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Taxes (Tables)

12 Months Ended

Dec. 31, 2011

Income before income taxes

($ in millions)

For the year ended December 31:		2011			2010			2009
Income before income taxes
U.S. operations		$	9,716		$	9,140		$	9,524
Non-U.S. operations		11,287			10,583			8,614
Total income before income taxes		$	21,003		$	19,723		$	18,138

Provision for income taxes by geographic operations

($ in millions)

For the year ended December 31:		2011			2010			2009
U.S. operations		$	2,141		$	2,000		$	2,427
Non-U.S. operations		3,007			2,890			2,286
Total provision for income taxes		$	5,148		$	4,890		$	4,713

Components of the provision for income taxes by taxing jurisdiction

($ in millions)

For the year ended December 31:		2011			2010			2009
U.S. federal
Current		$	268		$	190		$	473
Deferred		909			1,015			1,341
		1,177			1,205			1,814
U.S. state and local
Current		429			279			120
Deferred		81			210			185
		510			489			305
Non-U.S.
Current		3,239			3,127			2,347
Deferred		222			69			247
		3,461			3,196			2,594
Total provision for income taxes		5,148			4,890			4,713
Provision for social security, real estate, personal property and other taxes		4,289			4,018			3,986
Total taxes included in net income		$	9,437		$	8,908		$	8,699

Income tax reconciliation

($ in millions)

For the year ended December 31:		2011		2010		2009
Statutory rate		35	%	35	%	35	%
Foreign tax differential		(10	)	(10	)	(9	)
State and local		2		2		1
Other		(2	)	(2	)	(1	)
Effective rate		25	%	25	%	26	%

Components of deferred tax assets (liabilities)

($ in millions)

At December 31:		2011			2010
Retirement benefits		$	5,169		$	4,131
Share-based and other compensation		1,598			1,570
Domestic tax loss/credit carryforwards		914			948
Deferred income		834			1,080
Foreign tax loss/credit carryforwards		752			758
Bad debt, inventory and warranty reserves		608			564
Depreciation		474			470
Capitalized research and development		70			291
Other		1,409			1,486
Gross deferred tax assets		11,828			11,298
Less: valuation allowance		912			795
Net deferred tax assets		$	10,916		$	10,503

Deferred Tax Liabilities

($ in millions)

At December 31:		2011			2010
Leases		$	2,149		$	1,950
Depreciation		1,421			1,223
Goodwill and intangible assets		796			909
Retirement benefits		551			338
Software development costs		466			638
Other		1,121			1,114
Gross deferred tax liabilities		$	6,504		$	6,172

Reconciliation of the beginning and ending amount of unrecognized tax benefits

($ in millions)

		2011			2010			2009
Balance at January 1		$	5,293		$	4,790		$	3,898
Additions based on tax positions related to the current year		672			1,054			554
Additions for tax positions of prior years		379			1,768			634
Reductions for tax positions of prior years (including impacts due to a lapse in statute)		(538		)	(1,659		)	(277		)
Settlements		(231		)	(660		)	(19		)
Balance at December 31		$	5,575		$	5,293		$	4,790

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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