INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income before income taxes and equity in affiliated companies' net earnings

Geographic sources of income (losses) before income taxes and equity in affiliated companies’ net earnings for the years ended December 31 consist of the following:

	2021		2020		2019
U.S.	$	1,861	$	(40)	$	(287)
Foreign	5,798		1,837		593
Total	$	7,659	$	1,797	$	306

Schedule of Benefit from (Provision for) income taxes

FCX’s provision for income taxes for the years ended December 31 consists of the following:

	2021			2020			2019
Current income taxes:
Federal	$	—		$	53	a	$	(23)	b,c
State	(11)			(1)			3
Foreign	(2,460)			(816)		d	(462)
Total current	(2,471)			(764)			(482)
Deferred income taxes:
Federal	(184)			3			48
State	(4)			5			8
Foreign	(23)			(306)			(101)
Total deferred	(211)			(298)			(45)
Adjustments	193		e	37			12
Operating loss carryforwards	190			81			5
Provision for income taxes	$	(2,299)		$	(944)		$	(510)

a.Includes a credit of $53 million associated with the reversal of the charge discussed in footnote c below.

b.As a result of the 2017 Tax Cuts and Jobs Act (the Act) guidance released in 2019, FCX recorded a $29 million credit.

c.Includes a charge of $53 million associated with the sale of FCX’s interest in the lower zone of the Timok exploration project.

d.Includes a charge of $135 million associated with the gain on sale of Kisanfu.

e.Primarily reflects the release of valuation allowances on NOLs at PT Rio Tinto (see below).

Reconciliation of the U.S. federal statutory tax rate to effective income tax rate

A reconciliation of the U.S. federal statutory tax rate to FCX’s effective income tax rate for the years ended December 31 follows:

	2021				2020				2019
	Amount		Percent		Amount		Percent		Amount			Percent
U.S. federal statutory tax rate	$	(1,608)	(21)	%	$	(377)	(21)	%	$	(64)		(21)	%
Valuation allowancea	221		3		(210)		(12)		(149)			(49)
PT Rio Tinto valuation allowancea	189		2		—		—		—			—
PT-FI historical tax disputesb	(193)		(3)		(8)		—		(145)			(47)
Percentage depletion	221		3		104		6		118			39
Effect of foreign rates different than the U.S.
federal statutory rate	(328)		(4)		(109)		(6)		(64)			(21)
Withholding and other impacts on
foreign earnings	(678)		(9)		(193)		(11)		(55)			(18)
Adjustment to deferred taxes	—		—		—		—		(49)		c	(16)
Non-deductible permanent differences	—		—		—		—		(47)			(15)
Uncertain tax positions	13		—		(15)		(1)		(47)			(15)
U.S. tax reform	—		—		—		—		29		d	9
Foreign tax credit limitation	(11)		—		28		2		(16)			(5)
State income taxes	(14)		—		(2)		—		16			6
Cerro Verde historical tax disputese	—		—		(39)		(2)		2			1
Timok exploration project sale	—		—		53		3		(15)			(5)
Sale of Kisanfu	—		—		(135)		(8)		—			—
Other items, net	(111)		(1)		(41)		(3)		(24)			(9)
Provision for income taxes	$	(2,299)	(30)	%	$	(944)	(53)	%	$	(510)		(166)	%

a.Refer to “Valuation Allowance” below.

b.Refer to “Income Tax Matters” below.

c.Represents net charges primarily to adjust deferred taxes on historical balance sheet items in accordance with tax accounting principles.

d.As a result of the Act guidance released in 2019, FCX recorded a $29 million credit.

e.Refer to Note 12 for further discussion.

Components of deferred tax assets and liabilities

The components of deferred taxes follow:

	December 31,
	2021		2020
Deferred tax assets:
Foreign tax credits	$	1,536	$	1,641
Accrued expenses	1,193		1,194
Net operating losses (NOLs)	2,220		2,443
Employee benefit plans	105		177
Other	252		227
Deferred tax assets	5,306		5,682
Valuation allowances	(4,087)		(4,732)
Net deferred tax assets	1,219		950
Deferred tax liabilities:
Property, plant, equipment and mine development costs	(4,492)		(4,489)
Undistributed earnings	(807)		(694)
Other	(152)		(175)
Total deferred tax liabilities	(5,451)		(5,358)
Net deferred tax liabilities	$	(4,232)	$	(4,408)

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. The balance at year-end December 31, 2019, was revised by $115 million and the balance at year-end December 31, 2020, was revised by $179 million to adjust for amounts paid on accruals not yet settled.

	2021		2020		2019
Balance at beginning of year	$	474	$	491	$	494
Additions:
Prior year tax positions	330		56		86
Current year tax positions	71		60		11
Decreases:
Prior year tax positions	(30)		(82)		(75)
Settlements with taxing authorities	(37)		(51)		(25)
Balance at end of year	$	808	$	474	$	491

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	2017-2018	2014-2016, 2019-2021
Indonesia	2011-2018	2020-2021
Peru	2016	2017-2021
Chile	2020	2018-2019, 2021

A summary of these assessments follows:

Tax Year	Tax Assessment		Penalties and Interest		Total
2003 to 2008	$	48	$	130	$	178
2009	56		52		108
2010	54		122		176
2011 and 2012	41		72		113
2013	48		65		113
2014 to 2016	5		28		33
	$	252	$	469	$	721

Excluding surface water 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, including potential penalties follows:

Tax Year	Tax Assessment		Penalties and Interest		Total
2005	$	62	$	30	$	92
2007	48		23		71
2008 and 2011	28		36		64
2012 and 2013	41		43		84
2014 and 2015	121		—		121
2016	257		483		740
2017 and 2019	48		47		95
	$	605	$	662	$	1,267