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Income Taxes | 12 Months Ended
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Dec. 31, 2018
Income Taxes [Abstract] |
Income Taxes | 4.Inco me Taxes ﻿ Income before income taxes follows (in millions): ﻿ ﻿
﻿ |  |  |  |  |  |  |  |
﻿ |  |  |  |  |  |  |  |
﻿ | Years ended December 31,
﻿ | 2018 |  | 2017 |  | 2016
﻿ |  |  |  |  |  |  |  |
﻿U.S. companies | $ | 472 |  | $ | 653 |  | $ | 2,658
﻿Non-U.S. companies |  | 1,031 |  |  | 1,004 |  |  | 1,034
﻿Income before income taxes | $ | 1,503 |  | $ | 1,657 |  | $ | 3,692
﻿ 4.Income Taxes (continued) ﻿ The current and deferred amounts of the (provision) benefit for income taxes follow (in millions): ﻿ ﻿
﻿ |  |  |  |  |  |  |  |
﻿ |  |  |  |  |  |  |  |
﻿ | Years ended December 31,
﻿ | 2018 |  | 2017 |  | 2016
﻿Current: |  |  |  |  |  |  |  |
﻿Federal | $ | (256) |  | $ | (20) |  | $ | (1)
﻿State and municipal |  | (22) |  |  | (21) |  |  | (17)
﻿Foreign |  | (196) |  |  | (317) |  |  | (287)
﻿Deferred: |  |  |  |  |  |  |  |
﻿Federal |  | (34) |  |  | (1,617) |  |  | 310
﻿State and municipal |  | 4 |  |  | (109) |  |  | 48
﻿Foreign |  | 67 |  |  | (70) |  |  | (50)
﻿(Provision) benefit for income taxes | $ | (437) |  | $ | (2,154) |  | $ | 3
﻿ Amounts are reflected in the preceding tables based on the location of the taxing authorities. ﻿ Reconciliation of the U.S. statutory income tax rate to our effective tax rate for operations follows: ﻿ ﻿
﻿ |  |  |  |  |  |  |  |
﻿ |  |  |  |  |  |  |  |
﻿ | Years ended December 31,
﻿ | 2018 |  | 2017 |  | 2016
﻿Statutory U.S. income tax rate | 21.0 | % |  | 35.0 | % |  | 35.0 | %
﻿State income tax (benefit), net of federal effect | 0.9 |  |  | 0.8 |  |  | (0.3) |
﻿Global intangible low-taxed income | 3.6 |  |  |  |  |  |  |
﻿Repatriation tax on accumulated previously untaxed foreign earnings | (1.2) |  |  | 67.4 |  |  |  |
﻿Remeasurement of deferred tax assets and liabilities | (0.1) |  |  | 21.0 |  |  |  |
﻿Rate difference on foreign earnings | (2.3) |  |  | (3.9) |  |  | (9.2) |
﻿Preliminary IRS settlement of 2013-2014 tax years | 11.5 |  |  |  |  |  |  |
﻿Equity earnings impact |  |  |  | 0.1 |  |  | (0.4) |
﻿Valuation allowance | (3.8) |  |  | 6.8 |  |  | 1.2 |
﻿Realignment of Dow Corning interest |  |  |  |  |  |  | (28.2) |
﻿Other items, net | (0.5) |  |  | 2.8 |  |  | 1.8 |
﻿Effective income tax rate (benefit) | 29.1 | % |  | 130.0 | % |  | (0.1) | %
﻿ In December 2017, the U.S. enacted the 2017 Tax Act which resulted in significant changes for our financial results, including, but not limited to, (1) reducing the U.S. federal corporate income tax rate to 21%, and (2) imposing a one-time toll charge on certain unrepatriated earnings of foreign subsidiaries of U.S. companies that had not been previously taxed in the U.S. ﻿ The 2017 Tax Act also established new tax provisions affecting our 2018 results, including, but not limited to, (1) creating a new provision designed to tax GILTI; (2) generally eliminating U.S. federal taxes on dividends from foreign subsidiaries; (3) eliminating the corporate AMT; (4) creating the BEAT; (5) establishing a deduction for FDII; (6) establishing new limitations on deductible interest expense; and (7) establishing new limitations on deductibility of certain executive compensation. ﻿ 4.Income Taxes (continued) ﻿ Given the significant complexity of the 2017 Tax Act and the lack of clear tax and accounting regulatory guidance for this new law, the Securities Exchange Commission issued SAB 118 to provide registrants additional time to analyze and report the effects of tax reform during the “measurement period.” Under SAB 118, the registrant was required to record those items where ASC 740 analysis was complete; include reasonable estimates and label them as provisional where ASC 740 analysis was incomplete; and if reasonable estimates could not