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Income Taxes | 12 Months Ended
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Dec. 31, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES Our effective tax rate was (50.8)%, 50.6% and 14.3% for 2018, 2017 and 2016. The effective income tax rate for 2018 reflects the tax effect related to the transfer of intellectual properties between tax jurisdictions, the continuing impact of complying with the Tax Cuts and Jobs Act of 2017 (the Tax Act), and continued lower effective income tax rates as a result of our European operations. The effective income tax rate for 2017 reflects compliance with the Tax Act offset by lower effective income tax rates as a result of our European operations. The effective income tax rate for 2016 reflects lower effective income tax rates as a result of our European operations.
Effective Income Tax Rate Reconciliation
| 2018 |  | 2017 |  | 2016
United States federal statutory rate | 21.0 | % |  | 35.0 | % |  | 35.0 | %
United States state and local income taxes, less federal deduction | 0.4 |  |  | 1.2 |  |  | 1.7 |
Foreign income tax at rates other than 21% | (6.5 | ) |  | (21.0 | ) |  | (22.2 | )
Tax Cuts and Jobs Act of 2017 transition tax | 2.2 |  |  | 38.0 |  |  | — |
Tax Cuts and Jobs Act of 2017 deferred tax changes | (0.6 | ) |  | 2.3 |  |  | — |
Tax related to repatriation of foreign earnings | 0.5 |  |  | — |  |  | (0.3 | )
Intellectual property transfer | (63.8 | ) |  | — |  |  | — |
Other | (4.0 | ) |  | (4.9 | ) |  | 0.1 |
Effective income tax rate | (50.8 | )% |  | 50.6 | % |  | 14.3 | %
In December 2017 the Tax Act was signed into law in the United States. The law includes significant changes to the United States corporate income tax system, including a federal corporate rate reduction, limitations on the deductibility of certain expenses, and the transition of United States international taxation from a worldwide tax system to a territorial tax system. As part of the transition to a territorial tax system, the Tax Act requires taxpayers to calculate a one-time transition tax based on undistributed earnings of foreign subsidiaries. In 2017 and 2018, we recorded provisional amounts for certain enactment-date effects of the Tax Act by applying guidance in SAB 118 because we had not yet completed the enactment-date accounting for these effects. We applied the guidance of SAB 118 when accounting for the enactment date effects of the Tax Act in 2017 and throughout 2018. As of December 31, 2017, we had not completed our accounting for all of the enactment-date income tax effects of the Tax Act for the following aspects: remeasurement of deferred tax assets and liabilities, transition tax, and tax on global intangible low-taxed income (GILTI). Upon further analysis of the Tax Act and notices and regulations issued and proposed by the United States Department of Treasury and the Internal Revenue Service, we finalized our calculations and completed our accounting for the enactment-date income tax effects of the Tax Act in December 2018. We elected to pay our transition tax over the eight-year period provided by the Tax Act and adjusted our December 2017 provisional estimate. We adjusted our December 2017 transition tax provision by $51 which increased our effective income tax rate by 2.2%. We also adjusted our December 2017 provisional estimate for remeasuring our deferred tax assets and liabilities by $13. The deferred tax assets and liabilities adjustment decreased our effective income tax rate by 0.6%. The Tax Act subjects a United States shareholder to tax on GILTI earned by certain foreign subsidiaries. The FASB Staff Q&A, Topic 740, No. 5 states that an entity can make an accounting policy election to either recognize deferred taxes related to GILTI or to provide for the tax expense related to GILTI in the year the tax is incurred as a period expense only. We have elected to account for GILTI tax in the year the tax is incurred.
Earnings Before Income Taxes
| 2018 |  | 2017 |  | 2016
United States | $ | 509 |  |  | $ | 499 |  |  | $ | 542 |
International | 1,847 |  |  | 1,564 |  |  | 1,379 |
Total | $ | 2,356 |  |  | $ | 2,063 |  |  | $ | 1,921 |
Components of Income Tax Expense (Benefit)
Current income tax expense: | 2018 |  | 2017 |  | 2016
United States federal | $ | 178 |  |  | $ | 836 |  |  | $ | 94 |
United States state and local | 30 |  |  | 38 |  |  | 50 |
International | 177 |  |  | 133 |  |  | 176 |
Total current income tax expense | $ | 385 |  |  | $ | 1,007 |  |  | $ | 320 |
Deferred income tax (benefit) expense: |  |  |  |  |
United States federal | $ | (44 | ) |  | $ | 84 |  |  | $ | (17 | )
United States state and local | (20 | ) |  | (9 | ) |  | (12 | )
International | (1,518 | ) |  | (39 | ) |  | (17 | )
Total deferred income tax (benefit) expense | $ | (1,582 | ) |  | $ | 36 |  |  | $ | (46 | )
Total income tax (benefit) expense | $ | (1,197 | ) |  | $ | 1,043 |  |  | $ | 274 |
Interest and penalties included in other income (expense), net were expense of ($9), ($28) and ($1) in 2018, 2017 and 2016. The United States federal deferred income tax benefit (expense) includes the utilization of net operating loss carryforwards of $31, $32 and $28 in 2018, 2017 and 2016.
