Taxes (Tables)

12 Months Ended

Dec. 31, 2012

($ in millions)

For the year ended December 31:	2012		2011		2010
Income before income taxes
U.S. operations	$	9,668	$	9,716	$	9,140
Non-U.S. operations	12,234		11,287		10,583
Total income before income taxes	$	21,902	$	21,003	$	19,723

Provision for income taxes by geographic operations

($ in millions)

For the year ended December 31:	2012		2011		2010
U.S. operations	$	2,582	$	2,141	$	2,000
Non-U.S. operations	2,716		3,007		2,890
Total provision for income taxes	$	5,298	$	5,148	$	4,890

Components of the provision for income taxes by taxing jurisdiction

($ in millions)

For the year ended December 31:	2012		2011		2010
U.S. federal
Current	$	1,361	$	268	$	190
Deferred	403		909		1,015
	1,764		1,177		1,205
U.S. state and local
Current	134		429		279
Deferred	289		81		210
	423		510		489
Non-U.S.
Current	3,006		3,239		3,127
Deferred	105		222		69
	3,111		3,461		3,196
Total provision for income taxes	5,298		5,148		4,890
Provision for social security, real estate, personal property and other taxes	4,331		4,289		4,018
Total taxes included in net income	$	9,629	$	9,437	$	8,908

Income tax reconciliation

For the year ended December 31:	2012		2011		2010
Statutory rate	35	%	35	%	35	%
Foreign tax differential	(11	)	(10	)	(10	)
State and local	1		2		2
Other	(1	)	(2	)	(2	)
Effective rate	24	%	25	%	25	%

Components of deferred tax assets (liabilities)

($ in millions)

At December 31:	2012		2011*
Retirement benefits	$	5,870	$	5,169
Share-based and other compensation	1,666		1,598
Deferred income	1,018		834
Domestic tax loss/credit carryforwards	954		914
Foreign tax loss/credit carryforwards	681		752
Bad debt, inventory and warranty reserves	586		608
Depreciation	456		474
Other	1,384		1,479
Gross deferred tax assets	12,615		11,828
Less: valuation allowance	1,187		912
Net deferred tax assets	$	11,428	$	10,916

* Reclassed to conform with 2012 presentation.

Deferred Tax Liabilities

($ in millions)

At December 31:	2012		2011
Leases	$	2,216	$	2,149
Depreciation	1,378		1,421
Goodwill and intangible assets	957		796
Software development costs	542		466
Retirement benefits	257		551
Other	1,158		1,121
Gross deferred tax liabilities	$	6,508	$	6,504

Reconciliation of the beginning and ending amount of unrecognized tax benefits

($ in millions)

	2012			2011			2010
Balance at January 1	$	5,575		$	5,293		$	4,790
Additions based on tax positions related to the current year	401			672			1,054
Additions for tax positions of prior years	215			379			1,768
Reductions for tax positions of prior years (including impacts due to a lapse in statute)	(425		)	(538		)	(1,659		)
Settlements	(94		)	(231		)	(660		)
Balance at December 31	$	5,672		$	5,575		$	5,293

- Definition

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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