be made, record items under the previous tax law. The measurement period, not to exceed one year, ended on the date the entity obtained, prepared, and analyzed the information that was needed to complete the accounting requirements under ASC Topic 740. For the year ended December 31, 2018, Corning’s results included a worldwide tax provision of $437 million, inclusive of tax on ongoing operations of $412 million and the impacts of the 2017 Tax Act of $25 million. The impacts of the 2017 Tax Act include: GILTI tax of $55 million, FDII benefit of $10 million, and a $20 million benefit related to truing up the toll charge and our measurement of U.S. deferred taxes, offset by the recording of a provision related to lifting our assertion of indefinite reinvestment on certain foreign earnings. As of December 31, 2018, Corning has completed its analysis of the impact of the 2017 Tax Act as required by SAB 118. The GILTI tax of $55 million was largely driven by the receipt of customer deposits. See Note 2 (Revenue) to these Consolidated Financial Statements for more information. ﻿ In response to the reduction of the U.S. Federal Corporate Tax Rate, the Company re-measured the U.S. deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%. We recorded a provisional estimate of $347 million during 2017. This was adjusted by an immaterial amount upon completion of our analysis for the year ended December 31, 2018. ﻿ We recorded a provisional expense of $1.1 billion for the Toll Charge at year end 2017 on unrepatriated earnings of certain foreign subsidiaries that were previously deferred. This charge was reduced by $35 million upon completion of our analysis. ﻿ Corning has completed its analysis on the impact of the 2017 Tax Act on its assertion regarding its indefinitely reinvested foreign earnings. Corning has determined that it will no longer assert indefinite asset reinvestment on $15.4 billion of unremitted foreign earnings accumulated prior to 2018. This represents approximately 94% of Corning’s unremitted foreign earnings as of the end of 2017. Corning will continue to indefinitely reinvest the remaining 6% of historic foreign earnings as of December 31, 2017. ﻿ Beginning in 2018, Corning will indefinitely reinvest the foreign earnings of: (1) any of its subsidiaries located in jurisdictions where Corning lacks the ability to repatriate its earnings, (2) any of its subsidiaries where Corning’s intention is to reinvest those earnings in operations, (3) legal entities for which Corning holds a non-controlling interest, (4) any subsidiaries with an accumulated deficit in earnings and profits and (5) any subsidiaries which have a positive earnings and profits balance but for which the entity lacks sufficient local statutory earnings or stock basis from which to make a distribution. ﻿ During 2018, the Company distributed approximately $4.2 billion from foreign subsidiaries to their respective U.S. parent companies. There are no incremental taxes beyond the toll charge due with respect to these distributions. As of December 31, 2018, Corning has approximately $1.5 billion of indefinitely reinvested foreign earnings. It remains impracticable to calculate the tax cost of repatriating our unremitted earnings which are considered indefinitely reinvested. ﻿ Under new guidance, a company can make a policy election to account for the tax on GILTI as a period cost or to recognize deferred tax assets and liabilities when basis differences exist that are expected to affect the amount of GILTI inclusion upon reversal. Corning’s has elected to account for the GILTI provisions as a period cost. 4.Income Taxes (continued) ﻿ The tax effects of temporary differences and carryforwards that gave rise to significant portions of the deferred tax assets and liabilities follows (in millions): ﻿ ﻿
﻿ |  |  |  |  |
﻿ |  |  |  |  |
﻿ | December 31,
