	112			461			20
Reductions for tax positions related to prior years	(201		)	(5		)	(27		)
Reductions for settlements 2	—			(6		)	(9		)
Reductions for expiration of statute of limitations	(1		)	(1		)	—
Balance at December 31,	$	1,778		$	1,796		$	1,286
Amount that, if recognized, would impact the effective tax rate	$	1,616		$	1,716		$	1,209

¹  Foreign currency impacts are included within each line as applicable.

²  Includes cash payment or other reduction of assets to settle liability.