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Income Taxes
9 Months Ended
Sep. 30, 2020
Income Tax Disclosure [Abstract]  
Income Taxes Income TaxesThe income tax expense decreased between quarterly periods from $1.47 billion in 2019 to $165 million in 2020. The company's income before income tax expense decreased $4.09 billion from $4.05 billion in 2019 to a loss of $44 million in 2020, primarily due to the decrease in crude prices and production. The company’s effective tax rate changed between quarterly periods from 36 percent in 2019 to negative 375 percent in 2020.
The change in the effective tax rate is primarily due to the one-time tax charge in an international location and the consequence of the mix effect resulting from the absolute level of earnings or losses and whether they arose in higher or lower tax rate jurisdictions.
The income tax expense decreased between the nine-month periods from a charge of $4.43 billion in 2019 to a benefit of $1.59 billion in 2020. This decrease is a direct result of the company’s income before income tax expense decreasing $20.44 billion, from $13.94 billion in 2019 to a loss of $6.50 billion in 2020. The decrease in income is primarily due to the reduction in prices and production, impairments and other corporate charges. The company’s effective tax rate changed between nine-month periods from 32 percent in 2019 to 24 percent in 2020. The reduction in the effective tax rate is primarily due to the consequence of the mix effect resulting from the absolute level of earnings or losses and whether they arose in higher or lower tax rate jurisdictions and is also due to the impact of tax benefits for releasing the reserve on an uncertain tax position, valuation allowance release and a tax rate change.
Tax positions for Chevron and its subsidiaries and affiliates are subject to income tax audits by many tax jurisdictions throughout the world. For the company’s major tax jurisdictions, examinations of tax returns for certain prior tax years had not been completed as of September 30, 2020. For these jurisdictions, the latest years for which income tax examinations had been finalized were as follows: United States — 2013, Nigeria — 2007, Australia — 2009 and Kazakhstan — 2012.
The company engages in ongoing discussions with tax authorities regarding the resolution of tax matters in the various jurisdictions. Both the outcomes for these tax matters and the timing of resolution and/or closure of the tax audits are highly uncertain. However, it is reasonably possible that developments regarding tax matters in certain tax jurisdictions may result in significant increases or decreases in the company’s total unrecognized tax benefits within the next 12 months. Given the number of years that still remain subject to examination and the number of matters being examined in the various tax jurisdictions, the company is unable to estimate the range of possible adjustments to the balance of unrecognized tax benefits.