Income Taxes (Tables)

12 Months Ended

Dec. 31, 2014

Components of the (provision)/benefit for income taxes on continuing operations

The components of the (provision)/benefit for income taxes on continuing operations were:



	Year Ended December 31
Millions of dollars	2014			2013			2012
Current income taxes:
Federal	$	(959	)	$	(245	)	$	(695	)
Foreign	(734		)	(485		)	(328		)
State	(36		)	(49		)	(47		)
Total current	(1,729		)	(779		)	(1,070		)
Deferred income taxes:
Federal	83			4			(168		)
Foreign	357			125			15
State	14			2			(12		)
Total deferred	454			131			(165		)
Provision for income taxes	$	(1,275	)	$	(648	)	$	(1,235	)

United States and foreign components of income from continuing operations before income taxes

The United States and foreign components of income from continuing operations before income taxes were as follows:



	Year Ended December 31
Millions of dollars	2014		2013		2012
United States	$	3,020	$	1,070	$	2,826
Foreign	1,692		1,694		996
Total	$	4,712	$	2,764	$	3,822

Reconciliations between the actual provision for income taxes on continuing operations and that computed by applying the US statutory rate to income from continuing operations before income taxes

Reconciliations between the actual provision for income taxes on continuing operations and that computed by applying the United States statutory rate to income from continuing operations before income taxes were as follows:



	Year Ended December 31
	2014		2013		2012
United States statutory rate	35.0	%	35.0	%	35.0	%
Impact of foreign income taxed at different rates	(5.7	)	(9.3	)	(2.5	)
Valuation allowance against tax assets	(3.6	)	(0.1	)	1.2
Domestic manufacturing deduction	(1.9	)	(2.0	)	(2.2	)
State income taxes	0.8		1.7		1.6
Adjustments of prior year taxes	0.3		(0.6	)	(1.3	)
Other impact of foreign operations	(0.1	)	(0.7	)	(0.5	)
Other items, net	2.3		(0.5	)	1.0
Total effective tax rate on continuing operations	27.1	%	23.5	%	32.3	%

Primary components of deferred tax assets and liabilities

The primary components of our deferred tax assets and liabilities were as follows:



	December 31
Millions of dollars	2014		2013
Gross deferred tax assets:
Accrued liabilities	$	494	$	600
Net operating loss carryforwards	462		481
Employee compensation and benefits	395		351
Other	315		162
Total gross deferred tax assets	1,666		1,594
Gross deferred tax liabilities:
Depreciation and amortization	1,005		1,185
Other	111		81
Total gross deferred tax liabilities	1,116		1,266
Valuation allowances – net operating loss carryforwards	184		374
Net deferred income tax asset (liability)	$	366	$	(46	)

Rollforward of unrecognized tax benefits and associated interest and penalties

The following table presents a rollforward of our unrecognized tax benefits and associated interest and penalties.



Millions of dollars	Unrecognized Tax Benefits				Interest and Penalties
Balance at January 1, 2012	$	205			$	69
Change in prior year tax positions	16				(1		)
Change in current year tax positions	14				1
Cash settlements with taxing authorities	(3		)		—
Lapse of statute of limitations	(4		)		(1		)
Balance at December 31, 2012	$	228			$	68
Change in prior year tax positions	(53		)		(9		)
Change in current year tax positions	30				1
Cash settlements with taxing authorities	(21		)		(17		)
Lapse of statute of limitations	(9		)		(9		)
Balance at December 31, 2013	$	175		(a)	$	34
Change in prior year tax positions	83				24
Change in current year tax positions	84				—
Cash settlements with taxing authorities	(27		)		(1		)
Lapse of statute of limitations	(1		)		(1		)
Balance at December 31, 2014	$	314		(a)(b)	$	56

(a)

Includes $46 million as of December 31, 2014 and $27 million as of December 31, 2013 in foreign unrecognized tax benefits that would give rise to a United States tax credit. Approximately $194 million, which excludes $10 million of unrecognized tax benefits covered by an indemnification asset, as of December 31, 2014 and $138 million as of December 31, 2013, if resolved in our favor, would positively impact the effective tax rate and, therefore, be recognized as additional tax benefits in our statement of operations.


(b)	Includes $42 million that could be resolved within the next 12 months.

- Definition

Tabular disclosure of tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities (i.e., uncertain tax positions) and other types of income tax contingencies, including: (1) the policy on classification of interest and penalties; (2) a tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period; the total amount(s) of: (3) unrecognized tax benefits that, if recognized, would affect the effective tax rate, and (4) interest and penalties recognized in each of the income statement and balance sheet; (5) for positions for which it is reasonably possible that the total amounts unrecognized will significantly change within 12 months of the reporting date the: (i) nature of the uncertainty, (ii) nature of the event that could occur that would cause the change, and (iii) an estimate of the range of the reasonably possible change or a statement that an estimate of the range cannot be made; and (6) a description of tax years that remain subject to examination by major tax jurisdictions.

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