Income Taxes (Tables)

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

Components of Income Tax Expense

The provision for income taxes by taxing jurisdiction and by significant components consisted of the following:

($ in millions)	2018			2017			2016
Current
U.S. federal		$7			$179			($251	)
U.S. state and local	4			49			(12		)
Foreign	297			349			306
Total current income tax expense		$308			$577			$43
Deferred
U.S. federal		$44			$107			$173
U.S. state and local	7			(16		)	(10		)
Foreign	(6		)	(53		)	8
Total deferred income tax expense		$45			$38			$171
Total income tax expense		$353			$615			$214

Reconciliation of Statutory U.S. Corporate Federal Income Tax Rate to Effective Income Tax Rate

A reconciliation of the statutory U.S. corporate federal income tax rate to the Company’s effective tax rate follows:

	2018		2017		2016
U.S. federal income tax rate	21.0	%	35.0	%	35.0	%
Changes in rate due to:
U.S. tax cost - Tax Cuts & Jobs Act	(2.5	)	11.0		—
U.S./foreign tax differential	3.3		(9.3	)	(17.7	)
U.S. current tax benefit on foreign exchange realization	—		(4.9	)	(3.0	)
U.S. tax incentives	(1.0	)	(2.3	)	(3.7	)
U.S. tax (benefit) cost on foreign dividends	(0.4	)	(1.9	)	0.4
U.S. state and local taxes	0.5		1.1		(1.8	)
U.S. deferred tax benefit on foreign income	—		(0.6	)	(3.1	)
Asbestos charge	—		—		19.1
Other	—		2.6		2.3
Effective income tax rate	20.9	%	30.7	%	27.5	%

Net deferred income tax assets and liabilities

($ in millions)	2018			2017
Deferred income tax assets related to
Employee benefits		$366			$399
Contingent and accrued liabilities	149			164
Operating loss and other carry-forwards	251			221
Inventories	7			6
Property	48			51
Other	82			135
Valuation allowance	(164		)	(173		)
Total		$739			$803
Deferred income tax liabilities related to
Property		$310			$314
Intangibles	545			578
Employee benefits	46			11
Derivatives	1			1
Undistributed foreign earnings	5			24
Other	9			20
Total		$916			$948
Deferred income tax liabilities – net		($177	)		($145	)

Summary of Operating Loss Carryforwards

($ in millions)	2018		2017		Expiration
Available net operating loss carryforwards:
Indefinite expiration		$462		$447	NA
Definite expiration	796		247		2019 - 2038
Total		$1,258		$694	NA
Net operating loss carryforwards, tax effected		$192		$210	NA
Income tax credit carryforwards		$61		$9	2019 - 2038

Unrecognized Tax Benefits

A reconciliation of the total amounts of unrecognized tax benefits (excluding interest and penalties) as of December 31 follows:

($ in millions)	2018			2017			2016
January 1		$148			$94			$82
Current year tax positions - additions	36			37			25
Prior year tax positions - additions	17			26			8
Prior year tax positions - reductions	(6		)	—			(11		)
Statute of limitations expirations	(9		)	(8		)	(8		)
Settlements	(15		)	(10		)	—
Foreign currency translation	(5		)	9			(2		)
December 31		$166			$148			$94

Interest and penalties

($ in millions)	2018		2017		2016
Accrued interest and penalties related to unrecognized tax benefits		$16		$15		$9
Loss recognized in income tax expense related to interest and penalties		$2		$4		$1