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Income Taxes | 12 Months Ended
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Dec. 31, 2019
Income Tax Disclosure [Abstract] |
Income taxes | Income taxes Income before income taxes is comprised of the following components:
| For Years Ended December 31, |  |  |  |
| 2019 |  | 2018 |  | 2017
U.S. | $ | 4,915 |  |  | $ | 5,672 |  |  | $ | 5,130 |
Non-U.S. | 813 |  |  | 1,014 |  |  | 950 |
Total | $ | 5,728 |  |  | $ | 6,686 |  |  | $ | 6,080 |
Provision for income taxes is comprised of the following components:
| For Years Ended December 31, |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| 2019 |  |  |  |  |  | 2018 |  |  |  |  |  | 2017 |  |  |  |
| Current |  | Deferred |  | Total |  | Current |  | Deferred |  | Total |  | Current |  | Deferred |  | Total
U.S. federal | $ | 483 |  |  | $ | 25 |  |  | $ | 508 |  |  | $ | 979 |  |  | $ | (98) |  |  | $ | 881 |  |  | $ | 2,101 |  |  | $ | 51 |  |  | $ | 2,152 |
Non-U.S. | 135 |  |  | 56 |  |  | 191 |  |  | 225 |  |  | (8) |  |  | 217 |  |  | 173 |  |  | 61 |  |  | 234 |
U.S. state | 12 |  |  | — |  |  | 12 |  |  | 7 |  |  | 1 |  |  | 8 |  |  | 12 |  |  | — |  |  | 12 |
Total | $ | 630 |  |  | $ | 81 |  |  | $ | 711 |  |  | $ | 1,211 |  |  | $ | (105) |  |  | $ | 1,106 |  |  | $ | 2,286 |  |  | $ | 112 |  |  | $ | 2,398 |
Principal reconciling items from the U.S. statutory income tax rate to the effective tax rate (provision for income taxes as a percentage of income before income taxes) are as follows:
| For Years Ended December 31, |  |  |  |
| 2019 |  | 2018 |  | 2017
U.S. statutory income tax rate | 21.0 | % |  | 21.0 | % |  | 35.0 | %
U.S. tax benefit for foreign derived intangible income | (4.9) |  |  | (5.3) |  |  | — |
U.S. excess tax benefit for stock compensation | (3.1) |  |  | (2.0) |  |  | (4.1) |
U.S. R&D tax credit | (1.4) |  |  | (1.3) |  |  | (1.1) |
Non-U.S. effective tax rates | 0.3 |  |  | 0.1 |  |  | (2.5) |
U.S. Tax Act transitional non-cash expense | — |  |  | 4.2 |  |  | — |
U.S. Tax Act enactment-date effects and measurement period adjustments | — |  |  | (0.7) |  |  | 12.7 |
U.S. tax benefit for manufacturing | — |  |  | — |  |  | (1.6) |
Other | 0.5 |  |  | 0.5 |  |  | 1.0 |
Effective tax rate | 12.4 | % |  | 16.5 | % |  | 39.4 | %
The U.S. Tax Cuts and Jobs Act (the Tax Act) was enacted on December 22, 2017. The Tax Act reduces the U.S. statutory income tax rate from 35% to 21% and requires companies to pay a one-time tax on indefinitely reinvested earnings of certain non-U.S. subsidiaries that were previously tax deferred. We applied the guidance in Staff Accounting Bulletin No. 118 when accounting for the enactment-date effects of the Tax Act in 2017 and throughout 2018. As of December 31, 2018, we completed our accounting for the enactment-date income tax effects of the Tax Act. We booked a provisional amount of $773 million in 2017 and reduced our provisional amount by $44 million in 2018, for a net of $729 million. The earnings represented by non-cash operating assets, such as fixed assets and inventory, will continue to be permanently reinvested outside the United States. Provisions of the Tax Act, such as the one-time tax on indefinitely reinvested earnings and the global intangible low-taxed income (GILTI) tax for years beginning in 2018, eliminate any additional U.S. taxation resulting from repatriation of earnings of non-U.S. subsidiaries to the United States. Consequently, no U.S. tax provision has been made for the future remittance of these earnings. However, withholding or distribution taxes in certain non-U.S. jurisdictions will be incurred upon repatriation of available cash to the United States. A provision has been made for deferred taxes on these undistributed earnings to the extent that repatriation of the available cash to the United States is expected to result in a tax liability. As of December 31, 2019, we have no basis differences that would result in material unrecognized deferred tax liabilities. We have made an allowable policy election to account for the effects of GILTI as a component of income tax expense in the period in which the tax is incurred. The primary components of deferred tax assets and liabilities are as follows:
| December 31, |  |
| 2019 |  | 2018
Deferred tax assets: |  |  |
Deferred loss and tax credit carryforwards | $ | 213 |  |  | $ | 247 |
Accrued expenses | 113 |  |  | 129 |
Stock compensation | 109 |  |  | 122 |
Inventories and related reserves | 109 |  |  | 107 |
Retirement costs for defined benefit and retiree health care | 49 |  |  | 80 |
Total deferred tax assets, before valuation allowance | 593 |  |  | 685 |
Valuation allowance | (180) |  |  | (172) |
Total deferred tax assets, after valuation allowance | 413 |  |  | 513 |
Deferred tax liabilities: |  |  |
Property, plant and equipment | (95) |  |  | (10) |
Acquisition-related intangibles and fair-value adjustments | (82) |  |  | (142) |
International earnings | (62) |  |  | (43) |
Other | (55) |  |  | (65) |
Total deferred tax liabilities | (294) |  |  | (260) |
Net deferred tax asset | $ | 119 |  |  | $ | 253 |
The deferred tax assets and liabilities based on tax jurisdictions are presented on our Consolidated Balance Sheets as follows:
| December 31, |  |
| 2019 |  | 2018
Deferred tax assets | $ | 197 |  |  | $ | 295 |
Deferred tax liabilities | (78) |  |  | (42) |
Net deferred tax asset | $ | 119 |  |  | $ | 253 |
We make an ongoing assessment regarding the realization of U.S. and non-U.S. deferred tax assets. This assessment is based on our evaluation of relevant criteria, including the existence of deferred tax liabilities that can be used to absorb deferred tax assets, taxable income in prior carryback years and expectations for future taxable income. Valuation allowances increased by $8 million, $7 million and $37 million in 2019, 2018 and 2017, respectively. These changes had no impact to net income in 2019 or 2018. We have U.S. and non-U.S. tax loss carryforwards of approximately $6 million, none of which will expire before the year 2029. Cash payments made for income taxes, net of refunds, were $570 million, $705 million and $1.80 billion in 2019, 2018 and 2017, respectively. Uncertain tax positions We operate in a number of tax jurisdictions, and our income tax returns are subject to examination by tax authorities in those jurisdictions who may challenge any item on these tax returns. Because the matters challenged by authorities are typically complex, their ultimate outcome is uncertain. Before any benefit can be recorded in our financial statements, we must determine that it is “more likely than not” that a tax position will be sustained by the appropriate tax authorities. We recognize accrued interest related to uncertain tax positions and penalties as components of OI&E. The changes in the total amounts of uncertain tax positions are as follows:
| 2019 |  | 2018 |  | 2017
Balance, January 1 | $ | 286 |  |  | $ | 300 |  |  | $ | 243 |
Additions based on tax positions related to the current year | 3 |  |  | 3 |  |  | 17 |
Additions for tax positions of prior years | 63 |  |  | 1 |  |  | 42 |
Reductions for tax positions of prior years | (41) |  |  | — |  |  | (1) |
Settlements with tax authorities | (8) |  |  | (18) |  |  | (1) |
Balance, December 31 | $ | 303 |  |  | $ | 286 |  |  | $ | 300 |
Interest income (expense) recognized in the year ended December 31 | $ | 9 |  |  | $ | (15) |  |  | $ | (19) |
Interest payable as of December 31 | $ | 44 |  |  | $ | 49 |  |  | $ | 38 |
The liability for uncertain tax positions is a component of other long-term liabilities on our Consolidated Balance Sheets. All of the $303 million and $286 million liabilities for uncertain tax positions as of December 31, 2019 and 2018, respectively, are comprised of positions that, if recognized, would lower the effective tax rate. If these liabilities are ultimately realized, $2 million and $30 million of existing deferred tax assets in 2019 and 2018, respectively, would also be realized. It is reasonably possible that the $303 million liability as of December 31, 2019, could decrease by up to $249 million in 2020 for the resolution of a tax depreciation-related position. As of December 31, 2019, the statute of limitations remains open for U.S. federal tax returns for 2013 and following years. Audit activities related to our U.S. federal tax returns through 2012 have been completed except for certain pending tax treaty procedures for relief from double taxation. The procedures for relief from double taxation pertain to U.S. federal tax returns for the years 2007 through 2012. The audit of the U.S. federal tax returns for 2013 through 2015 is underway. In non-U.S. jurisdictions, the years open to audit represent the years still open under the statute of limitations. With respect to major jurisdictions outside the United States, our subsidiaries are no longer subject to income tax audits for years before 2007.

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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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