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Income Taxes | 9 Months Ended
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Sep. 30, 2018
Income Tax Disclosure [Abstract] |
Income taxes | 3. Income taxes Our Provision for income taxes was $354 million and $504 million for the third quarters of 2018 and 2017, respectively, and $842 million and $1.19 billion for the first nine months of 2018 and 2017, respectively. Our estimated annual effective tax rate is about 20 percent, which does not include discrete tax items. This differs from the 21 percent statutory corporate tax rate due to the effect of U.S. tax benefits, partially offset by a 2018 transitional tax effect. We have included the provisions of the Tax Act in the calculation of our estimated annual effective tax rate. The estimates could change when additional information on implementation of the provisions of the Tax Act becomes available. The Tax Act was enacted on December 22, 2017. We have not completed our accounting for the tax effects of enactment of the Tax Act. We have made reasonable estimates of the tax on indefinitely reinvested earnings and the effects on our existing deferred tax balances. This resulted in additional tax expense in 2017 of $773 million, consisting of $714 million related to the tax on indefinitely reinvested earnings and $59 million related to remeasuring our existing deferred tax balances. The tax on indefinitely reinvested earnings is based on our non-U.S. post-1986 earnings and profits that we previously deferred from U.S. income taxes. We have not yet completed our calculation of the total post-1986 earnings and profits for these non-U.S. subsidiaries. In the first quarter of 2018, we reduced the amount of income tax expense recorded for indefinitely reinvested earnings to $669 million from $714 million recorded in 2017. In the second quarter of 2018, we reduced the amount of income tax expense recorded for the effects of the Tax Act on our deferred tax balances to $50 million from $59 million recorded in 2017. In the third quarter of 2018, we increased the amount of income tax expense recorded for indefinitely reinvested earnings to $678 million from $669 million, and we increased the amount of income tax expense recorded on our deferred tax balances to $51 million from $50 million. These adjustments did not affect the estimated annual effective tax rate for 2018. The calculations of the tax effect of the Tax Act for both indefinitely reinvested earnings and deferred tax assets and liabilities will be completed in the fourth quarter of 2018. Provision for income taxes is based on the following:
| For Three Months Ended |  |  | For Nine Months Ended |
| September 30, |  |  | September 30, |
| 2018 |  |  | 2017 |  |  | 2018 |  |  | 2017 |
Taxes calculated using the estimated annual effective tax rate | $ |  | 367 |  |  | $ |  | 542 |  |  | $ |  | 1,027 |  |  | $ |  | 1,382 |
Discrete tax items |  |  | (13 | ) |  |  |  | (38 | ) |  |  |  | (185 | ) |  |  |  | (190 | )
Provision for income taxes | $ |  | 354 |  |  | $ |  | 504 |  |  | $ |  | 842 |  |  | $ |  | 1,192 |
Actual effective tax rate |  |  | 18 | % |  |  |  | 28 | % |  |  |  | 16 | % |  |  |  | 26 | %

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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