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Income Taxes | 12 Months Ended
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Dec. 31, 2016
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The components of income before income taxes are as follows:
|  | 2016 |  |  | 2015 |  |  | 2014 |
United States |  | $ | 2,630 |  |  | $ | 2,879 |  |  | $ | 2,557 |
Foreign |  | 5,923 |  |  | 4,563 |  |  | 6,200 |
|  | $ | 8,553 |  |  | $ | 7,442 |  |  | $ | 8,757 |
The provision for income taxes consisted of the following:
| 2016 |  |  | 2015 |  |  | 2014 |
Current: | U.S. Federal | $ | 1,219 |  |  | $ | 1,143 |  |  | $ | 1,364 |
| Foreign | 824 |  |  | 773 |  |  | 851 |
| State | 77 |  |  | 65 |  |  | 210 |
|  | 2,120 |  |  | 1,981 |  |  | 2,425 |
Deferred: | U.S. Federal | 109 |  |  | (14 | ) |  | (33 | )
| Foreign | (33 | ) |  | (32 | ) |  | (60 | )
| State | (22 | ) |  | 6 |  |  | (133 | )
|  | 54 |  |  | (40 | ) |  | (226 | )
|  | $ | 2,174 |  |  | $ | 1,941 |  |  | $ | 2,199 |
A reconciliation of the U.S. Federal statutory tax rate to our annual tax rate is as follows:
| 2016 |  |  | 2015 |  |  | 2014 |
U.S. Federal statutory tax rate | 35.0 | % |  | 35.0 | % |  | 35.0 | %
State income tax, net of U.S. Federal tax benefit | 0.4 |  |  | 0.6 |  |  | 0.6 |
Lower taxes on foreign results | (8.0 | ) |  | (10.5 | ) |  | (8.6 | )
Impact of Venezuela impairment charges | — |  |  | 6.4 |  |  | — |
Tax settlements | — |  |  | (3.1 | ) |  | — |
Other, net | (2.0 | ) |  | (2.3 | ) |  | (1.9 | )
Annual tax rate | 25.4 | % |  | 26.1 | % |  | 25.1 | %
Deferred tax liabilities and assets are comprised of the following:
Deferred tax liabilities | 2016 |  |  | 2015 |
Debt guarantee of wholly-owned subsidiary | $ | 839 |  |  | $ | 842 |
Property, plant and equipment | 1,967 |  |  | 2,023 |
Intangible assets other than nondeductible goodwill | 4,124 |  |  | 3,920 |
Other | 245 |  |  | 299 |
Gross deferred tax liabilities | 7,175 |  |  | 7,084 |
Deferred tax assets |  |  |
Net carryforwards | 1,255 |  |  | 1,279 |
Share-based compensation | 219 |  |  | 240 |
Retiree medical benefits | 316 |  |  | 343 |
Other employee-related benefits | 614 |  |  | 547 |
Pension benefits | 419 |  |  | 424 |
Deductible state tax and interest benefits | 189 |  |  | 186 |
Other | 839 |  |  | 933 |
Gross deferred tax assets | 3,851 |  |  | 3,952 |
Valuation allowances | (1,110 | ) |  | (1,136 | )
Deferred tax assets, net | 2,741 |  |  | 2,816 |
Net deferred tax liabilities | $ | 4,434 |  |  | $ | 4,268 |
Deferred taxes are included within the following balance sheet accounts:
| 2016 |  |  | 2015 |
Assets: |  |  |
Prepaid expenses and other current assets | $ | 639 |  |  | $ | 691 |
Liabilities: |  |  |
Deferred income taxes | $ | 5,073 |  |  | $ | 4,959 |
A summary of our valuation allowance activity is as follows:
| 2016 |  |  | 2015 |  |  | 2014 |
Balance, beginning of year | $ | 1,136 |  |  | $ | 1,230 |  |  | $ | 1,360 |
Provision/(Benefit) | 13 |  |  | (26 | ) |  | (25 | )
Other deductions | (39 | ) |  | (68 | ) |  | (105 | )
Balance, end of year | $ | 1,110 |  |  | $ | 1,136 |  |  | $ | 1,230 |
For additional unaudited information on our income tax policies, including our reserves for income taxes, see “Our Critical Accounting Policies” in Management’s Discussion and Analysis of Financial Condition and Results of Operations. Reserves A number of years may elapse before a particular matter, for which we have established a reserve, is audited and finally resolved. The number of years with open tax audits varies depending on the tax jurisdiction. Our major taxing jurisdictions and the related open tax audits are as follows:
Jurisdiction |  | Years Open to Audit |  | Years Currently Under Audit
