XML 28 R15.htm IDEA: XBRL DOCUMENT
v3.6.0.2

INCOME TAXES | 12 Months Ended
--- | ---
Oct. 31, 2016
INCOME TAXES |
INCOME TAXES | 8. INCOME TAXES The provision for income taxes by taxing jurisdiction and by significant component consisted of the following in millions of dollars:
|  | 2016 |  | 2015 |  | 2014 |
Current: |  |  |  |  |  |  |  |  |  |
U.S.: |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 51 |  | $ | 377 |  | $ | 1,217 |
State |  |  | 26 |  |  | 32 |  |  | 126 |
Foreign |  |  | 340 |  |  | 449 |  |  | 564 |
Total current |  |  | 417 |  |  | 858 |  |  | 1,907 |
Deferred: |  |  |  |  |  |  |  |  |  |
U.S.: |  |  |  |  |  |  |  |  |  |
Federal |  |  | 297 |  |  | 21 |  |  | (189) |
State |  |  | 11 |  |  | 4 |  |  | (11) |
Foreign |  |  | (25) |  |  | (43) |  |  | (80) |
Total deferred |  |  | 283 |  |  | (18) |  |  | (280) |
Provision for income taxes |  | $ | 700 |  | $ | 840 |  | $ | 1,627 |
Based upon the location of the company’s operations, the consolidated income before income taxes in the U.S. in 2016, 2015 and 2014 was $967 million, $1,838 million and $3,219 million, respectively, and in foreign countries was $1,257 million, $942 million and $1,578 million, respectively. Certain foreign operations are branches of Deere & Company and are subject to U.S. as well as foreign income tax regulations. The pretax income by location and the preceding analysis of the income tax provision by taxing jurisdiction are not directly related. A comparison of the statutory and effective income tax provision and reasons for related differences in millions of dollars follow:
|  | 2016 |  | 2015 |  | 2014 |
U.S. federal income tax provision at a statutory rate of 35 percent |  | $ | 778 |  | $ | 973 |  | $ | 1,679 |
Increase (decrease) resulting from: |  |  |  |  |  |  |  |  |  |
State and local income taxes, net of federal income tax benefit |  |  | 26 |  |  | 23 |  |  | 75 |
Differences in taxability of foreign (earnings) losses |  |  | (107) |  |  | (449) |  |  | (305) |
Nondeductible impairment charges |  |  | 4 |  |  |  |  |  | 32 |
Research and business tax credits |  |  | (57) |  |  | (76) |  |  | (99) |
Tax rates on foreign earnings |  |  | (27) |  |  | (36) |  |  | (71) |
Valuation allowance on deferred taxes |  |  | 79 |  |  | 384 |  |  | 454 |
Other-net |  |  | 4 |  |  | 21 |  |  | (138) |
Provision for income taxes |  | $ | 700 |  | $ | 840 |  | $ | 1,627 |
At October 31, 2016, accumulated earnings in certain subsidiaries outside the U.S. totaled $5,787 million for which no provision for U.S. income taxes or foreign withholding taxes has been made, because it is expected that such earnings will be reinvested outside the U.S. indefinitely. Determination of the amount of unrecognized deferred tax liability on these unremitted earnings is not practicable. At October 31, 2016, the amount of cash and cash equivalents and marketable securities held by these foreign subsidiaries was $2,301 million. Deferred income taxes arise because there are certain items that are treated differently for financial accounting than for income tax reporting purposes. An analysis of the deferred income tax assets and liabilities at October 31 in millions of dollars follows:
|  | 2016 |  | 2015 |
|  | Deferred |  | Deferred |  | Deferred |  | Deferred |
|  | Tax |  | Tax |  | Tax |  | Tax |
|  | Assets |  | Liabilities |  | Assets |  | Liabilities |
Other postretirement benefit liabilities |  | $ | 2,191 |  |  |  |  | $ | 1,972 |  |  |  |
Tax over book depreciation |  |  |  |  | $ | 578 |  |  |  |  | $ | 574 |
Accrual for sales allowances |  |  | 592 |  |  |  |  |  | 618 |  |  |  |
Lease transactions |  |  |  |  |  | 817 |  |  |  |  |  | 528 |
Tax loss and tax credit carryforwards |  |  | 661 |  |  |  |  |  | 604 |  |  |  |
