INCOME TAXES

The benefit or provision for income taxes is comprised of the following for the years ended December 31:



	2015			2014			2013
Current:
U.S.	$	(55	)	$	365		$	159
Foreign	225			601			452
Total current	170			966			611
Deferred:
U.S.	(762		)	(52		)	(54		)
Foreign	(47		)	(18		)	55
Total deferred	(809		)	(70		)	1
(Benefit) provision for income taxes	$	(639	)	$	896		$	612

The geographic sources of loss or income before income taxes are as follows for the years ended December 31:



	2015			2014		2013
U.S.	$	(2,288	)	$	920	$	512
Foreign	(325		)	1,707		1,203
(Loss) income before income taxes	$	(2,613	)	$	2,627	$	1,715

The benefit or provision for income taxes differs from the amount computed by applying the U.S. statutory income tax rate to the loss or income before income taxes for the reasons set forth below for the years ended December 31:



	2015		2014		2013
U.S. statutory income tax rate	35.0	%	35.0	%	35.0	%
Effect of foreign operations	(1.5	)	(5.3	)	(8.7	)
Change in valuation allowances related to foreign losses	(7.3	)	4.0		8.9
Adjustments of prior years’ tax positions	(1.5	)	1.2		0.9
State income taxes - net of U.S. tax benefit	1.4		0.9		0.8
Impact of reorganization of certain foreign subsidiaries	—		—		(1.0	)
Other - net	(1.6	)	(1.7	)	(0.2	)
Total effective tax rate	24.5	%	34.1	%	35.7	%

During the fourth quarter of 2013, we recognized a net tax benefit of $18 million as a result of the reorganization of certain of our foreign subsidiaries. This included a $360 million tax benefit resulting from the reversal of a deferred tax liability related to our decision to indefinitely reinvest the earnings of certain foreign subsidiaries which was made in conjunction with the reorganization that occurred during the fourth quarter of 2013. Due to the fact that these undistributed foreign earnings are no longer a source of future income against which the foreign tax credits will be utilized, we also recognized a tax charge of $342 million to record a valuation allowance against certain foreign tax credit carryforwards.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, as well as operating loss and tax credit carryforwards.

The tax effects of our temporary differences and carryforwards are as follows at December 31:



	2015			2014
Deferred tax assets:
Receivables	$	84		$	65
Inventory	253			376
Employee benefits	143			106
Other accrued expenses	141			173
Operating loss carryforwards	1,153			493
Tax credit carryforwards	458			481
Other	112			104
Subtotal	2,344			1,798
Valuation allowances	(1,210		)	(1,051		)
Total	1,134			747
Deferred tax liabilities:
Goodwill and other intangibles	272			334
Property	47			459
Undistributed earnings of foreign subsidiaries	21			26
Other	35			16
Total	375			835
Net deferred tax asset (liability)	$	759		$	(88	)

We record a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of the deferred tax assets depends on the ability to generate sufficient taxable income of the appropriate character in the future and in the appropriate taxing jurisdictions. At December 31, 2015, valuation allowances totaled $1,210 million consisting of $672 million for operating loss carryforwards, $425 million for foreign tax credit carryforwards, and $113 million for other deferred tax assets in various jurisdictions. There are $481 million of deferred tax assets related to operating loss carryforwards without a valuation allowance as we expect that the deferred tax assets will be realized within the carryforward period. The majority of these deferred tax assets will expire in varying amounts over the next twenty years.

We have provided relevant U.S. and foreign taxes for the anticipated repatriation of certain earnings of our foreign subsidiaries. We consider the undistributed earnings of our foreign subsidiaries above the amount for which taxes have already been provided to be indefinitely reinvested, as we have no current intention to repatriate these earnings. As of December 31, 2015, the cumulative amount of earnings upon which the U.S. income taxes have not been provided is approximately $5.6 billion. These additional foreign earnings could become subject to additional tax, if remitted, or deemed remitted, as a dividend. Computation of the potential deferred tax liability associated with these undistributed earnings and any other basis differences, is not practicable.

At December 31, 2015, we had approximately $126 million of foreign tax credits which may be carried forward indefinitely under applicable foreign law, and $310 million of foreign tax credits and $22 million of other credits which expire in 2016 through 2035 under U.S. tax law.

At December 31, 2015, we had $312 million of tax liabilities for total gross unrecognized tax benefits related to uncertain tax positions, which includes liabilities for interest and penalties of $30 million and $21 million, respectively. If we were to prevail on all uncertain tax positions, the net effect would be an increase to our income tax benefit of approximately $289 million. The remaining approximately $23 million is offset by deferred tax assets that represent tax benefits that would be received in different taxing jurisdictions in the event that we did not prevail on all uncertain tax positions.

The following table presents the changes in our gross unrecognized tax benefits and associated interest and penalties included in the consolidated balance sheets.



	Gross Unrecognized Tax Benefits, Excluding Interest and Penalties				Interest and Penalties			Total Gross Unrecognized Tax Benefits
Balance at December 31, 2012		$	196		$	71			$	267
Increase (decrease) in prior year tax positions		20			(2		)		18
Increase in current year tax positions		44			1				45
Decrease related to settlements with taxing authorities		(15		)	(4		)		(19		)
Decrease related to lapse of statute of limitations		(17		)	(10		)		(27		)
Decrease due to effects of foreign currency translation		—			(2		)		(2		)
Balance at December 31, 2013		228			54				282
(Decrease) increase in prior year tax positions		(7		)	1				(6		)
Increase in current year tax positions		39			2				41
Decrease related to settlements with taxing authorities		(5		)	(1		)		(6		)
Decrease related to lapse of statute of limitations		(6		)	(3		)		(9		)
Decrease due to effects of foreign currency translation		(7		)	(4		)		(11		)
Balance at December 31, 2014		242			49				291
Increase in prior year tax positions		19			15				34
Increase in current year tax positions		26			1				27
Decrease related to settlements with taxing authorities		(8		)	(2		)		(10		)
Decrease related to lapse of statute of limitations		(11		)	(7		)		(18		)
Decrease due to effects of foreign currency translation		(8		)	(4		)		(12		)
Balance at December 31, 2015		$	260		$	52			$	312

It is expected that the amount of unrecognized tax benefits will change in the next twelve months due to expiring statutes, audit activity, tax payments, competent authority proceedings related to transfer pricing or final decisions in matters that are the subject of litigation in various taxing jurisdictions in which we operate. At December 31, 2015, we had approximately $80 million of tax liabilities, net of $13 million of tax assets, related to uncertain tax positions, each of which are individually insignificant, and each of which are reasonably possible of being settled within the next twelve months.

At December 31, 2015, approximately $219 million of tax liabilities for total gross unrecognized tax benefits were included in the noncurrent portion of our income tax liabilities, for which the settlement period cannot be determined; however, it is not expected to be within the next twelve months.

We operate in more than 80 countries and are subject to income taxes in most taxing jurisdictions in which we operate. The following table summarizes the earliest tax years that remain subject to examination by the major taxing jurisdictions in which we operate. In addition to the U.S., we include foreign jurisdictions that we project to have the highest tax liability for 2016.



Jurisdiction	Earliest Open Tax Period	Jurisdiction	Earliest Open Tax Period
Argentina	2008	Norway	2005
Ecuador	2012	Saudi Arabia	2004
Netherlands	2010	U.S.	2010