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Income taxes

9 Months Ended

Sep. 30, 2020

Our estimated annual effective tax rate is about 14%, which does not include discrete tax items. This differs from the 21% statutory corporate tax rate due to the effect of U.S. tax benefits.

Provision for income taxes is based on the following:


	For Three Months Ended									For Nine Months Ended
	September 30,									September 30,
	2020			2019			2020			2019
Taxes calculated using the estimated annual effective tax rate	$	231		$	257		$	561		$	715
Discrete tax items	3			(102)			(378)			(191)
Provision for income taxes	$	234		$	155		$	183		$	524

Actual effective tax rate	15		%	10		%	4		%	12		%

Our provision for income taxes for the first nine months of 2020 includes a $249 million discrete tax benefit in the second quarter for the settlement of a depreciation-related uncertain tax position. Accrued interest of $46 million related to this uncertain tax position was reversed in the second quarter and is included in OI&E.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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