Taxes (Tables)

12 Months Ended

Dec. 31, 2018

Taxes

Income before income taxes

($ in millions)

For the year ended December 31:	2018		2017		2016
Income from continuing operations before income taxes
U.S. operations	$	627	$	560	$	3,650
Non-U.S. operations	10,715		10,840		8,680
Total income from continuing operations before income taxes	$	11,342	$	11,400	$	12,330

Components of the provision for income taxes by geographic operations and taxing jurisdiction

($ in millions)

For the year ended December 31:	2018		2017		2016
U.S. operations	$	1,199	$	2,923	$	38
Non-U.S. operations	1,420		2,719		411
Total continuing operations provision for income taxes	$	2,619	$	5,642	$	449

($ in millions)

For the year ended December 31:	2018			2017			2016
U.S. federal
Current	$	(342	)	$	2,388		$	186
Deferred	1,377			77			(746		)
	$	1,035		$	2,465		$	(560	)
U.S. state and local
Current	$	127		$	55		$	244
Deferred	(292		)	28			(44		)
	$	(165	)	$	83		$	200
Non-U.S.
Current	$	2,135		$	3,891		$	988
Deferred	(386		)	(797		)	(179		)
	$	1,749		$	3,094		$	809
Total continuing operations provision for income taxes	$	2,619		$	5,642		$	449
Discontinued operations provision for/(benefit from) income taxes	2			(3		)	(2		)
Provision for social security, real estate, personal property and other taxes	3,322			3,434			3,417
Total taxes included in net income	$	5,943		$	9,073		$	3,864

Effective income tax rate reconciliation

For the year ended December 31:	2018		2017		2016
Statutory rate	21	%	35	%	35	%
Enactment of U.S. tax reform	18		48		—
Tax differential on foreign income	(11	)	(26	)	(21	)
Intra-entity transfers	0		(5	)	—
Domestic incentives	(1	)	(2	)	(1	)
State and local	(1	)	1		1
Japan resolution	—		—		(10	)
Other	(3	)	(2	)	0
Effective rate	23	%	49	%	4	%

Percentages rounded for disclosure purposes.

Components of deferred tax assets and liabilities

Deferred Tax Assets

($ in millions)

At December 31:	2018		2017
Retirement benefits	$	3,620	$	3,477
Share-based and other compensation	636		646
Domestic tax loss/credit carryforwards	964		718
Deferred income	674		605
Foreign tax loss/credit carryforwards	903		1,024
Bad debt, inventory and warranty reserves	348		395
Depreciation	231		293
Accruals	336		387
Intangible assets	620		585
Other	1,501		1,396
Gross deferred tax assets	9,833		9,526
Less: valuation allowance	915		1,004
Net deferred tax assets	$	8,918	$	8,522

Deferred Tax Liabilities

($ in millions)

At December 31:	2018		2017
Depreciation	$	719	$	641
Retirement benefits	455		483
Goodwill and intangible assets	1,200		1,226
Leases	580		584
Software development costs	292		360
Deferred transition costs	233		254
GILTI deferred taxes	1,927		—
Undistributed foreign earnings*	981		—
Other	1,011		658
Gross deferred tax liabilities	$	7,398	$	4,206

*Year-to-year increase primarily driven by a reclass from other taxes payable within other liabilities.

Reconciliation of the beginning and ending amount of unrecognized tax benefits

($ in millions)

	2018			2017			2016
Balance at January 1	$	7,031		$	3,740		$	4,574
Additions based on tax positions related to the current year	394			3,029			560
Additions for tax positions of prior years	1,201			803			334
Reductions for tax positions of prior years (including impacts due to a lapse of statute)	(1,686		)	(367		)	(1,443		)
Settlements	(181		)	(174		)	(285		)
Balance at December 31	$	6,759		$	7,031		$	3,740