Income Taxes (Tables)

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Components of income tax expense

The components of income tax expense for the years ended December 31 included in Credco’s Consolidated Statements of Income were as follows:

(Millions)	2020		2019		2018
Current income tax expense (benefit):
U.S. federal	$	69	$	45	$	(14)
U.S. state and local	13		13		(6)
Non-U.S.	182		23		84
Total current income tax expense	264		81		64
Deferred income tax expense (benefit):
U.S. federal	(135)		11		(28)
U.S. state and local	(4)		—		1
Non-U.S.	(4)		2		(8)
Total deferred income tax expense (benefit)	(143)		13		(35)
Total income tax expense	$	121	$	94	$	29

Effective income tax rate

A reconciliation of the U.S. federal statutory rate of 21 percent as of December 31, 2020, 2019 and 2018, to Credco’s actual income tax rate on continuing operations was as follows:

	2020		2019		2018
U.S. statutory federal income tax rate	21.0	%	21.0	%	21.0	%
Increase (decrease) in taxes resulting from:
State and local income taxes, net of federal benefit	2.5		0.8		(0.4)
Non-U.S. subsidiaries earnings(a)	14.9		(3.7)		(8.7)
Tax settlements(b)	(0.9)		—		—
U.S. Tax Act	—		—		(5.6)
Other(c)	0.1		0.3		0.7
Actual tax rate	37.6	%	18.4	%	7.0	%

(a)2020 included discrete tax charges related to the attribution and taxation of income to jurisdictions outside the U.S.

(b)Related to the resolution of tax matters in various jurisdictions.

(c)Results for all years include the impact of prior year tax returns filed in the current year.

Components of deferred tax assets and liabilities

The significant components of deferred tax assets and liabilities as of December 31 are reflected in the following table:

(Millions)	2020		2019
Deferred tax assets:
Reserves not yet deducted for tax purposes	$	26	$	29
State income taxes	10		9
Foreign exchange loss	41		32
Deferred tax attributes(a)	110		15
Other	11		10
Gross deferred tax assets	198		95
Deferred tax liabilities:
Investment in foreign subsidiaries(b)	83		74
Gross deferred tax liabilities	83		74
Net deferred tax assets	$	115	$	21

(a)Deferred foreign tax credits and other related adjustments.

(b)Deferred state income and foreign withholding tax consequences of future cash distributions from non-U.S. subsidiaries.

Changes in unrecognized tax benefits

The following table presents changes in unrecognized tax benefits:

(Millions)	2020		2019		2018
Balance, January 1	$	60	$	53	$	24
Increases:
Current year tax positions	4		5		4
Tax positions related to prior years	37		4		26
Effects of foreign currency translation	1		—		—
Decreases:
Settlements with tax authorities	(3)		—		—
Lapse of statute of limitations	(1)		(2)		(1)
Balance, December 31	$	98	$	60	$	53

Deemed repatriation tax payments due by year

	Payments due by year
(Millions)	2021		2022 - 2023		2024 – 2025		2026 and thereafter		Total
Deemed repatriation tax	$	—	$	6	$	254	$	181	$	441