Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

The components of Income before Income Taxes follow:

A reconciliation of income taxes at the U.S. statutory rate to United States and Foreign Tax Expense follows:



(In millions)	2019			2018			2017
U.S. federal income tax expense at the statutory rate of 21% (35% for 2017)	$	37		$	212		$	307
Federal and state tax on accelerated royalty income transaction	334			—			—
Net establishment (release) of foreign valuation allowances	140			(5		)	1
Net establishment (release) of U.S. valuation allowances	(98		)	25			5
Net foreign losses (income) with no tax due to valuation allowances	48			7			(7		)
U.S. charges (benefits) related to foreign tax credits, R&D and foreign derived intangible deduction	(17		)	20			(23		)
Adjustment for foreign income taxed at different rates	16			30			(55		)
Net establishment (resolution) of uncertain tax positions	7			18			(6		)
Deferred tax impact of enacted tax rate and law changes	3			—			389
State income taxes, net of U.S. federal benefit	(1		)	(1		)	9
Provision for undistributed foreign earnings, net	—			(9		)	(162		)
Transition tax	—			8			77
Domestic production activities deduction	—			(1		)	(16		)
Other	5			(1		)	(6		)
United States and Foreign Tax Expense	$	474		$	303		$	513

The components of United States and Foreign Tax Expense by taxing jurisdiction, follow:



(In millions)	2019		2018			2017
Current:
Federal	$	—	$	(15	)	$	(22	)
Foreign	134		188			166
State	17		(1		)	3
	151		172			147
Deferred:
Federal	133		120			389
Foreign	153		6			(8		)
State	37		5			(15		)
	323		131			366
United States and Foreign Tax Expense	$	474	$	303		$	513

Temporary differences and carryforwards giving rise to deferred tax assets and liabilities at December 31 follow:



(In millions)	2019			2018
Tax loss carryforwards and credits	$	1,159		$	1,473
Prepaid royalty income	576			—
Capitalized research and development expenditures	416			404
Accrued expenses deductible as paid	347			261
Postretirement benefits and pensions	221			207
Rationalizations and other provisions	38			26
Vacation and sick pay	23			23
Deferred interest deductions	—			40
Other	106			111
	2,886			2,545
Valuation allowance	(982		)	(317		)
Total deferred tax assets	1,904			2,228
Property basis differences	(466		)	(475		)
Tax on undistributed earnings of subsidiaries	(1		)	(1		)
Total net deferred tax assets	$	1,437		$	1,752



Reconciliation of Unrecognized Tax Benefits
(In millions)	2019			2018			2017
Balance at January 1	$	71		$	52		$	63
Increases related to prior year tax positions	24			9			2
Decreases related to prior year tax positions	—			(1		)	(2		)
Settlements	(11		)	(2		)	(8		)
Foreign currency impact	(2		)	(5		)	—
Increases related to current year tax positions	—			21			—
Lapse of statute of limitations	—			(3		)	(3		)
Balance at December 31	$	82		$	71		$	52