NOTE 10	DOMESTIC AND FOREIGN INCOME TAXES

The domestic and foreign components of income from continuing operations before domestic and foreign income taxes were as follows:

For the years ended December 31, (in millions)	Domestic		Foreign		Total
2015	$	(5,810)	$	(3,666)	$	(9,476	)

2014	$	(732)	$	2,273	$	1,541

2013	$	3,399	$	4,747	$	8,146

The provisions (credits) for domestic and foreign income taxes on continuing operations consisted of the following:

For the years ended December 31, (in millions)	United States Federal		State and Local		Foreign		Total
2015
Current	$	(810)	$	(31)	$	883	$	42
Deferred	(1,146)		(83)		(143)		(1,372		)

	$	(1,956)	$	(114)	$	740	$	(1,330	)

2014
Current	$	870	$	81	$	1,912	$	2,863
Deferred	(1,037)		(71)		(70)		(1,178		)

	$	(167)	$	10	$	1,842	$	1,685

2013
Current	$	113	$	17	$	2,170	$	2,300
Deferred	883		48		(17)		914

	$	996	$	65	$	2,153	$	3,214

The following reconciliation of the United States federal statutory income tax rate to Occidental’s worldwide effective tax rate on income from continuing operations is stated as a percentage of pre-tax income:

For the years ended December 31,	2015	2014	2013
United States federal statutory tax rate	35%	35%	35	%
Other than temporary loss on available for sale investment in California Resources stock	(1)	12	—
Operations outside the United States	(21)	65	5
State income taxes, net of federal benefit	1	1	1
Other	—	(4)	(1	)

Worldwide effective tax rate	14%	109%	40	%

The tax effects of temporary differences resulting in deferred income taxes at December 31, 2015 and 2014 were as follows:

	2015				2014
Tax effects of temporary differences (in millions)	Deferred Tax Assets		Deferred Tax Liabilities		Deferred Tax Assets		Deferred Tax Liabilities
Property, plant and equipment differences	$	—	$	3,232	$	—	$	4,081
Equity investments, partnerships and foreign subsidiaries	—		12		—		—
Environmental reserves	136		—		123		—
Postretirement benefit accruals	346		—		379		—
Deferred compensation and benefits	179		—		208		—
Asset retirement obligations	372		—		307		—
Foreign tax credit carryforwards	2,034		—		1,765		—
Federal benefit of state income taxes	11		—		85		—
All other	677		—		274		221

Subtotal	3,755		3,244		3,141		4,302
Valuation allowance	(1,834)		—		(1,744)		—

Total deferred taxes	$	1,921	$	3,244	$	1,397	$	4,302

The current portion of total deferred tax assets was $110 million as of December 31, 2014 which was reported in other current assets. Total deferred tax assets were $1.9 billion and $1.4 billion as of December 31, 2015 and 2014, respectively, the noncurrent portion of which is netted against deferred tax liabilities. Occidental expects to realize the recorded deferred tax assets, net of any allowances, through future operating income and reversal of temporary differences. The reduction in net deferred tax liabilities from 2014 to 2015 was primarily due to asset impairments.

Occidental had, as of December 31, 2015, foreign tax credit carryforward of $2.0 billion, which expire in varying amounts through 2025, and various state operating loss carryforwards, which have varying carryforward periods through 2025. Occidental’s valuation allowance provides for substantially all of the foreign tax credit and state operating loss carryforwards.

A deferred tax liability has not been recognized for temporary differences related to unremitted earnings of certain consolidated foreign subsidiaries aggregating approximately $9.9 billion, net of foreign taxes, at December 31, 2015, as it is Occidental’s intention, generally, to reinvest such earnings permanently. If the earnings of these foreign subsidiaries were not indefinitely reinvested, an additional deferred tax liability of approximately $115 million would be required, assuming utilization of available foreign tax credits.

Discontinued operations include income tax charges of $1 million, $454 million, and $550 million in 2015, 2014, and 2013 respectively.

Additional paid-in capital was credited zero in 2015, $4 million in 2014 and $6 million in 2013 for an excess tax benefit from the exercise of certain stock-based compensation awards.

As of December 31, 2015, Occidental had liabilities for unrecognized tax benefits of approximately $22 million included in deferred credits and other liabilities – other, all of which, if subsequently recognized, would favorably affect Occidental’s effective tax rate.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

For the years ended December 31, (in millions)	2015		2014
Balance at January 1,	$	61	$	61
Reductions based on tax positions related to prior years and settlements	(39)		—

Balance at December 31,	$	22	$	61

Management believes it is unlikely that Occidental’s liabilities for unrecognized tax benefits related to existing matters would increase or decrease within the next 12 months by a material amount. Occidental cannot reasonably estimate a range of potential changes in such benefits due to the unresolved nature of the various audits.

Occidental is subject to audit by various tax authorities in varying periods. See Note 9 for a discussion of these matters.

Occidental records estimated potential interest and penalties related to liabilities for unrecognized tax benefits in the provisions for domestic and foreign income taxes and these amounts were not material for the years ended December 31, 2015, 2014 and 2013.