Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

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)
	2019					2018					2017
Taxes computed at U.S. statutory rates	$	132		21.0	%	$	91		21.0	%	$	206		35.0	%
(Decreases) increases in taxes resulting from:
State Income Tax, net of Federal Tax	1			0.2	%	1			0.2	%	2			0.3	%
Subsidiaries' results subject to tax rates other than U.S. statutory rates	32			5.1	%	28			6.5	%	(31		)	(5.3	)%
Income from non-U.S. subsidiaries taxed at U.S. statutory rates, net of foreign tax credits(1)	2			0.3	%	—			—	%	(16		)	(2.7	)%
Foreign currency translation taxed at non-U.S. subsidiaries	(1		)	(0.2	)%	(1		)	(0.2	)%	(12		)	(2.0	)%
U.S. deferred tax rate change	—			—	%	(7		)	(1.6	)%	(334		)	(56.6	)%
Mandatory deemed repatriation of non-U.S. earnings	—			—	%	(5		)	(1.2	)%	183			31.0	%
Prior year tax adjustments	9			1.4	%	11			2.5	%	—			—	%
Valuation allowances	21			3.4	%	(7		)	(1.6	)%	—			—	%
Other, net	—			—	%	(3		)	(0.7	)%	(2		)	(0.4	)%
Provision (benefit) for income taxes	$	196		31.2	%	$	108		24.9	%	$	(4	)	(0.7	)%

⁽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)
	2019		2018		2017
U.S.	$	257	$	213	$	285
Non-U.S.	371		220		305
Total	$	628	$	433	$	590

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)
	2019			2018			2017
Current income tax provision (benefit):
U.S.	$	13		$	(46	)	$	157
Non-U.S.	161			112			102
State (U.S.)	2			1			1
	176			67			260
Deferred income tax provision (benefit):
U.S.	32			67			(239		)
Non-U.S.	(11		)	(26		)	(28		)
State (U.S.)	(1		)	—			3
	20			41			(264		)
Total Provision (benefit) for income taxes	$	196		$	108		$	(4	)

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)
	2019			2018
Assets:
Other assets	$	118		$	108
Liabilities:
Other liabilities	(680		)	(653		)
Deferred income taxes, net	$	(562	)	$	(545	)

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

(Millions of dollars)
	2019			2018
Deferred income tax assets:
Allowance for credit losses	$	124		$	111
Tax carryforwards	39			44
	163			155
Deferred income tax liabilities (primarily lease basis differences)	(508		)	(508		)
Valuation allowance for deferred income tax assets	(23		)	(2		)
Deferred income tax on translation adjustment	(194		)	(190		)
Deferred income taxes, net	$	(562	)	$	(545	)

Summary of net operating loss carryforwards

As of December 31, 2019, amounts and expiration dates of net operating loss (NOL) carryforwards in various U.S. state taxing jurisdictions were: 

(Millions of dollars)
2020		2021		2022		2023		2024-2039		Unlimited		Total
$	—	$	5	$	5	$	6	$	93	$	5	$	114

The gross deferred income tax asset associated with these NOL carryforwards is $9 million as of December 31, 2019, partially offset by a valuation allowance of $2 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.

At December 31, 2019, approximately $6 million of U.S. foreign tax credits were available for carryforward. These credits expire in 2028.

As of December 31, 2019, amounts and expiration dates of NOL carryforwards in various non-U.S. taxing jurisdictions were: 

(Millions of dollars)
2020		2021		2022		2023		2024-2034		Unlimited		Total
$	—	$	9	$	2	$	6	$	6	$	121	$	144

Valuation allowances of $21 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)
	2019		2018		2017
Reconciliation of unrecognized income tax benefits(1):
Balance at beginning of year	$	119	$	—	$	4
Additions for income tax positions related to current year	—		119		—
Reductions for income tax positions related to settlements(2)	—		—		(4		)
Balance at end of year	$	119	$	119	$	—
Amount that, if recognized, would impact the effective tax rate	$	119	$	119	$	—

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

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