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INCOME TAXES (Tables)

12 Months Ended

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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