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Taxes | 12 Months Ended
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Dec. 31, 2017
Income Tax Disclosure [Abstract] |
Taxes | Taxes
Income Taxes | Year ended December 31 |
| 2017 |  |  |  | 2016 |  |  | 2015 |
Income tax expense (benefit) |  |  |  |  |  |
U.S. federal |  |  |  |  |  |
Current | $ | (382 | ) |  |  | $ | (623 | ) |  | $ | (817 | )
Deferred | (2,561 | ) |  |  | (1,558 | ) |  | (580 | )
State and local |  |  |  |  |  |
Current | (97 | ) |  |  | (15 | ) |  | (187 | )
Deferred | 66 |  |  |  | (121 | ) |  | (109 | )
Total United States | (2,974 | ) |  |  | (2,317 | ) |  | (1,693 | )
International |  |  |  |  |  |
Current | 3,634 |  |  |  | 2,744 |  |  | 2,997 |
Deferred | (708 | ) |  |  | (2,156 | ) |  | (1,172 | )
Total International | 2,926 |  |  |  | 588 |  |  | 1,825 |
Total income tax expense (benefit) | $ | (48 | ) |  |  | $ | (1,729 | ) |  | $ | 132 |
The reconciliation between the U.S. statutory federal income tax rate and the company’s effective income tax rate is detailed in the following table:
| 2017 |  |  |  | 2016 |  |  | 2015 |
Income (loss) before income taxes |  |  |  |  |  |
United States | $ | (441 | ) |  |  | $ | (4,317 | ) |  | $ | (2,877 | )
International | 9,662 |  |  |  | 2,157 |  |  | 7,719 |
Total income (loss) before income taxes | 9,221 |  |  |  | (2,160 | ) |  | 4,842 |
Theoretical tax (at U.S. statutory rate of 35%) | 3,227 |  |  |  | (756 | ) |  | 1,695 |
Effect of U.S. tax reform | (2,020 | ) |  |  | — |  |  | — |
Equity affiliate accounting effect | (1,373 | ) |  |  | (704 | ) |  | (1,286 | )
Effect of income taxes from international operations* | (130 | ) |  |  | 608 |  |  | 72 |
State and local taxes on income, net of U.S. federal income tax benefit | 39 |  |  |  | (44 | ) |  | (74 | )
Prior year tax adjustments, claims and settlements | (39 | ) |  |  | (349 | ) |  | 84 |
Tax credits | (199 | ) |  |  | (188 | ) |  | (35 | )
Other U.S.* | 447 |  |  |  | (296 | ) |  | (324 | )
Total income tax expense (benefit) | $ | (48 | ) |  |  | $ | (1,729 | ) |  | $ | 132 |
Effective income tax rate | (0.5 | )% |  |  | 80.0 | % |  | 2.7 | %
* Includes one-time tax costs (benefits) associated with changes in uncertain tax positions and valuation allowances. The 2017 decline in income tax benefit of $1,681, from a benefit of $1,729 in 2016 to a benefit of $48 in 2017, is a result of the year-over-year increase in total income before income tax expense, which is primarily due to effects of higher crude oil prices and gains on asset sales primarily in Indonesia and Canada. In addition, the tax benefit for the year includes a provisional benefit of $2,020 from U.S. tax reform, which primarily reflects the remeasurement of U.S. deferred tax assets and liabilities. The company’s effective tax rate changed from 80 percent in 2016 to (0.5) percent in 2017. The change in effective tax rate is primarily a 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 the 2017 impact of U.S. tax reform. As noted above, U.S. tax reform resulted in the remeasurement of U.S. deferred tax assets and liabilities. The final impact will not be known until the actual 2017 U.S. tax return is submitted in 2018, and this may result in a change to the provisional amounts that have been recognized. The company records its deferred taxes on a tax-jurisdiction basis. The reported deferred tax balances are composed of the following:
|  |  |  | At December 31 |
| 2017 |  |  |  | 2016 |
Deferred tax liabilities |  |  |  |
Properties, plant and equipment | $ | 19,869 |  |  |  | $ | 25,180 |
Investments and other | 4,796 |  |  |  | 5,222 |
Total deferred tax liabilities | 24,665 |  |  |  | 30,402 |
Deferred tax assets |  |  |  |
Foreign tax credits | (11,872 | ) |  |  | (10,976 | )
Asset retirement obligations/environmental reserves | (5,511 | ) |  |  | (6,251 | )
Employee benefits | (3,129 | ) |  |  | (4,392 | )
Deferred credits | (1,769 | ) |  |  | (1,950 | )
Tax loss carryforwards | (5,463 | ) |  |  | (6,030 | )
Other accrued liabilities | (842 | ) |  |  | (510 | )
Inventory | (336 | ) |  |  | (374 | )
Miscellaneous | (2,415 | ) |  |  | (3,121 | )