﻿ | 2018 |  | 2017
﻿ |  |  |  |  |
﻿Loss and tax credit carryforwards | $ | 479 |  | $ | 652
﻿Other assets |  | 45 |  |  | 43
﻿Asset impairments and restructuring reserves |  | 33 |  |  | 94
﻿Postretirement medical and life benefits |  | 162 |  |  | 191
﻿Other accrued liabilities |  | 265 |  |  |
﻿Other employee benefits |  | 289 |  |  | 278
﻿Gross deferred tax assets |  | 1,273 |  |  | 1,258
﻿Valuation allowance |  | (317) |  |  | (456)
﻿Total deferred tax assets |  | 956 |  |  | 802
﻿Intangible and other assets |  | (96) |  |  | (101)
﻿Other accrued liabilities |  |  |  |  | (94)
﻿Fixed assets |  | (256) |  |  | (245)
﻿Total deferred tax liabilities |  | (352) |  |  | (440)
﻿Net deferred tax assets | $ | 604 |  | $ | 362
﻿ The net deferred tax assets are classified in our consolidated balance sheets as follows (in millions): ﻿ ﻿
﻿ |  |  |  |  |
﻿ |  |  |  |  |
﻿ | December 31,
﻿ | 2018 |  | 2017
﻿ |  |  |  |  |
﻿Deferred tax assets | $ | 951 |  | $ | 813
﻿Deferred tax liabilities |  | (347) |  |  | (451)
﻿Net deferred tax assets | $ | 604 |  | $ | 362
﻿ Details on deferred tax assets for loss and tax credit carryforwards at December 31, 201 8 follow (in millions): ﻿ ﻿
﻿ |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿ |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿ |  |  |  | Expiration
﻿ | Amount |  | 2018-2022 |  | 2023-2027 |  | 2028-2037 |  | Indefinite
﻿ |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿Net operating losses | $ | 449 |  | $ | 121 |  | $ | 60 |  | $ | 25 |  | $ | 243
﻿Tax credits |  | 30 |  |  |  |  |  |  |  |  | 25 |  |  | 5
﻿Totals as of December 31, 2018 | $ | 479 |  | $ | 121 |  | $ | 60 |  | $ | 50 |  | $ | 248
﻿ Deferred tax assets are to be reduced by a valuation allowance if, based on the weight of available positive and negative evidence, it is more likely than not (a likelihood of greater than 50 percent) that some portion or all deferred tax assets will not be realized. Corning has valuation allowances on certain shorter-lived deferred tax assets such as those represented by capital loss and state tax net operating loss carryforwards, as well as other foreign net operating loss carryforwards, because we cannot conclude that it is more likely than not that we will earn income of the character required to utilize these assets before they expire. The change in the other accrued liabilities is largely driven by the payment of certain withholding taxes and reclassification of a portion of our deferred tax liability to deferred tax payable. Also, during 2018, a benefit was recorded upon the release of valuation allowances on deferred tax that are now considered realizable outside of the U.S. The amount of U.S. and foreign deferred tax assets that have remaining valuation allowances at December 31, 2018 and 2017 was $317 million and $456 million, respectively. 4.Income Taxes (continued) ﻿ The 2017 Tax Act makes the following key changes to U.S. tax law which will potentially impact Corning’s deferred tax assets. AMT has been eliminated. Net operating losses (“NOL’s”) generated prior to the 2017 Tax Act may still be carried back two years and forward 20 years. Corning has $35 million of Federal NOL’s that are subject to these provisions. The 2017 Tax Act limits and, in some cases, eliminates foreign tax credits. Corning has $22 million of foreign tax credit carryforwards that may be subject to these restrictions. ﻿ In 2018, we adopted ASU 2016-16, Improvements to Intra-Entity Transfers of Assets Other Than Inventory. As a result, cumulative tax benefits totaling $5 million were recorded as an adjustment to beginning retained earnings. ﻿ The following is a tabular reconciliation of the total amount of unrecognized tax benefits (in millions): ﻿ ﻿
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﻿ |  |  |  |  |  |  |  |
﻿ | 2018 |  | 2017 |  | 2016
﻿Balance at January 1 | $ | 252 |  | $ | 243 |  | $ | 253
