Income Taxes (Tables)

12 Months Ended

Dec. 31, 2016

Income Tax Disclosure [Abstract]

Components of Profit before income taxes

The components of Profit before income taxes for the years ended December 31, were as follows: 

(Millions of dollars)
	2016		2015		2014
U.S.	$	249	$	230	$	207
Non-U.S.	312		389		546
Total	$	561	$	619	$	753

Components of the Provision for income taxes

The components of the Provision for income taxes were as follows for the years ended December 31: 

(Millions of dollars)
	2016			2015			2014
Current income tax provision (benefit):
U.S.	$	(18	)	$	(21	)	$	14
Non-U.S.	111			109			138
State (U.S.)	—			2			(1		)
	93			90			151
Deferred income tax provision (benefit):
U.S.	90			45			44
Non-U.S.	(15		)	21			13
State (U.S.)	3			2			1
	78			68			58
Total Provision for income taxes	$	171		$	158		$	209

Reconciliation of the U.S. federal statutory rate to effective rate

The actual Provision for income taxes differs from the Provision for income taxes that would result from applying the U.S. statutory rate to Profit before income taxes for the years ended December 31, for the reasons set forth in the following reconciliation: 

(Millions of dollars)
	2016					2015					2014
Taxes computed at U.S. statutory rates	$	196		35.0	%	$	217		35.0	%	$	264		35.0	%
(Decreases) increases in taxes resulting from:
State Income Tax, net of Federal Tax	2			0.4	%	3			0.5	%	—			—	%
Subsidiaries' results subject to tax rates other than U.S. statutory rates	(36		)	(6.5	)%	(25		)	(4.0	)%	(55		)	(7.2	)%
Income from non-U.S. subsidiaries taxed at U.S. statutory rates, net of foreign tax credits	2			0.3	%	(39		)	(6.3	)%	—			—	%
Foreign currency translation taxed at non-U.S. subsidiaries	13			2.3	%	6			0.9	%	2			0.2	%
Other, net	(6		)	(1.1	)%	(4		)	(0.6	)%	(2		)	(0.2	)%
Provision for income taxes	$	171		30.4	%	$	158		25.5	%	$	209		27.8	%

Deferred income tax assets and liabilities

The amounts of deferred income taxes at December 31, included in the following lines in our Consolidated Statements of Financial Position were: 

(Millions of dollars)
	2016			2015
Assets:
Deferred and refundable income taxes	$	89		$	75
Liabilities:
Deferred income taxes and other liabilities	(939		)	(812		)
Deferred income taxes, net	$	(850	)	$	(737	)

Differences between accounting rules and income tax laws cause differences between the bases of certain assets and liabilities for financial reporting and income tax purposes.  The income tax effects of these differences, to the extent they are temporary, are recorded as deferred income tax assets and liabilities netted by tax jurisdiction and taxpayer.

Our consolidated deferred income taxes consisted of the following components as of December 31: 

(Millions of dollars)
	2016			2015
Deferred income tax assets:
Allowance for credit losses	$	148		$	142
Tax carryforwards	73			48
	221			190
Deferred income tax liabilities (primarily lease basis differences)	(693		)	(574		)
Valuation allowance for deferred income tax assets	(10		)	(10		)
Deferred income tax on translation adjustment	(368		)	(343		)
Deferred income taxes, net	$	(850	)	$	(737	)

Summary of net operating loss carryforwards

As of December 31, 2016, amounts and expiration dates of net operating loss (NOL) carryforwards in various U.S. state taxing jurisdictions were: 

(Millions of dollars)
2017		2018		2019		2020		2021-2031		Total
$	2	$	6	$	4	$	1	$	162	$	175

The gross deferred income tax asset associated with these NOL carryforwards is $13 million as of December 31, 2016, partially offset by a valuation allowance of $1 million.

In some U.S. state income tax jurisdictions, we join with other Caterpillar entities in filing combined income tax returns.  In other U.S. state income tax jurisdictions, we file on a separate, stand-alone basis.

As of December 31, 2016, amounts and expiration dates of NOL carryforwards in various non-U.S. taxing jurisdictions were: 

(Millions of dollars)
2017		2018		2019		2020		2021-2031		Unlimited		Total
$	—	$	—	$	—	$	7	$	29	$	44	$	80

Valuation allowances totaling $9 million have been recorded at certain non-U.S. subsidiaries that have not yet demonstrated consistent and/or sustainable profitability to support the recognition of net deferred income tax assets.

Schedule of unrecognized tax benefits

A reconciliation of the beginning and ending amounts of gross unrecognized income tax benefits for uncertain income tax positions, including positions impacting only the timing of income tax benefits was as follows: 

(Millions of dollars)
	2016		2015
Reconciliation of unrecognized income tax benefits(1):
Balance at beginning of year	$	—	$	—
Additions for income tax positions related to current year	1		—
Additions for income tax positions related to prior year	3		2
Reductions for income tax positions related to settlements(2)	—		(2		)
Balance at end of year	$	4	$	—
Amount that, if recognized, would impact the effective tax rate	$	—	$	—

⁽¹⁾ Foreign currency translation amounts are included within each line as applicable.

⁽²⁾ Includes cash payment or other reduction of assets to settle liability.