Income Taxes (Tables)

12 Months Ended

Dec. 31, 2018

Components of the Provision for Income Taxes

The components of the provision for income taxes were as follows:



In millions	2018			2017			2016
U.S. federal income taxes:
Current	$	373		$	1,117		$	756
Deferred	(15		)	(10		)	(224		)
Total U.S. federal income taxes	358			1,107			532
Foreign income taxes:
Current	358			296			290
Deferred	49			102			(5		)
Total foreign income taxes	407			398			285
State income taxes:
Current	66			106			90
Deferred	—			(28		)	(34		)
Total state income taxes	66			78			56
Total provision for income taxes	$	831		$	1,583		$	873

Income from Continuing Operations Before Income Taxes

Income before taxes for domestic and foreign operations was as follows:



In millions	2018		2017		2016
Domestic	$	1,774	$	1,806	$	1,653
Foreign	1,620		1,464		1,255
Total income before taxes	$	3,394	$	3,270	$	2,908

Reconciliation Between the U.S. Federal Statutory Tax Rate and the Effective Tax Rate

The reconciliation between the U.S. federal statutory tax rate and the effective tax rate was as follows:



	2018		2017		2016
U.S. federal statutory tax rate	21.0	%	35.0	%	35.0	%
U.S. tax effect of foreign earnings	1.5		0.5		0.7
Tax effect of U.S. federal tax law change	(0.1	)	20.1		—
State income taxes, net of U.S. federal tax benefit	1.6		1.2		1.3
Differences between U.S. federal statutory and foreign tax rates	2.1		(3.5	)	(3.6	)
Nontaxable foreign interest income	(1.7	)	(1.7	)	(2.1	)
Tax effect of foreign dividends	1.0		0.4		0.8
Tax relief for U.S. manufacturers	—		(1.4	)	(1.4	)
Excess tax benefits from stock-based compensation	(0.3	)	(1.5	)	—
Other, net	(0.6	)	(0.7	)	(0.7	)
Effective tax rate	24.5	%	48.4	%	30.0	%

Components of Deferred Income Tax Assets and Liabilities

The components of deferred income tax assets and liabilities at December 31, 2018 and 2017 were as follows:



	2018						2017
In millions	Asset			Liability			Asset			Liability
Goodwill and intangible assets	$	194		$	(484	)	$	195		$	(506	)
Inventory reserves, capitalized tax cost and LIFO inventory	30			(3		)	31			(3		)
Investments	19			(171		)	15			(180		)
Plant and equipment	17			(72		)	18			(64		)
Accrued expenses and reserves	36			—			45			—
Employee benefit accruals	186			—			177			—
Foreign tax credit carryforwards	8			—			13			—
Net operating loss carryforwards	451			—			507			—
Capital loss carryforwards	89			—			98			—
Allowances for uncollectible accounts	10			—			9			—
Pension liabilities	—			(19		)	—			(25		)
Deferred intercompany deductions	—			—			405			—
Unrealized loss (gain) on foreign debt instruments	—			(45		)	—			(19		)
Other	32			(13		)	99			(15		)
Gross deferred income tax assets (liabilities)	1,072			(807		)	1,612			(812		)
Valuation allowances	(418		)	—			(459		)	—
Total deferred income tax assets (liabilities)	$	654		$	(807	)	$	1,153		$	(812	)

Net Operating Loss Carryforwards

At December 31, 2018, the Company had net operating loss carryforwards available to offset future taxable income in the U.S. and certain foreign jurisdictions, which expire as follows:



	Gross Carryforwards Related
In millions	to Net Operating Losses
2019	$	25
2020	87
2021	81
2022	34
2023	7
2024	7
2025-2045	55
Do not expire	1,532
Total gross carryforwards related to net operating losses	$	1,828

Changes in Amount of Unrecognized Tax Benefits

The changes in the amount of unrecognized tax benefits for the years ended 2018, 2017 and 2016 were as follows:



In millions	2018			2017			2016
Beginning balance	$	285		$	210		$	259
Additions based on tax positions related to the current year	3			42			19
Additions for tax positions of prior years	49			100			126
Reductions for tax positions of prior years	(31		)	(24		)	(97		)
Settlements	(5		)	(53		)	(96		)
Foreign currency translation	(4		)	10			(1		)
Ending balance	$	297		$	285		$	210

Open Tax Years for Company's Major Jurisdictions

The following table summarizes the open tax years for the Company’s major jurisdictions:



Jurisdiction		Open Tax Years
United States – Federal		2016-2018
United Kingdom		2017-2018
Germany		2012-2018
France		2014-2018
Australia		2013-2018