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Income Taxes | 9 Months Ended
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Sep. 30, 2019
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES Our effective income tax rate of 22.2% for the three months ended September 30, 2019 differed from the U.S. federal statutory rate of 21% primarily due to the tax on Global Intangible Low-Taxed Income tax, state taxes and our portion of the non-tax deductible Branded Prescription Drug (BPD) fee, partially offset by research tax credits and earnings from non-U.S. subsidiaries that operate in jurisdictions with lower tax rates than the United States. Our effective income tax rate of 17.9% for the nine months ended September 30, 2019 differed from the U.S. federal statutory rate of 21% primarily due to $119 million of tax benefits related to settlements with taxing authorities during the three months ended March 31, 2019, research tax credits and earnings from non-U.S. subsidiaries that operate in jurisdictions with lower tax rates than the United States, partially offset by the Global Intangible Low-Taxed Income tax, state taxes and our portion of the non-tax deductible BPD fee. Our effective income tax rate of 21.2% for the three months ended September 30, 2018 differed from the U.S. federal statutory rate of 21% primarily due to the Global Intangible Low-Taxed Income tax and state taxes, partially offset by earnings from non-U.S. subsidiaries that operate in jurisdictions with lower tax rates than the United States. Our effective income tax rate of 19.5% for the nine months ended September 30, 2018 differed from the U.S. federal statutory rate of 21% primarily due to $153 million of tax benefits related to settlements of tax examinations during the six months ended June 30, 2018 and earnings from non-U.S. subsidiaries that operate in jurisdictions with lower tax rates than the United States, partially offset by the Global Intangible Low-Taxed Income tax and state taxes. We file federal, state and foreign income tax returns in the United States and in many foreign jurisdictions. For federal and California income tax purposes, the statute of limitations is open for 2013 and 2010 onwards, respectively. Our income tax returns are subject to audit by federal, state and foreign tax authorities. We are currently under examination by the Internal Revenue Service for the tax years from 2013 to 2015 and by various state and foreign jurisdictions. There are differing interpretations of tax laws and regulations, and as a result, significant disputes may arise with these tax authorities involving issues of the timing and amount of deductions and allocations of income among various tax jurisdictions. We regularly evaluate our exposures associated with our tax filing positions. We record liabilities related to uncertain tax positions in accordance with the income tax guidance which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements by prescribing a minimum recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Resolution of one or more of these uncertain tax positions in any period may have a material impact on the results of operations for that period. Our unrecognized tax benefits decreased by $119 million during the nine months ended September 30, 2019 due to settlements with taxing authorities. As of September 30, 2019, we believe that it is reasonably possible that our unrecognized tax benefits may materially change in the next 12 months due to potential resolutions with a taxing authority. An estimate of the range of the reasonably possible change cannot be determined at this time. In June 2019, the Ninth Circuit issued an opinion in Altera Corp. v. Commissioner reversing the prior decision of the United States Tax Court and requiring related parties in an intercompany cost-sharing arrangement to share expenses related to stock-based compensation. It is possible that there will be further judicial review of this issue; and as such, we believe the law to be unsettled and continue to recognize tax benefits for the exclusion of stock-based compensation from our cost-sharing arrangement. We will continue to monitor this issue and will reassess our evaluation of the financial reporting impact when more information becomes available.

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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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