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INCOME TAXES (Tables)
 12 Months Ended
Dec. 31, 2019
Income Tax Disclosure [Abstract]  
Income before income taxes and equity in affiliated companies' net earnings
Geographic sources of (losses) income before income taxes and equity in affiliated companies’ net earnings for the years ended December 31 consist of the following:
 
2019
 
2018
 
2017
U.S.
$
(287
)
 
$
390

 
$
20

Foreign
593

 
3,502

 
2,882

Total
$
306

 
$
3,892

 
$
2,902
Schedule of Benefit from (Provision for) income taxes
FCX’s (provision for) benefit from income taxes for the years ended December 31 consist of the following:
 
2019
 
2018
 
2017
 
Current income taxes:
 
 
 
 
 
 
Federal
$
(23
)
a,b 
$
46

a,c 
$
(3
)
 
State
3

 
1

 
(10
)
 
Foreign
(462
)
 
(1,445
)
c 
(1,426
)
 
Total current
(482
)
 
(1,398
)
 
(1,439
)
 
 
 
 
 
 
 
 
Deferred income taxes:
 
 
 
 
 
 
Federal
48

 
(106
)
 
64

 
State
8

 
(8
)
 
10

 
Foreign
(101
)
 
(102
)
 
89

 
Total deferred
(45
)
 
(216
)
 
163

 
 
 
 
 
 
 
 
Adjustments
12

 
504

d 
393

e 
Operating loss carryforwards
5

 
119

 
—

 
Provision for income taxes
$
(510
)
 
$
(991
)
 
$
(883
)
 

a.
As a result of the 2017 Tax Cuts and Jobs Act (the Act) guidance regarding a transition tax issued in 2018, FCX recognized a $29 million tax charge in 2018. Additional guidance released in 2019 resulted in a $29 million tax credit in 2019.
b.
Includes a tax charge of $53 million associated with the sale of FCX’s interest in the lower zone of the Timok exploration project in Serbia.
c.
In 2018, FCX completed its analysis of the Act and recognized benefits totaling $123 million ($76 million to the U.S. tax provision and $47 million to PT-FI’s tax provision) associated with alternative minimum tax (AMT) credit refunds.
d.
Represents net tax credits resulting from the reduction in PT-FI's statutory tax rates in accordance with its new special mining license (IUPK).
e.
Represents net tax credits associated with the Act, including $272 million for the reversal of valuation allowances associated with AMT credit refunds and $121 million for a decrease in corporate income tax rates.
Reconciliation of the U.S. federal statutory tax rate to effective income tax rate reconciliation of the U.S. federal statutory tax rate to FCX’s effective income tax rate for the years ended December 31 follows:
 
2019
 
2018
 
2017
 
Amount
 
Percent
 
Amount
 
Percent
 
Amount
 
Percent
U.S. federal statutory tax rate
$
(64
)
 
(21
)%
 
$
(817
)
 
(21
)%
 
$
(1,016
)
 
(35
)%
Valuation allowance
(149
)
a 
(49
)
 
129

a 
3

 
28

 
1

PT-FI historical contested tax disputes
(145
)
 
(47
)
 
—

 
—

 
—

 
—

Percentage depletion
118

 
39

 
141

 
4

 
227

 
8

Effect of foreign rates different than the U.S.
 
 
 
 
 
 
 
 
 
 
 
federal statutory rate
(64
)
 
(21
)
 
(494
)
 
(13
)
 
17

 
1

Withholding and other impacts on
 
 
 
 
 
 
 
 
 
 
 
foreign earnings
(55
)
 
(18
)
 
(232
)
 
(6
)
 
(216
)
 
(7
)
Adjustment to deferred taxes
(49
)
b 
(16
)
 
—

 
—

 
—

 
—

Non-deductible permanent differences
(47
)
 
(15
)
 
(25
)
 
(1
)
 
(31
)
 
(1
)
Uncertain tax positions
(47
)
 
(15
)
 
(7
)
 
—

 
(20
)
 
(1
)
U.S. tax reform
29

c 
9

 
94

c,d 
2

 
393

e 
14

Foreign tax credit limitation
(16
)
 
(5
)
 
(195
)
 
(5
)
 
(159
)
 
(5
)
State income taxes
16

 
6

 
7

 
1

 
(5
)
 
(1
)
Cerro Verde royalty disputef
2

 
1

 
(55
)
 
(1
)
 
(129
)
 