United States |  | 2010, 2012-2015 |  | 2012-2013
Mexico |  | 2011-2015 |  | 2014
United Kingdom |  | 2014-2015 |  | None
Canada (Domestic) |  | 2011-2015 |  | 2011-2014
Canada (International) |  | 2009-2015 |  | 2010-2014
Russia |  | 2012-2015 |  | 2013-2015
While it is often difficult to predict the final outcome or the timing of resolution of any particular tax matter, we believe that our reserves reflect the probable outcome of known tax contingencies. We adjust these reserves, as well as the related interest, in light of changing facts and circumstances. Settlement of any particular issue would usually require the use of cash. Favorable resolution would be recognized as a reduction to our annual tax rate in the year of resolution. For further unaudited information on the impact of the resolution of open tax issues, see “Other Consolidated Results” in Management’s Discussion and Analysis of Financial Condition and Results of Operations. In 2015, we reached an agreement with the IRS resolving substantially all open matters related to the audits of taxable years 2010 and 2011 (two immaterial matters were still open as of December 31, 2016). The agreement resulted in a 2015 non-cash tax benefit totaling $230 million. As of December 31, 2016, the total gross amount of reserves for income taxes, reported in other liabilities, was $1,885 million. We accrue interest related to reserves for income taxes in our provision for income taxes and any associated penalties are recorded in selling, general and administrative expenses. The gross amount of interest accrued, reported in other liabilities, was $193 million as of December 31, 2016, of which $61 million of expense was recognized in 2016. The gross amount of interest accrued, reported in other liabilities, was $144 million as of December 26, 2015, of which $14 million of expense was recognized in 2015. A rollforward of our reserves for all federal, state and foreign tax jurisdictions, is as follows:
| 2016 |  |  | 2015 |
Balance, beginning of year | $ | 1,547 |  |  | $ | 1,587 |
Additions for tax positions related to the current year | 349 |  |  | 248 |
Additions for tax positions from prior years | 139 |  |  | 122 |
Reductions for tax positions from prior years | (70 | ) |  | (261 | )
Settlement payments | (26 | ) |  | (78 | )
Statutes of limitations expiration | (27 | ) |  | (34 | )
Translation and other | (27 | ) |  | (37 | )
Balance, end of year | $ | 1,885 |  |  | $ | 1,547 |
Carryforwards and Allowances Operating loss carryforwards totaling $11.3 billion at year-end 2016 are being carried forward in a number of foreign and state jurisdictions where we are permitted to use tax operating losses from prior periods to reduce future taxable income. These operating losses will expire as follows: $0.1 billion in 2017, $9.9 billion between 2018 and 2036 and $1.3 billion may be carried forward indefinitely. We establish valuation allowances for our deferred tax assets if, based on the available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Undistributed International Earnings As of December 31, 2016, we had approximately $44.9 billion of undistributed international earnings. We intend to continue to reinvest earnings outside the United States for the foreseeable future and, therefore, have not recognized any U.S. tax expense on these earnings. It is not practicable for us to determine the amount of unrecognized U.S. tax expense on these reinvested international earnings.

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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 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32537-109319 + Details
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