Income Taxes (Tables)

12 Months Ended

Dec. 31, 2020

The components of Income (Loss) 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)	2020			2019			2018
U.S. federal income tax expense (benefit) at the statutory rate of 21%	$	(239	)	$	37		$	212
Net establishment (release) of U.S. valuation allowances		310			(98	)		25
Net foreign losses (income) with no tax due to valuation allowances		37			48			7
Goodwill impairment		34			—			—
Deferred tax impact of enacted tax rate and law changes		(18	)		3			—
State income taxes, net of U.S. federal benefit		(17	)		(1	)		(1	)
U.S. charges (benefits) related to foreign tax credits, R&D and foreign derived intangible deduction		(9	)		(17	)		20
Adjustment for foreign income taxed at different rates		7			16			30
Net establishment of uncertain tax positions		6			7			18
Federal and state tax on accelerated royalty income transaction		—			334			—
Net establishment (release) of foreign valuation allowances		—			140			(5	)
Other		(1	)		5			(3	)
United States and Foreign Tax Expense	$	110		$	474		$	303

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


(In millions)	2020			2019		2018
Current:
Federal	$	(5	)	$	—	$	(15	)
Foreign		95			134		188
State		(3	)		17		(1	)
		87			151		172
Deferred:
Federal		63			133		120
Foreign		(31	)		153		6
State		(9	)		37		5
		23			323		131
United States and Foreign Tax Expense	$	110		$	474	$	303

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


(In millions)	2020			2019
Tax loss carryforwards and credits	$	1,570		$	1,159
Prepaid royalty income		629			576
Capitalized research and development expenditures		421			416
Accrued expenses deductible as paid		255			347
Postretirement benefits and pensions		209			221
Lease liabilities		76			75
Rationalizations and other provisions		34			38
Vacation and sick pay		21			23
Other		133			106
		3,348			2,961
Valuation allowance		(1,469	)		(982	)
Total deferred tax assets		1,879			1,979
Property basis differences		(420	)		(467	)
Right-of-use assets		(75	)		(74	)
Tax on undistributed earnings of subsidiaries		(1	)		(1	)
Total net deferred tax assets	$	1,383		$	1,437

A summary of our unrecognized tax benefits and changes during the year follows:


(In millions)	2020			2019			2018
Balance at January 1	$	82		$	71		$	52
Increases related to prior year tax positions		26			24			9
Decreases related to prior year tax positions		(1	)		—			(1	)
Settlements		(15	)		(11	)		(2	)
Foreign currency impact		(7	)		(2	)		(5	)
Increases related to current year tax positions		—			—			21
Lapse of statute of limitations		—			—			(3	)
Balance at December 31	$	85		$	82		$	71