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INCOME TAXES (Tables) | 12 Months Ended
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Dec. 31, 2016
Income Tax Disclosure [Abstract] |
Income before income taxes and equity in affiliated companies' net earnings | Geographic sources of losses before income taxes and equity in affiliated companies’ net earnings (losses) for the years ended December 31 consist of the following:
| 2016 |  | 2015 |  | 2014
U.S. | $ | (5,179 | ) |  | $ | (14,589 | ) |  | $ | (2,973 | )
Foreign | 1,707 |  |  | 461 |  |  | 2,173 |
Total | $ | (3,472 | ) |  | $ | (14,128 | ) |  | $ | (800 | )
Schedule of Benefit from (Provision for) income taxes | FCX’s (provision for) benefit from income taxes for the years ended December 31 consists of the following:
| 2016 |  | 2015 |  | 2014 |
Current income taxes: |  |  |  |  |  |
Federal | $ | 164 |  |  | $ | 89 |  |  | $ | (269 | ) |
State | 17 |  |  | 2 |  |  | (34 | ) |
Foreign | (352 | ) |  | (160 | ) |  | (1,066 | ) |
Total current | (171 | ) |  | (69 | ) |  | (1,369 | ) |
Deferred income taxes: |  |  |  |  |  |
Federal | 137 |  |  | 3,403 |  |  | 616 |  |
State | 41 |  |  | 154 |  |  | 214 |  |
Foreign | (451 | ) |  | (163 | ) |  | (19 | ) |
Total deferred | (273 | ) |  | 3,394 |  |  | 811 |  |
Adjustments | 13 |  | a | (1,374 | ) | b | — |  |
Operating loss carryforwards | 60 |  | c | — |  |  | 333 |  | c
(Provision for) benefit from income taxes | $ | (371 | ) |  | $ | 1,951 |  |  | $ | (225 | ) |
a. | Benefit related to changes in Peruvian tax rules.
b. | Adjustments include net provisions of $1.2 billion associated with an increase in the beginning of the year valuation allowance related to the impairment of U.S. oil and gas properties and $0.2 billion resulting from the termination of PT-FI's Delaware domestication.
c. | Benefit from the use of operating loss carryforwards.
Reconciliation of the U.S. federal statutory tax rate to effective income tax rate | A reconciliation of the U.S. federal statutory tax rate to FCX’s effective income tax rate for the years ended December 31 follows:
| 2016 |  | 2015 |  | 2014
| Amount |  | Percent |  | Amount |  | Percent |  | Amount |  | Percent
U.S. federal statutory tax rate | $ | 1,215 |  |  | (35 | )% |  | $ | 4,945 |  |  | (35 | )% |  | $ | 280 |  |  | (35 | )%
Valuation allowance, net | (1,680 | ) | a | 48 |  |  | (2,955 | ) | a | 21 |  |  | — |  |  | — |
Foreign tax credit limitation | (598 | ) |  | 17 |  |  | (228 | ) |  | 2 |  |  | (136 | ) |  | 17 |
Impairment of oil and gas properties | 520 | b | (15 | ) |  | 0 |  | — |  |  | 0 |  | — |
Percentage depletion | 211 |  |  | (6 | ) |  | 186 |  |  | (1 | ) |  | 263 |  | c | (33 | )
Withholding and other impacts on |  |  |  |  |  |  |  |  |  |  |
foreign earnings | (93 | ) |  | 3 |  |  | (193 | ) |  | 1 |  |  | (161 | ) |  | 20 |
Effect of foreign rates different than the U.S. |  |  |  |  |  |  |  |  |  |  |
federal statutory rate | 45 |  |  | (1 | ) |  | 12 |  |  | — |  |  | 69 |  |  | (9 | )
Goodwill impairment | — |  |  | — |  |  | — |  |  | — |  |  | (601 | ) |  | 75 |
Goodwill transferred to full cost pool | — |  |  | — |  |  | — |  |  | — |  |  | (77 | ) |  | 10 |
State income taxes | 46 |  | a | (1 | ) |  | 105 |  | a | (1 | ) |  | 116 |  |  | (14 | )
Other items, net | (37 | ) |  | 1 |  |  | 79 |  |  | (1 | ) |  | 22 |  |  | (3 | )
(Provision for) benefit from income taxes | $ | (371 | ) | d | 11 | % |  | $ | 1,951 |  |  | (14 | )% |  | $ | (225 | ) | e,f | 28 | %
a. | Includes tax charges totaling $1.6 billion in 2016 and $3.3 billion in 2015 as a result of the impairment to U.S. oil and gas properties to establish valuation allowances against U.S. federal and state deferred tax assets that will not generate a future benefit.
b. | Reflects a loss under U.S. federal income tax law related to the impairment of investments in oil and gas properties.
c. | Includes a net tax charge of $16 million in 2014 related to a change in U.S. federal income tax law.
d. | Includes a net tax benefit related to changes in Peruvian tax rules of $13 million.
e. | Includes a net tax charge of $221 million related to the sale of the Candelaria and Ojos del Salado mines.
f. | Includes tax charges related to changes in Chilean and Peruvian tax rules of $54 million and $24 million, respectively.
