INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2022

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:

	2022		2021		2020
U.S.	$	840	$	1,861	$	(40)
Foreign	5,875		5,798		1,837
Total	$	6,715	$	7,659	$	1,797

Schedule of Benefit from (Provision for) income taxes

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

	2022		2021			2020
Current income taxes:
Federal	$	—	$	—		$	53	a
State	1		(11)			(1)
Foreign	(2,232)		(2,460)			(816)		b
Total current	(2,231)		(2,471)			(764)
Deferred income taxes:
Federal	(149)		(184)			3
State	(6)		(4)			5
Foreign	(144)		(23)			(306)
Total deferred	(299)		(211)			(298)
Adjustments	1		193		c	37
Operating loss carryforwards	262		190			81
Provision for income taxes	$	(2,267)	$	(2,299)		$	(944)

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

b.Includes a charge of $135 million associated with the gain on sale of FCX’s interest in the Kisanfu undeveloped project.

c.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:

	2022				2021				2020
	Amount		%		Amount		%		Amount		%
U.S. federal statutory tax rate	$	(1,410)	(21)	%	$	(1,608)	(21)	%	$	(377)	(21)	%
Withholding and other impacts on
foreign earnings	(673)		(10)		(678)		(9)		(193)		(11)
Effect of foreign rates different than the U.S.
federal statutory rate	(314)		(5)		(328)		(4)		(109)		(6)
Percentage depletion	189		3		221		3		104		6
Foreign tax credit limitation	(28)		(1)		(11)		—		28		2
Uncertain tax positions	(17)		—		13		—		(15)		(1)
PT-FI historical tax disputesa	(8)		—		(193)		(3)		(8)		—
Valuation allowanceb	6		—		221		3		(210)		(12)
State income taxes	(4)		—		(14)		—		(2)		—
PT Rio Tinto valuation allowanceb	—		—		189		2		—		—
Sale of Kisanfu	—		—		—		—		(135)		(8)
Timok exploration project sale	—		—		—		—		53		3
Cerro Verde historical tax disputes	—		—		—		—		(39)		(2)
Other items, net	(8)		—		(111)		(1)		(41)		(3)
Provision for income taxes	$	(2,267)	(34)	%	$	(2,299)	(30)	%	$	(944)	(53)	%

a.Refer to “Indonesia Tax Matters” below.

b.Refer to “Valuation Allowances” below.

Components of deferred tax assets and liabilities

The components of deferred taxes follow:

	December 31,
	2022		2021
Deferred tax assets:
Foreign tax credits	$	1,514	$	1,536
NOLs	1,923		2,220
Accrued expenses	1,303		1,193
Employee benefit plans	99		105
Other	230		252
Deferred tax assets	5,069		5,306
Valuation allowances	(3,985)		(4,087)
Net deferred tax assets	1,084		1,219
Deferred tax liabilities:
Property, plant, equipment and mine development costs	(4,330)		(4,492)
Undistributed earnings	(810)		(807)
Other	(211)		(152)
Total deferred tax liabilities	(5,351)		(5,451)
Net deferred tax liabilities	$	(4,267)	$	(4,232)

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.

	2022		2021		2020
Balance at beginning of year	$	808	$	474	$	491
Additions:
Prior year tax positions	26		330		56
Current year tax positions	25		71		60
Decreases:
Prior year tax positions	(12)		(30)		(82)
Settlements with taxing authorities	(37)		(37)		(51)
Balance at end of year	$	810	$	808	$	474

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, 2019-2022
Indonesia	2012-2017	2020-2022
Peru	-	2017-2022
Chile	2020-2021	2019,2022

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		125		179
2011 and 2012	42		73		115
2013	48		66		114
2014 to 2017	73		30		103
	$	321	$	476	$	797

Excluding surface water tax assessments discussed below and the Indonesia government’s previous imposition of a 7.5% 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	$	29	$	91
2007	45		22		67
2012 and 2013	41		41		82
2014 and 2015	108		—		108
2016	257		336		593
2017	7		2		9
	$	520	$	430	$	950