Income Taxes (Tables)

12 Months Ended

Dec. 31, 2021

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)
	2021				2020				2019
Taxes computed at U.S. statutory rates	$	146	21.0	%	$	91	21.0	%	$	132	21.0	%
(Decreases) increases in taxes resulting from:
State Income Tax, net of Federal Tax	3		0.4	%	(1)		(0.2)	%	1		0.2	%
Non-U.S. Subsidiaries taxed at other than the U.S. rate	22		3.2	%	26		6.0	%	34		5.4	%
Prior year tax adjustments	—		—	%	3		0.7	%	9		1.4	%
Valuation allowances	5		0.7	%	10		2.3	%	21		3.4	%
Other, net	2		0.3	%	(3)		(0.7)	%	(1)		(0.2)	%
Provision for income taxes	$	178	25.6	%	$	126	29.1	%	$	196	31.2	%

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)
	2021		2020		2019
U.S.	$	288	$	99	$	257
Non-U.S.	407		335		371
Total	$	695	$	434	$	628

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)
	2021		2020		2019
Current income tax provision:
U.S.	$	101	$	46	$	13
Non-U.S.	162		80		161
State (U.S.)	5		1		2
	268		127		176
Deferred income tax provision:
U.S.	(56)		(45)		32
Non-U.S.	(33)		46		(11)
State (U.S.)	(1)		(2)		(1)
	(90)		(1)		20
Total Provision for income taxes	$	178	$	126	$	196

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)
	2021		2020
Assets:
Other assets	$	107	$	102
Liabilities:
Other liabilities	(592)		(629)
Deferred income taxes, net	$	(485)	$	(527)

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

(Millions of dollars)
	2021		2020
Deferred income tax assets:
Allowance for credit losses	$	90	$	100
Tax carryforwards	78		61
	168		161
Deferred income tax liabilities (primarily lease basis differences)	(425)		(508)
Valuation allowance for deferred income tax assets	(39)		(33)
Deferred income tax on translation adjustment	(189)		(147)
Deferred income taxes, net	$	(485)	$	(527)

Summary of net operating loss carryforwards

As of December 31, 2021, amounts and expiration dates of net operating loss (NOL) carryforwards in various U.S. state taxing jurisdictions were: 

(Millions of dollars)
2022		2023		2024		2025		2026-2041		Unlimited		Total
$	5	$	6	$	—	$	—	$	77	$	5	$	93

The gross deferred income tax asset associated with these NOL carryforwards is $7 million as of December 31, 2021, 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.

At December 31, 2021, approximately $1 million of U.S. foreign tax credits from 2017 were available for carryforward. These credits expire in 2028.

As of December 31, 2021, amounts and expiration dates of NOL carryforwards in various non-U.S. taxing jurisdictions were: 

(Millions of dollars)
2022		2023		2024		2025		2026-2032		Unlimited		Total
$	—	$	2	$	3	$	1	$	32	$	284	$	322

Valuation allowances of $38 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)
	2021		2020		2019
Reconciliation of unrecognized income tax benefits(1):
Balance at beginning of year	$	119	$	119	$	119
Additions for income tax positions related to current year	2		—		—
Additions for income tax positions related to prior year	10		—		—
Balance at end of year	$	131	$	119	$	119
Amount that, if recognized, would impact the effective tax rate	$	131	$	119	$	119

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