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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2013

Provision for Income Taxes

Earnings / (losses) from continuing operations before income taxes and the provision for income taxes consisted of the following for the years ended December 31, 2013, 2012 and 2011:

		2013				2012				2011
		(in millions)
Earnings / (losses) from continuing operations before income taxes:
United States		$	(799	)		$	(1,822	)		$	(1,308	)
Outside United States			3,191				3,596				3,188
Total		$	2,392			$	1,774			$	1,880
Provision for income taxes:
United States federal:
Current		$	(489	)		$	(420	)		$	(404	)
Deferred			103				(43	)			10
			(386	)			(463	)			(394	)
State and local:
Current			(35	)			(17	)			(39	)
Deferred			22				(40	)			46
			(13	)			(57	)			7
Total United States			(399	)			(520	)			(387	)
Outside United States:
Current			648				896				983
Deferred			(189	)			(208	)			(480	)
Total outside United States			459				688				503
Total provision for income taxes		$	60			$	168			$	116

Effective Income Tax Rate

The effective income tax rate on pre-tax earnings differed from the U.S. federal statutory rate for the following reasons for the years ended December 31, 2013, 2012 and 2011:

		2013				2012				2011
U.S. federal statutory rate			35.0%				35.0%				35.0%
Increase / (decrease) resulting from:
State and local income taxes, net of federal tax benefit excluding IRS audit impacts			(0.5%	)			(1.6%	)			0.2%
Foreign rate differences			(15.3%	)			(20.6%	)			(22.2%	)
Reversal of other tax accruals no longer required			(9.6%	)			(4.3%	)			(4.9%	)
Indemnification resolution			(4.7%	)			–				–
Tax legislation			(2.2%	)			(3.9%	)			(3.8%	)
Divestitures			(2.1%	)			0.6%				–
Non-deductible expenses			1.1%				3.6%				1.9%
Other			0.8%				0.7%				–
Effective tax rate			2.5%				9.5%				6.2%

Deferred Tax Assets and Liabilities Temporary Differences

The tax effects of temporary differences that gave rise to deferred income tax assets and liabilities consisted of the following at December 31, 2013 and 2012:

		2013				2012
		(in millions)
Deferred income tax assets:
Accrued postretirement and postemployment benefits		$	176			$	157
Accrued pension costs			417				693
Loss carryforwards			553				639
Other			1,189				1,755
Total deferred income tax assets			2,335				3,244
Valuation allowance			(335	)			(426	)
Net deferred income tax assets		$	2,000			$	2,818
Deferred income tax liabilities:
Trade names		$	(5,991	)		$	(6,394	)
Property, plant and equipment			(995	)			(972	)
Other			(590	)			(896	)
Total deferred income tax liabilities			(7,576	)			(8,262	)
Net deferred income tax liabilities		$	(5,576	)		$	(5,444	)

Changes in Unrecognized Tax Benefit

The changes in our unrecognized tax benefits for the years ended December 31, 2013, 2012 and 2011 were:

		2013				2012				2011
		(in millions)
January 1		$	1,164			$	1,522			$	1,256
Increases from positions taken during prior periods			94				119				220
Decreases from positions taken during prior periods			(132	)			(198	)			(147	)
Increases from positions taken during the current period			131				264				266
Decreases relating to settlements with taxing authorities			(7	)			(257	)			(17	)
Reductions resulting from the lapse of the applicable statute of limitations			(55	)			(23	)			(16	)
Impact of Spin-Off			–				(261	)			–
Currency / other			(6	)			(2	)			(40	)
December 31		$	1,189			$	1,164			$	1,522

X

- Definition

Tabular disclosure of the components of income tax expense attributable to continuing operations for each year presented including, but not limited to: current tax expense (benefit), deferred tax expense (benefit), investment tax credits, government grants, the benefits of operating loss carryforwards, tax expense that results from allocating certain tax benefits either directly to contributed capital or to reduce goodwill or other noncurrent intangible assets of an acquired entity, adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates or a change in the tax status of the entity, and adjustments of the beginning-of-the-year balances of a valuation allowance because of a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years.

+ References

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-Publisher FASB

-Name Accounting Standards Codification

-Topic 740

-SubTopic 10

-Section 50

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Tabular disclosure of the components of net deferred tax asset or liability recognized in an entity's statement of financial position, including the following: the total of all deferred tax liabilities, the total of all deferred tax assets, the total valuation allowance recognized for deferred tax assets.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

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-Name Accounting Standards Codification

-Topic 740

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Tabular disclosure of the reconciliation using percentage or dollar amounts of the reported amount of income tax expense attributable to continuing operations for the year to the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income from continuing operations.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

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Tabular disclosure of tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities (i.e., uncertain tax positions) and other types of income tax contingencies, including: (1) the policy on classification of interest and penalties; (2) a tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period; the total amount(s) of: (3) unrecognized tax benefits that, if recognized, would affect the effective tax rate, and (4) interest and penalties recognized in each of the income statement and balance sheet; (5) for positions for which it is reasonably possible that the total amounts unrecognized will significantly change within 12 months of the reporting date the: (i) nature of the uncertainty, (ii) nature of the event that could occur that would cause the change, and (iii) an estimate of the range of the reasonably possible change or a statement that an estimate of the range cannot be made; and (6) a description of tax years that remain subject to examination by major tax jurisdictions.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

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-SubTopic 10

-Section 50

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