Deferred Income Tax Assets and Liabilities
Deferred income tax assets: | 2018 |  | 2017
Inventories | $ | 390 |  |  | $ | 480 |
Product-related liabilities | 60 |  |  | 34 |
Other accrued expenses | 222 |  |  | 204 |
Depreciation and amortization | 1,504 |  |  | — |
State income taxes | 70 |  |  | 46 |
Share-based compensation | 47 |  |  | 46 |
Net operating loss carryforwards | 134 |  |  | 52 |
Other | 177 |  |  | 105 |
Total deferred income tax assets | $ | 2,604 |  |  | $ | 967 |
Less valuation allowances | (66 | ) |  | (49 | )
Net deferred income tax assets | $ | 2,538 |  |  | $ | 918 |
Deferred income tax liabilities: |  |  |
Depreciation and amortization | $ | (865 | ) |  | $ | (598 | )
Undistributed earnings | (46 | ) |  | (81 | )
Other | (3 | ) |  | (3 | )
Total deferred income tax liabilities | $ | (914 | ) |  | $ | (682 | )
Net deferred income tax assets | $ | 1,624 |  |  | $ | 236 |
Reported as: |  |  |
Noncurrent deferred income tax assets | $ | 1,678 |  |  | $ | 283 |
Noncurrent liabilities—Other liabilities | (54 | ) |  | (47 | )
Total | $ | 1,624 |  |  | $ | 236 |
Accrued interest and penalties were $85 and $60 on December 31, 2018 and 2017, which were reported in current and non-current accrued expenses and other liabilities. Net operating loss carryforwards totaling $606 on December 31, 2018 are available to reduce future taxable earnings of certain domestic and foreign subsidiaries. United States loss carryforwards of $489 expire through 2028. International loss carryforwards of $117 began to expire in 2018; however, some have no expiration. Of these carryforwards, $56 are subject to a full valuation allowance. We also have a tax credit carryforward of $55 with $52 being subject to a full valuation allowance. The credits with a full valuation allowance have no expiration; however, we do not anticipate generating income tax in excess of the credits in the foreseeable future. We recorded a transition tax on undistributed foreign earnings as required by the Tax Act. No other provision was made for income taxes that may result from future remittances of the undistributed earnings of foreign subsidiaries that are determined to be indefinitely reinvested. Determination of the total amount of unrecognized deferred income tax on undistributed earnings of foreign subsidiaries is not practicable.
Uncertain Income Tax Positions
| 2018 |  | 2017
Beginning uncertain tax positions | $ | 540 |  |  | $ | 287 |
Increases related to current year income tax positions | 22 |  |  | 123 |
Increases related to prior year income tax positions | 25 |  |  | 131 |
Decreases related to prior year income tax positions: |  |  |
Settlements and resolutions of income tax audits | (37 | ) |  | (9 | )
Statute of limitations expirations | (14 | ) |  | (4 | )
Foreign currency translation | (8 | ) |  | 12 |
Ending uncertain tax positions | $ | 528 |  |  | $ | 540 |
Reported as: |  |  |
Noncurrent liabilities—Income taxes | 528 |  |  | 540 |
Total | $ | 528 |  |  | $ | 540 |
Our income tax expense would have been reduced by $521 and $232 on December 31, 2018 and 2017 had these uncertain income tax positions been favorably resolved. It is reasonably possible that the amount of unrecognized tax benefits will significantly change due to one or more of the following events in the next 12 months: expiring statutes, audit activity, tax payments, competent authority proceedings related to transfer pricing or final decisions in matters that are the subject of controversy in various taxing jurisdictions in which we operate, including inventory transfer pricing, cost sharing, product royalty and foreign branch arrangements. We are not able to reasonably estimate the amount or the future periods in which changes in unrecognized tax benefits may be resolved. Interest and penalties incurred associated with uncertain tax positions are included in other income (expense), net. In the normal course of business, income tax authorities in various income tax jurisdictions both within the United States and internationally conduct routine audits of our income tax returns filed in prior years. These audits are generally designed to determine if individual income tax authorities are in agreement with our interpretations of complex income tax regulations regarding the allocation of income to the various income tax jurisdictions. Income tax years are open from 2012 through the current year for the United States federal jurisdiction. Income tax years open for our other major jurisdictions range from 2005 through the current year.

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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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