Income Taxes (Tables)

12 Months Ended

Dec. 31, 2016

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

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



	Year Ended December 31
Millions of dollars	2016			2015			2014
Current income taxes:
Federal	$	737		$	635		$	(959	)
Foreign	(415		)	(636		)	(734		)
State	35			51			(36		)
Total current	357			50			(1,729		)
Deferred income taxes:
Federal	1,343			(18		)	83
Foreign	77			262			357
State	81			(20		)	14
Total deferred	1,501			224			454
Income tax benefit (provision)	$	1,858		$	274		$	(1,275	)

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

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



	Year Ended December 31
Millions of dollars	2016			2015			2014
United States	$	(6,636	)	$	(1,560	)	$	3,020
Foreign	(989		)	624			1,692
Total	$	(7,625	)	$	(936	)	$	4,712

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 (loss) from continuing operations before income taxes were as follows:



	Year Ended December 31
	2016		2015		2014
United States statutory rate	35.0	%	35.0	%	35.0	%
Undistributed foreign earnings	(5.1	)	—		—
Impact of foreign income taxed at different rates (a)	(3.2	)	17.0		(5.7	)
Valuation allowance against tax assets	(2.1	)	(8.3	)	(3.6	)
Domestic manufacturing deduction	(1.3	)	—		(1.9	)
State income taxes	1.0		2.0		0.8
Non-deductible acquisition costs	0.6		(4.5	)	—
Adjustments of prior year taxes	0.2		1.3		0.3
Venezuela devaluation	—		(7.5	)	—
Other items, net	(0.7	)	(5.7	)	2.2
Total effective tax rate on continuing operations	24.4	%	29.3	%	27.1	%

(a) For the year ended December 31, 2015, we recognized taxable losses in our United States operations, partially offset by taxable income in our foreign operations in which the corresponding tax expenses are applied at lower statutory rates in certain jurisdictions, which had a significant effect on our effective tax rate during the year.

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	2016		2015
Gross deferred tax assets:
Net operating loss carryforwards	$	1,647	$	540
Foreign tax credit carryforwards	648		365
Employee compensation and benefits	352		403
Accrued liabilities	325		392
Other	536		359
Total gross deferred tax assets	3,508		2,059
Gross deferred tax liabilities:
Depreciation and amortization	585		1,334
Undistributed foreign earnings	406		5
Other	145		109
Total gross deferred tax liabilities	1,136		1,448
Valuation allowances	453		213
Net deferred income tax asset	$	1,919	$	398

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, 2014	$	175			$	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			$	56
Change in prior year tax positions	(33		)		7
Change in current year tax positions	62				1
Cash settlements with taxing authorities	(16		)		(15		)
Lapse of statute of limitations	(5		)		(2		)
Balance at December 31, 2015	$	322		(a)	$	47
Change in prior year tax positions	44				20
Change in current year tax positions	129				3
Cash settlements with taxing authorities	(62		)		(8		)
Lapse of statute of limitations	(6		)		(1		)
Balance at December 31, 2016	$	427		(a)(b)	$	61

(a)

Includes $84 million as of December 31, 2016 and $67 million as of December 31, 2015 in foreign unrecognized tax benefits that would give rise to a United States tax credit. Approximately $257 million, which excludes $5 million of unrecognized tax benefits covered by an indemnification asset, as of December 31, 2016 and $176 million, which excludes $10 million of unrecognized tax benefits covered by an indemnification asset, as of December 31, 2015, 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 $15 million that could be resolved within the next 12 months.