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Income Taxes (Tables)
 12 Months Ended
Dec. 29, 2019
Income Tax Disclosure [Abstract]  
Provision for Income Taxes
The provision for taxes on income consists of:
(Dollars in Millions)
 
2019
 
2018
 
2017
Currently payable:
 
 
 
 
 
 
U.S. taxes
 
$
1,941

 
1,284

 
12,095

International taxes
 
2,744

 
2,434

 
1,872

Total currently payable
 
4,685

 
3,718

 
13,967

Deferred:
 
 
 
 
 
 
U.S. taxes
 
(814
)
 
1,210

(1) 
(1,956
)
International taxes
 
(1,662
)
 
(2,226
)
 
4,362

Total deferred
 
(2,476
)
 
(1,016
)
 
2,406

Provision for taxes on income
 
$
2,209

 
2,702

 
16,373
Comparison of Income Taxes at Statutory Rate and Company's Effective Tax Rate
A comparison of income tax expense at the U.S. statutory rate of 21% in 2019 and 2018 and 35% in 2017, to the Company’s effective tax rate is as follows:
(Dollars in Millions)
 
2019
 
2018
 
2017
 
U.S. 
 
$
3,543

 
5,575

 
4,865

 
International
 
13,785

 
12,424

 
12,808

 
Earnings before taxes on income:
 
$
17,328

 
17,999

 
17,673

 
Tax rates:
 
 
 
 
 
 
 
U.S. statutory rate
 
21.0
 %
 
21.0

 
35.0

 
International operations (1)
 
(5.9
)
 
(3.7
)
 
(12.8
)
 
U.S. taxes on international income (2)
 
1.8

 
1.4

 
0.7

 
Tax benefits on share-based compensation
 
(0.5
)
 
(1.5
)
 
(2.1
)
 
All other
 
0.2

 
(0.3
)
 
(1.5
)
 
TCJA and related impacts
 
(3.9
)
(3) 
(1.9
)
(3) 
73.3

(4) 
Effective Rate
 
12.7
 %
 
15.0

 
92.6

 


(1) For all periods presented the Company has subsidiaries operating in Puerto Rico under various tax incentives. International operations reflects the impacts of operations in jurisdictions with statutory tax rates different than the U.S., particularly Ireland, Switzerland and Puerto Rico, which is a favorable impact on the effective tax rate as compared with the U.S. statutory rate. The 2017 amount also includes tax cost related to the revaluation of deferred tax balances related to the change in the Belgian statutory tax rate increasing the tax provision by approximately 3.4%.
(2) Includes the impact of the GILTI tax, the Foreign-Derived Intangible Income deduction and other foreign income that is taxable under the U.S. tax code.
(3) Represents impact of adjustments to balances originally recorded as part of the 2017 TCJA provisional tax charge. Further information provided below.
(4) Includes U.S. state and local taxes provisionally recorded as part TCJA provisional charge which was approximately 0.6% of the total effective tax rate.
Temporary Differences and Carryforwards mporary differences and carryforwards for 2019 and 2018 were as follows:
 
 
2019 Deferred Tax
 
2018 Deferred Tax
(Dollars in Millions)
 
Asset
 
Liability
 
Asset
 
Liability
Employee related obligations
 
$
2,393

 


 
2,398

 


Stock based compensation
 
546

 


 
639

 


Depreciation & amortization
 
1,122

 


 
1,784

 


Non-deductible intangibles
 


 
(5,752
)
 


 
(5,967
)
International R&D capitalized for tax
 
1,189

 


 
1,282

 


Reserves & liabilities
 
2,384

 


 
1,647

 


Income reported for tax purposes
 
1,605

 


 
1,104

 


Net operating loss carryforward international
 
838

 


 
786

 


Undistributed foreign earnings
 
765

 
(1,289
)
 
693

 
(2,240
)
Global intangible low-taxed income
 
 
 
(2,965
)
 
 
 
(2,971
)
Miscellaneous international
 
696

 
(81
)
 
603

 
(93
)
Miscellaneous U.S. 
 
410

 


 
469

 


Total deferred income taxes
 
$
11,948

 
(10,087
)
 
11,405

 
(11,271
)

T
Summary of Activity Related to Unrecognized Tax Benefits
The following table summarizes the activity related to unrecognized tax benefits:
(Dollars in Millions)
 
2019
 
2018
 
2017
 
Beginning of year
 
$
3,326

 
3,151

 
3,041

 
Increases related to current year tax positions
 
249

 
242

 
332

 
Increases related to prior period tax positions
 
408

 
145

 
232

 
Decreases related to prior period tax positions
 
(105
)
 
(137
)
 
(416
)
(1)
Settlements
 
(9
)
 
(40
)
 
(2
)
 
Lapse of statute of limitations
 
(16
)
 
(35
)
 
(36
)
 
End of year
 
$
3,853

 
3,326

 
3,151

 
(1) In 2017, $347 million of this decrease is related to the TCJA.