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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2017

Provision for Income Taxes

Earnings/(losses) from continuing operations before income taxes and the provision for income taxes consisted of:

		For the Years Ended December 31,
		2017				2016				2015
		(in millions)
Earnings/(losses) from continuing operations before income taxes:
United States		$	354			$	(364	)		$	43
Outside United States			2,770				1,818				7,841
Total		$	3,124			$	1,454			$	7,884
Provision for income taxes:
United States federal:
Current		$	1,322			$	(227	)		$	(90	)
Deferred			(1,256	)			141				136
			66				(86	)			46
State and local:
Current			33				7				6
Deferred			33				8				(3	)
			66				15				3
Total United States			132				(71	)			49
Outside United States:
Current			541				490				707
Deferred			15				(290	)			(163	)
Total outside United States			556				200				544
Total provision for income taxes		$	688			$	129			$	593

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,
		2017				2016				2015
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			0.8%				0.8%				(0.1)%
Foreign rate differences			(10.8)%				(18.6)%				(2.5)%
Changes in judgment on realizability of deferred tax assets			3.2%				–				–
Reversal of other tax accruals no longer required			(1.7)%				(7.7)%				(1.4)%
Tax accrual on investment in Keurig			2.7%				2.3%				–
Excess tax benefits from equity compensation			(1.2)%				–				–
Tax legislation (non-U.S. tax reform)			(2.7)%				(4.0)%				(0.5)%
U.S. tax reform - deferred benefit from tax rate change			(42.0)%				–				–
U.S. tax reform - transition tax			42.2%				–				–
U.S. tax reform - changes in indefinite reinvestment assertion			(2.0)%				–				–
Gains on coffee business transactions and divestitures			–				–				(26.9)%
Business sales			(0.9)%				–				–
Loss on deconsolidation of Venezuela			–				–				3.5%
Non-deductible expenses			0.4%				0.9%				0.3%
Other			(1.0)%				0.2%				0.1%
Effective tax rate			22.0%				8.9%				7.5%

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:

		As of December 31,
		2017				2016
		(in millions)
Deferred income tax assets:
Accrued postretirement and postemployment benefits		$	191			$	214
Accrued pension costs			313				370
Other employee benefits			155				237
Accrued expenses			269				379
Loss carryforwards			773				619
Tax credit carryforwards			370				—
Other			342				331
Total deferred income tax assets			2,413				2,150
Valuation allowance			(853	)			(310	)
Net deferred income tax assets		$	1,560			$	1,840
Deferred income tax liabilities:
Intangible assets		$	(3,977	)		$	(5,174	)
Property, plant and equipment			(452	)			(557	)
Other			(188	)			(472	)
Total deferred income tax liabilities			(4,617	)			(6,203	)
Net deferred income tax liabilities		$	(3,057	)		$	(4,363	)

Changes in Unrecognized Tax Benefit

The changes in our unrecognized tax benefits were:

		For the Years Ended December 31,
		2017				2016				2015
		(in millions)
January 1		$	610			$	756			$	852
Increases from positions taken during prior periods			33				18				34
Decreases from positions taken during prior periods			(93	)			(123	)			(74	)
Increases from positions taken during the current period			64				90				84
Decreases relating to settlements with taxing authorities			(54	)			(75	)			(13	)
Reductions resulting from the lapse of the applicable statute of limitations			(29	)			(43	)			(41	)
Currency/other			48				(13	)			(86	)
December 31		$	579			$	610			$	756

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
-Paragraph 9
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- Definition

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
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 2
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- Definition

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
-Topic 740
-SubTopic 10
-Section 50
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Tabular disclosure for 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 and other income tax contingencies. Includes, but is not limited to, interest and penalties, reconciliation of unrecognized tax benefits, unrecognized tax benefits that would affect the effective tax rate, tax years that remain subject to examination by tax jurisdictions, and information about positions for which it is reasonably possible that amounts unrecognized will significantly change within 12 months.

+ References

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-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
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-URI http://asc.fasb.org/extlink&oid=84230637&loc=SL6600010-109319

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