Components of deferred tax assets and liabilities | The components of deferred taxes follow:
| December 31,
| 2016 |  | 2015
Deferred tax assets: |  |  |
Foreign tax credits | $ | 2,094 |  |  | $ | 1,552 |
Accrued expenses | 923 |  |  | 1,167 |
Oil and gas properties | 346 |  |  | 1,422 |
Minimum tax credits | 444 |  |  | 569 |
Net operating loss carryforwards | 2,898 |  |  | 621 |
Employee benefit plans | 403 |  |  | 442 |
Other | 485 |  |  | 478 |
Deferred tax assets | 7,593 |  |  | 6,251 |
Valuation allowances | (6,058 | ) |  | (4,183 | )
Net deferred tax assets | 1,535 |  |  | 2,068 |
Deferred tax liabilities: |  |  |
Property, plant, equipment and mine development costs | (4,326 | ) |  | (4,765 | )
Undistributed earnings | (779 | ) |  | (852 | )
Other | (195 | ) |  | (55 | )
Total deferred tax liabilities | (5,300 | ) |  | (5,672 | )
Net deferred tax liabilities | $ | (3,765 | ) |  | $ | (3,604 | )
Reserve for unrecognized tax benefits, interest and penalties | A summary of the activities associated with FCX’s reserve for unrecognized tax benefits for the years ended December 31 follows:
| 2016 |  | 2015 |  | 2014
Balance at beginning of year | $ | 110 |  |  | $ | 104 |  |  | $ | 110 |
Additions: |  |  |  |  |
Prior year tax positions | 5 |  |  | 7 |  |  | 4 |
Current year tax positions | 28 |  |  | 11 |  |  | 11 |
Decreases: |  |  |  |  |
Prior year tax positions | (3 | ) |  | (6 | ) |  | (12 | )
Settlements with taxing authorities | — |  |  | — |  |  | (9 | )
Lapse of statute of limitations | (39 | ) |  | (6 | ) |  | — |
Balance at end of year | $ | 101 |  |  | $ | 110 |  |  | $ | 104 |
Summary of income tax examinations | The tax years for FCX's major tax jurisdictions that remain subject to examination are as follows:
Jurisdiction |  | Years Subject to Examination |  | Additional Open Years
U.S. Federal |  | 2013 |  | 2014-2016
Indonesia |  | 2008, 2011, 2012, 2014, 2015 |  | 2013, 2016
Peru |  | 2011 |  | 2012-2016
Chile |  | 2013-2015 |  | 2016
A summary of these assessments follows:
Tax Year |  | Tax Assessment |  | Penalty and Interest Assessment |  | Total |
2002 to 2005 |  | $ | 16 |  |  | $ | 51 |  |  | $ | 67 |  |
2006 |  | 7 |  |  | 49 |  |  | 56 |  |
2007 |  | 12 |  |  | 18 |  |  | 30 |  |
2008 |  | 21 |  |  | 13 |  |  | 34 |  |
2009 |  | 56 |  |  | 48 |  |  | 104 |  |
2010 |  | 66 |  |  | 98 |  |  | 164 |  |
2011, 2014 to 2016 |  | 22 |  |  | 3 |  |  | 25 |  |
|  | $ | 200 |  |  | $ | 280 |  |  | $ | 480 |  |
PT-FI has received assessments from the Indonesian tax authorities for additional taxes and interest related to various audit exceptions for income and other taxes. PT-FI has filed objections to the assessments because it believes it has properly determined and paid its taxes. A summary of these assessments follows:
Tax Year |  | Tax Assessment |  | Interest Assessment |  | Total
2005 |  | $ | 103 |  |  | $ | 49 |  |  | $ | 152 |
2006 |  | 22 |  |  | 10 |  |  | 32 |
2007 |  | 91 |  |  | 44 |  |  | 135 |
2008 |  | 62 |  |  | 52 |  |  | 114 |
2011 |  | 78 |  |  | 13 |  |  | 91 |
2012 |  | 123 |  |  | — |  |  | 123 |
2014 |  | 152 |  |  | — |  |  | 152 |
|  | $ | 631 |  |  | $ | 168 |  |  | $ | 799 |

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