Income Taxes (Notes)

6 Months Ended

Jun. 30, 2016

Income Taxes [Abstract]

Income Taxes

Income Taxes

During the three months ended June 30, 2016, we recorded a total income tax benefit of $902 million on pre-tax losses of $4.1 billion, resulting in an effective tax rate of 22.0%. The primary items impacting our effective tax rate during this period were as follows:

- $390 million of deferred tax expenses on approximately $3.3 billion of cumulative undistributed foreign earnings. As a result of the payment of the Baker Hughes termination fee and the general market conditions, we reviewed the financial requirements of our U.S. companies and our foreign subsidiaries during the second quarter of 2016, together with the overall capital structure of the global organization. As a result of this review, we concluded that we no longer intend to permanently reinvest a portion of our cumulative undistributed foreign earnings outside of the United States and recorded corresponding U.S. federal income tax expenses during the second quarter;

- $96 million of tax expenses associated with our inability to utilize certain domestic manufacturing deductions as a result of the carryback of net operating losses to prior tax periods;

- tax effects of the $423 million of impairments and other charges recorded during the second quarter of 2016, some of which are taxed at lower income tax rates in certain foreign jurisdictions; and

- second quarter taxable losses recognized in our United States operations in which we recorded tax benefits at the U.S. statutory rate, offset by second quarter taxable income in our foreign operations in which the corresponding tax expenses are applied at lower income tax rates in certain foreign jurisdictions.