Income Taxes (Tables)

12 Months Ended

Dec. 31, 2017

Income Tax Disclosure [Abstract]

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

A reconciliation of the U.S. federal statutory rate to the effective rate for the years ended December 31, was as follows: 

(Millions of dollars)
	2017					2016					2015
Taxes computed at U.S. statutory rates	$	206		35.0	%	$	196		35.0	%	$	217		35.0	%
(Decreases) increases in taxes resulting from:
State Income Tax, net of Federal Tax	2			0.3	%	2			0.4	%	3			0.5	%
Subsidiaries' results subject to tax rates other than U.S. statutory rates	(31		)	(5.3	)%	(36		)	(6.5	)%	(25		)	(4.0	)%
Income from non-U.S. subsidiaries taxed at U.S. statutory rates, net of foreign tax credits(1)	(16		)	(2.7	)%	2			0.3	%	(39		)	(6.3	)%
Foreign currency translation taxed at non-U.S. subsidiaries	(12		)	(2.0	)%	13			2.3	%	6			0.9	%
U.S. deferred tax rate change	(334		)	(56.6	)%	—			—	%	—			—	%
Mandatory deemed repatriation of non-U.S. earnings	183			31.0	%	—			—	%	—			—	%
Other, net	(2		)	(0.4	)%	(6		)	(1.1	)%	(4		)	(0.6	)%
Provision (benefit) for income taxes	$	(4	)	(0.7	)%	$	171		30.4	%	$	158		25.5	%

⁽¹⁾ Excludes provisionally estimated net benefit from 2017 U.S. tax reform.

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)
	2017		2016		2015
U.S.	$	285	$	249	$	230
Non-U.S.	305		312		389
Total	$	590	$	561	$	619

Components of the Provision (benefit) for income taxes

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

(Millions of dollars)
	2017			2016			2015
Current income tax provision (benefit):
U.S.	$	157		$	(18	)	$	(21	)
Non-U.S.	102			111			109
State (U.S.)	1			—			2
	260			93			90
Deferred income tax provision (benefit):
U.S.	(239		)	90			45
Non-U.S.	(28		)	(15		)	21
State (U.S.)	3			3			2
	(264		)	78			68
Total Provision (benefit) for income taxes	$	(4	)	$	171		$	158

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)
	2017			2016
Assets:
Deferred and refundable income taxes	$	101		$	89
Liabilities:
Deferred income taxes and other liabilities	(579		)	(939		)
Deferred income taxes, net	$	(478	)	$	(850	)

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

(Millions of dollars)
	2017			2016
Deferred income tax assets:
Allowance for credit losses	$	96		$	148
Tax carryforwards	43			73
	139			221
Deferred income tax liabilities (primarily lease basis differences)	(441		)	(693		)
Valuation allowance for deferred income tax assets	(11		)	(10		)
Deferred income tax on translation adjustment	(165		)	(368		)
Deferred income taxes, net	$	(478	)	$	(850	)

Summary of net operating loss carryforwards

As of December 31, 2017, amounts and expiration dates of net operating loss (NOL) carryforwards in various U.S. state taxing jurisdictions were: 

(Millions of dollars)
2018		2019		2020		2021		2022-2037		Total
$	6	$	4	$	1	$	5	$	137	$	153

The gross deferred income tax asset associated with these NOL carryforwards is $12 million as of December 31, 2017, 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, 2017, amounts and expiration dates of NOL carryforwards in various non-U.S. taxing jurisdictions were: 

(Millions of dollars)
2018		2019		2020		2021		2022-2037		Unlimited		Total
$	—	$	—	$	—	$	26	$	45	$	53	$	124

Valuation allowances totaling $10 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)
	2017			2016
Reconciliation of unrecognized income tax benefits(1):
Balance at beginning of year	$	4		$	—
Additions for income tax positions related to current year	—			1
Additions for income tax positions related to prior year	—			3
Reductions for income tax positions related to settlements(2)	(4		)	—
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.