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INCOME TAXES (Tables) | 12 Months Ended
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Dec. 31, 2021
Income Tax Disclosure [Abstract] |
Schedule of Income before Income Tax, Domestic and Foreign | The following table summarizes income before income taxes:
|  | Years ended December 31,
In millions |  | 2021 |  | 2020 |  | 2019
U.S. income |  | $ | 1,251 |  |  | $ | 1,134 |  |  | $ | 1,677 |
Foreign income |  | 1,500 |  |  | 1,204 |  |  | 1,157 |
Income before income taxes |  | $ | 2,751 |  |  | $ | 2,338 |  |  | $ | 2,834 |
Schedule of Components of Income Tax Expense (Benefit) | Income tax expense (benefit) consisted of the following:
|  | Years ended December 31,
In millions |  | 2021 |  | 2020 |  | 2019
Current |  |  |  |  |  |
U.S. federal and state |  | $ | 261 |  |  | $ | 162 |  |  | $ | 288 |
Foreign |  | 319 |  |  | 358 |  |  | 282 |
Total current income tax expense |  | 580 |  |  | 520 |  |  | 570 |
Deferred |  |  |  |  |  |
U.S. federal and state |  | (12) |  |  | 2 |  |  | (32) |
Foreign |  | 19 |  |  | 22 |  |  | 28 |
Impact of India tax law changes |  | — |  |  | (17) |  |  | — |
Total deferred income tax expense (benefit) |  | 7 |  |  | 7 |  |  | (4) |
Income tax expense |  | $ | 587 |  |  | $ | 527 |  |  | $ | 566 |
Schedule of Effective Income Tax Rate Reconciliation | A reconciliation of the statutory U.S. federal income tax rate to the effective tax rate was as follows:
|  | Years ended December 31,
|  | 2021 |  | 2020 |  | 2019
Statutory U.S. federal income tax rate |  | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State income tax, net of federal effect |  | 1.1 |  |  | 1.0 |  |  | 1.1 |
Differences in rates and taxability of foreign subsidiaries and joint ventures |  | 0.1 |  |  | 3.6 |  |  | 1.5 |
Research tax credits |  | (0.6) |  |  | (1.3) |  |  | (1.5) |
Foreign derived intangible income |  | (1.0) |  |  | (1.2) |  |  | (1.3) |
Impact of India tax law changes |  | — |  |  | (0.7) |  |  | — |
Other, net |  | 0.7 |  |  | 0.1 |  |  | (0.8) |
Effective tax rate |  | 21.3 | % |  | 22.5 | % |  | 20.0 | %
Schedule of Other Income Tax Adjustments | The India Tax Law Change resulted in the following adjustments to the Consolidated Statements of Net Income for the year ended December 31, 2020:
In millions |  |  |  |  |  | Favorable (Unfavorable) |  |
Equity, royalty and interest income from investees |  |  |  |  |  | $ | 37 |  |  |
Income tax expense (1) |  |  |  |  |  | 17 |  |  |
Less: Net income attributable to noncontrolling interests |  |  |  |  |  | (19) |  |  |
Net income statement impact |  |  |  |  |  | $ | 35 |  |  |
(1) The adjustment to "Income tax expense" includes $15 million of favorable discrete items. |  |
The year ended December 31, 2019, contained $34 million of favorable net discrete tax items, primarily due to withholding taxes and provision to return adjustments.
Schedule of Deferred Tax Assets and Liabilities | Carryforward tax benefits and the tax effect of temporary differences between financial and tax reporting that give rise to net deferred tax assets (liabilities) were as follows:
|  | December 31,
In millions |  | 2021 |  | 2020
Deferred tax assets |  |  |  |
U.S. and state carryforward benefits |  | $ | 218 |  |  | $ | 223 |
Foreign carryforward benefits |  | 177 |  |  | 159 |
Employee benefit plans |  | 254 |  |  | 273 |
Warranty expenses |  | 445 |  |  | 445 |
Lease liabilities |  | 108 |  |  | 107 |
Accrued expenses |  | 111 |  |  | 93 |
Other |  | 78 |  |  | 52 |
Gross deferred tax assets |  | 1,391 |  |  | 1,352 |
Valuation allowance |  | (360) |  |  | (346) |
Total deferred tax assets |  | 1,031 |  |  | 1,006 |
Deferred tax liabilities |  |  |  |
Property, plant and equipment |  | (272) |  |  | (258) |
Unremitted income of foreign subsidiaries and joint ventures |  | (197) |  |  | (185) |
Employee benefit plans |  | (355) |  |  | (229) |
Lease assets |  | (105) |  |  | (103) |
Other |  | (77) |  |  | (77) |
Total deferred tax liabilities |  | (1,006) |  |  | (852) |
Net deferred tax assets |  | $ | 25 |  |  | $ | 154 |
Tax Related Line Items on the Consolidated Balance Sheets | Our Consolidated Balance Sheets contain the following tax related items:
|  | December 31,
In millions |  | 2021 |  | 2020
Prepaid expenses and other current assets |  |  |  |
Refundable income taxes |  | $ | 101 |  |  | $ | 172 |
Other assets |  |  |  |
Deferred income tax assets |  | 428 |  |  | 479 |
Long-term refundable income taxes |  | — |  |  | 23 |
Other accrued expenses |  |  |  |
Income tax payable |  | 107 |  |  | 82 |
Other liabilities |  |  |  |
Long-term income tax |  | 263 |  |  | 289 |
Deferred income tax liabilities |  | 403 |  |  | 325 |
Schedule of Unrecognized Tax Benefits Roll Forward | A reconciliation of unrecognized tax benefits for the years ended December 31, 2021, 2020 and 2019 was as follows:
|  | December 31,
In millions |  | 2021 |  | 2020 |  | 2019
Balance at beginning of year |  | $ | 122 |  |  | $ | 77 |  |  | $ | 71 |
Additions to current year tax positions |  | 11 |  |  | 9 |  |  | 23 |
Additions to prior years' tax positions |  | 16 |  |  | 49 |  |  | 5 |
Reductions to prior years' tax positions |  | (28) |  |  | (13) |  |  | (11) |
Reductions for tax positions due to settlements with taxing authorities |  | (32) |  |  | — |  |  | (11) |
Balance at end of year |  | $ | 89 |  |  | $ | 122 |  |  | $ | 77 |

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