Total deferred tax assets | (31,337 | ) |  |  | (33,604 | )
Deferred tax assets valuation allowance | 16,574 |  |  |  | 16,069 |
Total deferred taxes, net | $ | 9,902 |  |  |  | $ | 12,867 |
Deferred tax liabilities at the end of 2017 decreased by approximately $5,700 from year-end 2016. The decrease was primarily related to property, plant and equipment temporary differences mainly due to the change in the enacted U.S. tax rate. Deferred tax assets decreased by approximately $2,300 in 2017. Decreases were mainly due to the change in the enacted U.S. tax rate and primarily impacted asset retirement obligations, employee benefits and tax loss carry forwards. The decrease was partially reduced by an increase in foreign tax credits arising from earnings in high-tax rate international jurisdictions, which was substantially offset by valuation allowances. The overall valuation allowance relates to deferred tax assets for U.S. foreign tax credit carryforwards, tax loss carryforwards and temporary differences. It reduces the deferred tax assets to amounts that are, in management’s assessment, more likely than not to be realized. At the end of 2017, the company had tax loss carryforwards of approximately $16,102 and tax credit carryforwards of approximately $1,379, primarily related to various international tax jurisdictions. Whereas some of these tax loss carryforwards do not have an expiration date, others expire at various times from 2018 through 2034. U.S. foreign tax credit carryforwards of $11,872 will expire between 2018 and 2027. At December 31, 2017 and 2016, deferred taxes were classified on the Consolidated Balance Sheet as follows:
| At December 31 |
| 2017 |  |  |  | 2016 |
Deferred charges and other assets | $ | (4,750 | ) |  |  | $ | (4,649 | )
Noncurrent deferred income taxes | 14,652 |  |  |  | 17,516 |
Total deferred income taxes, net | $ | 9,902 |  |  |  | $ | 12,867 |
Enactment of U.S. tax reform imposed a one-time U.S. federal tax on the deemed repatriation of unremitted earnings indefinitely reinvested abroad, which did not have a material impact on the company’s financial results. The indefinite reinvestment assertion continues to apply for the purpose of determining deferred tax liabilities for U.S. state and foreign withholding tax purposes. U.S. state and foreign withholding taxes are not accrued for unremitted earnings of international operations that have been or are intended to be reinvested indefinitely. Undistributed earnings of international consolidated subsidiaries and affiliates for which no deferred income tax provision has been made for possible future remittances totaled approximately $57,300 at December 31, 2017. This amount represents earnings reinvested as part of the company’s ongoing international business. It is not practicable to estimate the amount of state and foreign taxes that might be payable on the possible remittance of earnings that are intended to be reinvested indefinitely. The company does not anticipate incurring significant additional taxes on remittances of earnings that are not indefinitely reinvested. Uncertain Income Tax Positions The company recognizes a tax benefit in the financial statements for an uncertain tax position only if management’s assessment is that the position is “more likely than not” (i.e., a likelihood greater than 50 percent) to be allowed by the tax jurisdiction based solely on the technical merits of the position. The term “tax position” in the accounting standards for income taxes refers to a position in a previously filed tax return or a position expected to be taken in a future tax return that is reflected in measuring current or deferred income tax assets and liabilities for interim or annual periods. The following table indicates the changes to the company’s unrecognized tax benefits for the years ended December 31, 2017, 2016 and 2015. The term “unrecognized tax benefits” in the accounting standards for income taxes refers to the differences between a tax position taken or expected to be taken in a tax return and the benefit measured and recognized in the financial statements. Interest and penalties are not included.
| 2017 |  |  |  | 2016 |  |  | 2015 |
Balance at January 1 | $ | 3,031 |  |  |  | $ | 3,042 |  |  | $ | 3,552 |
Foreign currency effects | 43 |  |  |  | 1 |  |  | (27 | )
Additions based on tax positions taken in current year | 1,853 |  |  |  | 245 |  |  | 154 |
Additions for tax positions taken in prior years | 1,166 |  |  |  | 181 |  |  | 218 |
Reductions for tax positions taken in prior years | (90 | ) |  |  | (390 | ) |  | (678 | )
Settlements with taxing authorities in current year | (1,173 | ) |  |  | (36 | ) |  | (5 | )
Reductions as a result of a lapse of the applicable statute of limitations | (2 | ) |  |  | (12 | ) |  | (172 | )
Balance at December 31 | $ | 4,828 |  |  |  | $ | 3,031 |  |  | $ | 3,042 |
The increase in unrecognized tax benefits between December 31, 2016 and December 31, 2017 was primarily due to foreign tax credits associated with the deemed repatriation. The increase in unrecognized tax benefits related to these foreign tax credits had no impact on the effective tax rate since the change to the deferred tax asset was fully offset with a change to the valuation allowance. The resolution of numerous issues with various tax jurisdictions during the year also impacted the movement from December 31, 2016 and December 31, 2017. Approximately 81 percent of the $4,828 of unrecognized tax benefits at December 31, 2017, would have an impact on the effective tax rate if subsequently recognized. Certain of these unrecognized tax benefits relate to tax carryforwards that may require a full valuation allowance at the time of any such recognition. 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 December 31, 2017. For these jurisdictions, the latest years for which income tax examinations had been finalized were as follows: United States – 2011, Nigeria – 2000, Australia – 2006, Angola – 2016 and Kazakhstan – 2007. The company engages in ongoing discussions with tax authorities regarding the resolution of tax matters in the various jurisdictions. Both the outcome of 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 on 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. On April 21, 2017, an adverse decision was issued by the full Federal Court on Australia regarding the interest rate to be applied on certain Chevron intercompany loans. On August 14, 2017, an agreement was reached with the Australian Taxation Office to settle this dispute. Management believes the agreed terms to be a reasonable resolution of the dispute, which did not have a material impact on the 2017 results of the company. On the Consolidated Statement of Income, the company reports interest and penalties related to liabilities for uncertain tax positions as “Income tax expense.” As of December 31, 2017, accruals of $178 for anticipated interest and penalty obligations were included on the Consolidated Balance Sheet, compared with accruals of $424 as of year-end 2016. Income tax expense (benefit) associated with interest and penalties was $(161), $38 and $195 in 2017, 2016 and 2015, respectively.
Taxes Other Than on Income | Year ended December 31 |
| 2017 |  |  |  | 2016 |  |  | 2015 |
United States |  |  |  |  |  |
Excise and similar taxes on products and merchandise | $ | 4,398 |  |  |  | $ | 4,335 |  |  | $ | 4,426 |
Import duties and other levies | 11 |  |  |  | 9 |  |  | 4 |
Property and other miscellaneous taxes | 1,824 |  |  |  | 1,680 |  |  | 1,367 |
Payroll taxes | 241 |  |  |  | 252 |  |  | 270 |
Taxes on production | 206 |  |  |  | 159 |  |  | 157 |
Total United States | 6,680 |  |  |  | 6,435 |  |  | 6,224 |
International |  |  |  |  |  |
Excise and similar taxes on products and merchandise | 2,791 |  |  |  | 2,570 |  |  | 2,933 |
Import duties and other levies | 45 |  |  |  | 33 |  |  | 40 |
Property and other miscellaneous taxes | 2,563 |  |  |  | 2,379 |  |  | 2,548 |
Payroll taxes | 137 |  |  |  | 145 |  |  | 161 |
Taxes on production | 115 |  |  |  | 106 |  |  | 124 |
Total International | 5,651 |  |  |  | 5,233 |  |  | 5,806 |
Total taxes other than on income | $ | 12,331 |  |  |  | $ | 11,668 |  |  | $ | 12,030 |

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- 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. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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