(5
)
Change in PT-FI tax rates
—

 
—

 
504

 
13

 
—

 
—

Timok exploration project sale
(15
)
 
(5
)
 
—

 
—

 
—

 
—

Other items, net
(24
)
 
(9
)
 
(41
)
 
(1
)
 
28

 
1

Provision for income taxes
$
(510
)
 
(166
)%
 
$
(991
)
 
(25
)%
 
$
(883
)
 
(30
)%
 
a.
Refer to “Valuation Allowance” below for discussion of changes.
b.
Represents net tax charges primarily to adjust deferred taxes on historical balance sheet items in accordance with tax accounting principles.
c.
As a result of the Act guidance regarding a transition tax issued in 2018, FCX recognized a $29 million tax charge in 2018. Additional guidance released in 2019 resulted in a $29 million tax credit in 2019.
d.
In 2018, FCX completed its analysis of the Act and recognized benefits totaling $123 million ($76 million to the U.S. tax provisions and $47 million to PT-FI’s tax provision) associated with AMT credit refunds.
e.
Represents net tax credits associated with the Act, including $272 million for the reversal of valuation allowances associated with AMT credit refunds and $121 million for a decrease in corporate income tax rates.
f.
Refer to Note 12 for further discussion of the Cerro Verde royalty dispute.

Components of deferred tax assets and liabilities

The components of deferred taxes follow:
 
December 31,
 
2019
 
2018
Deferred tax assets:
 
 
 
Foreign tax credits
$
1,716

 
$
1,814

Accrued expenses
1,108

 
1,069

Net operating losses
2,249

 
2,235

Employee benefit plans
198

 
204

Other
267

 
270

Deferred tax assets
5,538

 
5,592

Valuation allowances
(4,576
)
 
(4,507
)
Net deferred tax assets
962

 
1,085

 
 
 
 
Deferred tax liabilities:
 
 
 
Property, plant, equipment and mine development costs
(4,372
)
 
(4,405
)
Undistributed earnings
(639
)
 
(601
)
Other
(157
)
 
(107
)
Total deferred tax liabilities
(5,168
)
 
(5,113
)
Net deferred tax liabilities
$
(4,206
)
 
$
(4,028
)
Reserve for unrecognized tax benefits, interest and penalties

A summary of the activities associated with FCX’s reserve for unrecognized tax benefits for the years ended December 31 follows:
 
2019
 
2018
 
2017
Balance at beginning of year
$
404

 
$
390

 
$
101

Additions:
 
 
 
 
 
Prior year tax positions
73

 
100

 
302

Current year tax positions
11

 
14

 
6

Decreases:
 
 
 
 
 
Prior year tax positions
(75
)
 
(86
)
 
(1
)
Settlements with taxing authorities
(37
)
 
(9
)
 
(17
)
Lapse of statute of limitations
—

 
(5
)
 
(1
)
Balance at end of year
$
376

 
$
404

 
$
390
Summary of income tax examinations The tax years for FCX’s major tax jurisdictions that remain subject to examination are as follows:
Jurisdiction
 
Years Subject to Examination
 
Additional Open Years
U.S. Federal
 
N/A
 
2014-2019
Indonesia
 
2008, 2011-2017
 
2018-2019
Peru
 
2013-2015
 
2016-2019
Chile
 
2017-2018
 
2019

A summary of these assessments follows:
Tax Year
 
Tax Assessment
 
Penalty and Interest Assessment
 
Total
 
2003 to 2008
 
$
53

 
$
122

 
$
175

 
2009
 
56

 
52

 
108

 
2010
 
63

 
107

 
170

 
2011
 
49

 
65

 
114

 
2012
 
52

 
11

 
63

 
2014 to 2019
 
39

 
—

 
39

 
 
 
$
312

 
$
357

 
$
669

 

Excluding surface water and withholding tax assessments discussed below and the Indonesia government’s previous imposition of a 7.5 percent export duty that PT-FI paid under protest during the period April 2017 to December 21, 2018 (refer to Note 13), a summary of these assessments follows:
Tax Year
 
Tax Assessment
 
Interest Assessment
 
Total
2005
 
$
73

 
$
35

 
$
108

2007
 
48

 
23

 
71

2008, 2010 to 2011
 
55

 
31

 
86

2012
 
124

 
—

 
124

2013
 
154

 
74

 
228

2014
 
139

 
6

 
145

2015
 
159

 
—

 
159

2016
 
257

 
113

 
370

 
 
$
1,009

 
$
282

 
$
1,291