Taxes (Tables)

12 Months Ended

Dec. 31, 2020

Taxes

Income before income taxes

($ in millions)
For the year ended December 31:	2020		2019		2018
Income/(loss) from continuing operations before income taxes
U.S. operations	$	(1,726)	$	(315)	$	627
Non-U.S. operations		6,363		10,481		10,715
Total income from continuing operations before income taxes	$	4,637	$	10,166	$	11,342

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

($ in millions)
For the year ended December 31:	2020		2019		2018
U.S. operations	$	2,004	$	(408)	$	1,199
Non-U.S. operations		(2,868)		1,139		1,420
Total continuing operations provision for/(benefit from) income taxes	$	(864)	$	731	$	2,619

($ in millions)
For the year ended December 31:	2020		2019		2018
U.S. federal
Current	$	315	$	331	$	(342)
Deferred		1,177		(839)		1,377
	$	1,492	$	(508)	$	1,035
U.S. state and local
Current	$	316	$	(85)	$	127
Deferred		(315)		(82)		(292)
	$	1	$	(167)	$	(165)
Non-U.S.
Current	$	1,827	$	1,829	$	2,135
Deferred		(4,184)		(423)		(386)
	$	(2,357)	$	1,406	$	1,749
Total continuing operations provision for/(benefit from) income taxes	$	(864)	$	731	$	2,619
Discontinued operations provision for/(benefit from) income taxes		(13)		(1)		2
Provision for social security, real estate, personal property and other taxes		3,199		3,304		3,322
Total taxes included in net income	$	2,322	$	4,034	$	5,943

Effective income tax rate reconciliation

For the year ended December 31:	2020		2019		2018
Statutory rate	21	%	21	%	21	%
Enactment of U.S. tax reform	—		1		18
Tax differential on foreign income	(15)		(11)		(9)
Intra-entity IP sale	(20)		—		—
Domestic incentives	(4)		(2)		(3)
State and local	0		(1)		(1)
Other	(1)		(1)		(3)
Effective rate	(19)	%	7	%	23	%

Percentages rounded for disclosure purposes.

Components of deferred tax assets and liabilities

Deferred Tax Assets

($ in millions)
At December 31:	2020			2019
Retirement benefits	$	3,946		$	3,766
Leases		1,525			1,729
Share-based and other compensation		616			637
Domestic tax loss/credit carryforwards		1,746			1,259
Deferred income		712			600
Foreign tax loss/credit carryforwards		818			836
Bad debt, inventory and warranty reserves		361			298
Depreciation		308			253
Hedging losses		576			—
Restructuring charges		302			138	**
Accruals		483			368
Intangible assets		3,540	*		592
Capitalized research and development		1,387			722
Other		1,441			1,300
Gross deferred tax assets		17,761			12,498
Less: valuation allowance		850			608
Net deferred tax assets	$	16,911		$	11,890

*

Deferred Tax Liabilities

($ in millions)
At December 31:	2020			2019
Goodwill and intangible assets	$	2,679		$	3,111
GILTI deferred taxes		4,365	*		1,908
Leases and right-of-use assets		1,908			2,216
Depreciation		709			728
Retirement benefits		1,221			1,002
Software development costs		1,007			1,075
Deferred transition costs		205			233
Undistributed foreign earnings		307			725
Other		741			940
Gross deferred tax liabilities	$	13,142		$	11,938

* The increase in the balance was primarily due to an intra-entity sale of intellectual property in the first quarter of 2020.

** Previously included in Other.

Reconciliation of the beginning and ending amount of unrecognized tax benefits

($ in millions)
	2020		2019		2018
Balance at January 1	$	7,146	$	6,759	$	7,031
Additions based on tax positions related to the current year		1,690		816		394
Additions for tax positions of prior years		159		779		1,201
Reductions for tax positions of prior years (including impacts due to a lapse of statute)		(408)		(922)		(1,686)
Settlements		(19)		(286)		(181)
Balance at December 31	$	8,568	$	7,146	$	6,759