Foreign unrealized losses |  |  | 472 |  |  |  |  |  | 458 |  |  |  |
Pension liability - net |  |  | 706 |  |  |  |  |  | 315 |  |  |  |
Accrual for employee benefits |  |  | 133 |  |  |  |  |  | 172 |  |  |  |
Share-based compensation |  |  | 152 |  |  |  |  |  | 141 |  |  |  |
Goodwill and other intangible assets |  |  |  |  |  | 89 |  |  |  |  |  | 80 |
Allowance for credit losses |  |  | 88 |  |  |  |  |  | 72 |  |  |  |
Deferred gains on distributed foreign earnings |  |  | 32 |  |  |  |  |  | 33 |  |  |  |
Deferred compensation |  |  | 50 |  |  |  |  |  | 51 |  |  |  |
Undistributed foreign earnings |  |  |  |  |  | 30 |  |  |  |  |  | 25 |
Other items |  |  | 439 |  |  | 175 |  |  | 436 |  |  | 119 |
Less valuation allowances |  |  | (1,029) |  |  |  |  |  | (940) |  |  |  |
Deferred income tax assets and liabilities |  | $ | 4,487 |  | $ | 1,689 |  | $ | 3,932 |  | $ | 1,326 |
Deere & Company files a consolidated federal income tax return in the U.S., which includes the wholly-owned financial services subsidiaries. These subsidiaries account for income taxes generally as if they filed separate income tax returns. At October 31, 2016, certain tax loss and tax credit carryforwards of $661 million, of which $60 million are capital losses, were available with $178 million expiring from 2017 through 2036 and $483 million with an indefinite carryforward period. A reconciliation of the total amounts of unrecognized tax benefits at October 31 in millions of dollars follows:
|  | 2016 |  | 2015 |  | 2014 |
Beginning of year balance |  | $ | 229 |  | $ | 213 |  | $ | 272 |
Increases to tax positions taken during the current year |  |  | 14 |  |  | 32 |  |  | 28 |
Increases to tax positions taken during prior years |  |  | 11 |  |  | 29 |  |  | 20 |
Decreases to tax positions taken during prior years |  |  | (36) |  |  | (15) |  |  | (84) |
Decreases due to lapse of statute of limitations |  |  | (7) |  |  | (11) |  |  | (4) |
Settlements |  |  | (5) |  |  | (6) |  |  |  |
Foreign exchange |  |  | (8) |  |  | (13) |  |  | (19) |
End of year balance |  | $ | 198 |  | $ | 229 |  | $ | 213 |
The amount of unrecognized tax benefits at October 31, 2016 and 2015 that would affect the effective tax rate if the tax benefits were recognized was $81 million and $79 million, respectively. The remaining liability was related to tax positions for which there are offsetting tax receivables, or the uncertainty was only related to timing. The company expects that any reasonably possible change in the amounts of unrecognized tax benefits in the next twelve months would not be significant. The company files its tax returns according to the tax laws of the jurisdictions in which it operates, which includes the U.S. federal jurisdiction, and various state and foreign jurisdictions. The U.S. Internal Revenue Service has completed the examination of the company’s federal income tax returns for periods prior to 2009. The years 2009 through 2014 federal income tax returns are currently under examination. Various state and foreign income tax returns, including major tax jurisdictions in Canada and Germany, also remain subject to examination by taxing authorities. The company’s policy is to recognize interest related to income taxes in interest expense and interest income, and recognize penalties in selling, administrative and general expenses. During 2016, 2015 and 2014, the total amount of expense from interest and penalties was none, $23 million and $11 million and the interest income was none, $3 million and $4 million, respectively. At October 31, 2016 and 2015, the liability for accrued interest and penalties totaled $68 million and $69 million and the receivable for interest was none and $2 million, respectively.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration