

Income Taxes	Year ended December 31
	2019			2018			2017
Income tax expense (benefit)
U.S. federal
Current	$	(73	)	$	(181	)	$	(382	)
Deferred	(1,074		)	738			(2,561		)
State and local
Current	153			183			(97		)
Deferred	(172		)	(16		)	66
Total United States	(1,166		)	724			(2,974		)
International
Current	4,577			4,662			3,634
Deferred	(720		)	329			(708		)
Total International	3,857			4,991			2,926
Total income tax expense (benefit)	$	2,691		$	5,715		$	(48	)



	2019			2018			2017
Income (loss) before income taxes
United States	$	(5,483	)	$	4,730		$	(441	)
International	11,019			15,845			9,662
Total income (loss) before income taxes	5,536			20,575			9,221
Theoretical tax (at U.S. statutory rate of 21% - 2019 & 2018, 35% - 2017)	1,163			4,321			3,227
Effect of U.S. tax reform	3			(26		)	(2,020		)
Equity affiliate accounting effect	(687		)	(1,526		)	(1,373		)
Effect of income taxes from international operations^*	2,196			3,132			(130		)
State and local taxes on income, net of U.S. federal income tax benefit	(18		)	162			39
Prior year tax adjustments, claims and settlements	192			(51		)	(39		)
Tax credits	(18		)	(163		)	(199		)
Other U.S.^*	(140		)	(134		)	447
Total income tax expense (benefit)	$	2,691		$	5,715		$	(48	)

Effective income tax rate	48.6		%	27.8		%	(0.5		)%

^*Includes one-time tax costs (benefits) associated with changes in uncertain tax positions and valuation allowances.

The 2019 decrease in income tax expense of $3,024 is a result of the year-over-year decrease in total income before income tax expense, which is primarily due to the impairment and project write-off charges in 2019. The company’s effective tax rate changed from 28 percent in 2018 to 49 percent in 2019. The change in effective tax rate is a consequence of mix effect resulting from the absolute level of earnings or losses and whether they arose in higher or lower tax rate jurisdictions, including a tax charge related to cash repatriation and the impact of asset sales and corporate rate reductions.



				At December 31
	2019			2018
Deferred tax liabilities
Properties, plant and equipment	$	17,251		$	20,159
Investments and other*	5,372			4,943
Total deferred tax liabilities	22,623			25,102
Deferred tax assets
Foreign tax credits	(9,840		)	(10,536		)
Asset retirement obligations/environmental reserves	(4,329		)	(5,328		)
Employee benefits	(3,454		)	(2,787		)
Deferred credits	(1,083		)	(1,373		)
Tax loss carryforwards	(5,262		)	(4,948		)
Other accrued liabilities	(441		)	(595		)
Inventory	(662		)	(505		)
Operating leases *	(1,211		)	—
Miscellaneous	(2,796		)	(3,481		)
Total deferred tax assets	(29,078		)	(29,553		)
Deferred tax assets valuation allowance	15,965			15,973
Total deferred taxes, net	$	9,510		$	11,522

* Beginning in 2019, the deferred taxes that are the consequence of ASU 2016-02 are included in the “Investments and other” and “Operating lease” balances above. Refer to Note 5, “Lease Commitments” beginning on page 62.

Deferred tax liabilities at the end of 2019 decreased by approximately $2,500 from year-end 2018. The decrease was primarily related to property, plant and equipment temporary differences due to upstream asset impairments. Deferred tax assets were essentially unchanged from year-end 2018.

The overall valuation allowance relates to deferred tax assets for U.S. foreign tax credit carryforwards, tax loss carryforwards and temporary differences. The valuation allowance reduces the deferred tax assets to amounts that are, in management’s assessment, more likely than not to be realized. At the end of 2019, the company had tax loss carryforwards of approximately $13,419 and tax credit carryforwards of approximately $1,058, 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 2020 through 2034. U.S. foreign tax credit carryforwards of $9,840 will expire between 2020 and 2029.

Income taxes are not accrued for unremitted earnings of international operations that have been or are intended to be reinvested indefinitely. 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 $52,500 at December 31, 2019. 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, 2019, 2018 and 2017. 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.



	2019			2018			2017
Balance at January 1	$	5,070		$	4,828		$	3,031
Foreign currency effects	1			(6		)	43
Additions based on tax positions taken in current year	94			239			1,853
Additions for tax positions taken in prior years	313			153			1,166
Reductions for tax positions taken in prior years	(194		)	(131		)	(90		)
Settlements with taxing authorities in current year	(78		)	(13		)	(1,173		)
Reductions as a result of a lapse of the applicable statute of limitations	(219		)	—			(2		)
Balance at December 31	$	4,987		$	5,070		$	4,828

Approximately 81 percent of the $4,987 of unrecognized tax benefits at December 31, 2019, 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, 2019. For these jurisdictions, the latest years for which income tax examinations had been finalized were as follows: United States – 2013, Nigeria – 2000, 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 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 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, 2019, accruals of $30 for anticipated interest and penalty obligations were included on the Consolidated Balance Sheet, compared with accruals of $33 as of year-end 2018. Income tax expense (benefit) associated with interest and penalties was $(3), $8 and $(161) in 2019, 2018 and 2017, respectively.



Taxes Other Than on Income
	Year ended December 31
	2019			2018			2017
United States
Excise and similar taxes on products and merchandise*	$	4,990		$	4,830		$	4,398
Consumer excise taxes collected on behalf of third parties*	(4,990		)	(4,830		)	—
Import duties and other levies	2			15			11
Property and other miscellaneous taxes	1,785			1,577			1,824
Payroll taxes	254			246			241
Taxes on production	355			325			206
Total United States	2,396			2,163			6,680
International
Excise and similar taxes on products and merchandise*	2,801			3,031			2,791
Consumer excise taxes collected on behalf of third parties*	(2,801		)	(3,031		)	—
Import duties and other levies	35			37			45
Property and other miscellaneous taxes	1,435			2,370			2,563
Payroll taxes	125			132			137
Taxes on production	145			165			115
Total International	1,740			2,704			5,651
Total taxes other than on income	$	4,136		$	4,867		$	12,331