INCOME TAXES

6 Months Ended

Jun. 30, 2021

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The following table summarizes our income tax expense:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(in millions, except percentages)	2021			2020			2021			2020
Income (loss) before income taxes	$	1,817		$	(2,973)		$	4,081		$	(970)
Income tax expense	$	(300)		$	(373)		$	(842)		$	(838)
Effective tax rate	16.5		%	(12.5)		%	20.6		%	(86.4)		%

Our effective income tax rate of 16.5% for the three months ended June 30, 2021 is lower than the U.S. federal statutory rate of 21% primarily due to discrete deferred tax benefits related to an intra-entity transfer of intangible assets and the donation of certain equity securities at fair value to the Foundation, partially offset by unfavorable changes in the fair value of our equity investment in Galapagos that are non-deductible for income tax purposes.

Our effective income tax rate of 20.6% for the six months ended June 30, 2021 is lower than the U.S. federal statutory rate of 21% primarily due to net discrete tax benefits related to settlements with tax authorities, in addition to the above mentioned items for the three months ended June 30, 2021.

Our effective income tax rate of (12.5)% and (86.4)% for the three and six months ended June 30, 2020, respectively, differed from the U.S. federal statutory rate of 21% primarily due to a non-deductible $4.5 billion IPR&D charge recorded in connection with our second quarter 2020 acquisition of Forty Seven.

We are currently under examination by the U.S. Internal Revenue Service for the tax years from 2016 to 2018 and by various state and foreign jurisdictions. There are differing interpretations of tax laws and regulations, and as a result, significant disputes may arise with these tax authorities involving issues of the timing and amount of deductions and allocations of income among various tax jurisdictions. We regularly evaluate our exposures associated with our tax filing positions to determine our assessment of unrecognized tax benefits in accordance with the income tax guidance which clarifies the accounting for uncertainty in income taxes.