﻿Additions based on tax positions related to the current year |  | 204 |  |  | 1 |  |  | 10
﻿Additions for tax positions of prior years |  |  |  |  | 13 |  |  | 4
﻿Reductions for tax positions of prior years |  | (10) |  |  |  |  |  | (18)
﻿Settlements and lapse of statute of limitations |  | (11) |  |  | (5) |  |  | (6)
﻿Balance at December 31 | $ | 435 |  | $ | 252 |  | $ | 243
﻿ The additions for 2018 were primarily due to a preliminary agreement with the IRS to resolve its 2013-2014 audit. Included in the balance at December 31, 2018, 2017 and 2016 are $263 million, $97 million and $92 million, respectively, of unrecognized tax benefits that would impact our effective tax rate if recognized. ﻿ We recognize accrued interest and penalties associated with uncertain tax positions as part of tax expense. For the years ended December 31, 2018, 2017 and 2016 the amount recognized in interest expense and accrued for the payment of interest and penalties were not material. ﻿ It is possible that the amount of unrecognized tax benefits will change due to one or more of the following events during the next twelve months: audit activity, tax payments, or final decisions in matters that are the subject of controversy in various jurisdictions within which we operate. The majority of the potential change relates to our ongoing U.S. tax audit. We believe we have provided adequate contingent reserves for these matters. However, if upon conclusion of these matters, the ultimate determination of taxes owed is for an amount materially different than our current reserves, our overall tax expense and effective tax rate could be materially impacted in the period of adjustment. ﻿ Corning Incorporated, as the common parent company, and all 80%-or-more-owned of its U.S. subsidiaries join in the filing of co nsolidated U.S. federal income tax returns. The statute of limitations is closed for all periods ending through December 31, 2012. All returns for periods ended through December 31, 2004, have been audited by and settled with the Internal Revenue Service (IRS). ﻿ Corning Incorporated and its U.S. subsidiaries file income tax returns on a combined, unitary or stand-alone basis in multiple state and local jurisdictions, which generally have statutes of limitations ranging from 3 to 5 years. Various state income tax returns are currently in the process of examination or administrative appeal. We do not expect any material proposed adjustments from any of these audits. ﻿ Corning has reached a preliminary agreement with the IRS to resolve its 2013-2014 audit. This preliminary agreement resulted in $172 million of additional tax expense in the first quarter of 2018, of which $12 million relates to interest expense, net of tax benefit. Corning will use tax attributes to cover most of the tax expense. We expect to finalize this agreement during 2019. 4.Income Taxes (continued) ﻿ Our foreign subsidiaries file income tax returns in the countries in which they have operations. Generally, these countries have statutes of limitations ranging from 3 to 10 years. The statute of limitations is closed through the following years in these major jurisdictions: Japan (20 11), Taiwan (2012) and South Korea (201 2). ﻿ CPM is currently appealing certain tax assessments and tax refund claims for tax years 2006 through 2017. The Company is required to deposit the disputed tax amounts with the South Korean government as a condition of its appeal of any tax assessments. Because we believe that it is more likely than not that we will prevail in the appeals process, we have recorded a non-current receivable of $425 million for the amount on deposit with the South Korean government.

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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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