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INCOME TAXES (Tables) | 12 Months Ended
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Dec. 31, 2018
Income Tax Disclosure [Abstract] |
Income before income taxes and equity in affiliated companies' net earnings | Geographic sources of income (losses) before income taxes and equity in affiliated companies’ net earnings for the years ended December 31 consist of the following:
| 2018 |  | 2017 |  | 2016
U.S. | $ | 390 |  |  | $ | 20 |  |  | $ | (5,179 | )
Foreign | 3,502 |  |  | 2,882 |  |  | 1,707 |
Total | $ | 3,892 |  |  | $ | 2,902 |  |  | $ | (3,472 | )
Schedule of Benefit from (Provision for) income taxes | FCX’s (provision for) benefit from income taxes for the years ended December 31 consist of the following:
| 2018 |  | 2017 |  | 2016 |
Current income taxes: |  |  |  |  |  |
Federal | $ | 46 |  | a | $ | (3 | ) |  | $ | 164 |  |
State | 1 |  |  | (10 | ) |  | 17 |  |
Foreign | (1,445 | ) | a | (1,426 | ) |  | (352 | ) |
Total current | (1,398 | ) |  | (1,439 | ) |  | (171 | ) |
Deferred income taxes: |  |  |  |  |  |
Federal | (106 | ) |  | 64 |  |  | 137 |  |
State | (8 | ) |  | 10 |  |  | 41 |  |
Foreign | (102 | ) |  | 89 |  |  | (451 | ) |
Total deferred | (216 | ) |  | 163 |  |  | (273 | ) |
Adjustments | 504 |  | b | 393 |  | c | 13 |  | d
Operating loss carryforwards | 119 |  |  | — |  |  | 60 |  |
Provision for income taxes | $ | (991 | ) |  | $ | (883 | ) |  | $ | (371 | ) |
a. | In 2018, FCX completed its analysis of the Act and recognized benefits totaling $123 million ($76 million to the U.S. tax provision and $47 million to PT-FI’s tax provision) associated with alternative minimum tax (AMT) credit refunds.
b. | Includes net tax credits totaling $504 million resulting from the reduction in PT-FI's statutory tax rates in accordance with PT-FI’s new special mining license (IUPK).
c. | Includes net tax credits totaling $393 million associated with the Act, including $272 million for the reversal of valuation allowances associated with AMT credit refunds and $121 million for a decrease in corporate income tax rates.
d. | Benefit related to changes in Peruvian tax rules.
Reconciliation of the U.S. federal statutory tax rate to effective income tax rate | reconciliation of the U.S. federal statutory tax rate to FCX’s effective income tax rate for the years ended December 31 follows:
| 2018 |  | 2017 |  | 2016
| Amount |  | Percent |  | Amount |  | Percent |  | Amount |  | Percent
U.S. federal statutory tax rate | $ | (817 | ) |  | (21 | )% |  | $ | (1,016 | ) |  | (35 | )% |  | $ | 1,215 |  |  | (35 | )%
Valuation allowance, net | 129 |  | a | 3 |  |  | 28 |  |  | 1 |  |  | (1,680 | ) | b | 48 |
Foreign tax credit limitation | (195 | ) |  | (5 | ) |  | (159 | ) |  | (5 | ) |  | (598 | ) |  | 17 |
U.S. tax reform c | 123 |  |  | 3 |  |  | 393 |  |  | 14 |  |  | — |  |  | — |
Cerro Verde royalty dispute d | (55 | ) |  | (1 | ) |  | (129 | ) |  | (5 | ) |  | — |  |  | — |
Change in PT-FI tax rates | 504 |  |  | 13 |  |  | — |  |  | — |  |  | — |  |  | — |
Impairment of oil and gas properties | — |  |  | — |  |  | — |  |  | — |  |  | 520 |  | e | (15 | )
Percentage depletion | 141 |  |  | 4 |  |  | 227 |  |  | 8 |  |  | 211 |  |  | (6 | )
Withholding and other impacts on |  |  |  |  |  |  |  |  |  |  |
foreign earnings | (232 | ) |  | (6 | ) |  | (216 | ) |  | (7 | ) |  | (93 | ) |  | 3 |
Effect of foreign rates different than the U.S. |  |  |  |  |  |  |  |  |  |  |
federal statutory rate | (494 | ) |  | (13 | ) |  | 17 |  |  | 1 |  |  | 45 |  |  | (1 | )
State income taxes | 7 |  |  | 1 |  |  | (5 | ) |  | (1 | ) |  | 46 |  | b | (1 | )
Other items, net | (102 | ) |  | (3 | ) |  | (23 | ) |  | (1 | ) |  | (37 | ) |  | 1 |
Provision for income taxes | $ | (991 | ) |  | (25 | )% |  | $ | (883 | ) |  | (30 | )% |  | $ | (371 | ) |  | 11 | %
a. | Refer to “Valuation Allowance” below for discussion of changes.
b. | Includes tax charges totaling $1.6 billion in 2016 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.
c. | Refer to discussion of 2017 U.S. Tax Reform below.
d. | Refer to Note 12 for further discussion of the Cerro Verde royalty dispute.
e. | Reflects a loss under U.S. federal income tax law related to the impairment of investments in oil and gas properties.
Components of deferred tax assets and liabilities | The components of deferred taxes follow:
| December 31,
| 2018 |  | 2017
Deferred tax assets: |  |  |
Foreign tax credits | $ | 1,814 |  |  | $ | 2,129 |
Accrued expenses | 881 |  |  | 789 |
Oil and gas properties | — |  |  | 236 |
Net operating losses | 2,235 |  |  | 2,043 |
Employee benefit plans | 245 |  |  | 248 |
Other | 212 |  |  | 260 |
Deferred tax assets | 5,387 |  |  | 5,705 |
Valuation allowances | (4,507 | ) |  | (4,575 | )
Net deferred tax assets | 880 |  |  | 1,130 |
Deferred tax liabilities: |  |  |
Property, plant, equipment and mine development costs | (4,200 | ) |  | (3,754 | )
Undistributed earnings | (578 | ) |  | (811 | )
Other | (130 | ) |  | (223 | )
Total deferred tax liabilities | (4,908 | ) |  | (4,788 | )
Net deferred tax liabilities | $ | (4,028 | ) |  | $ | (3,658 | )
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:
| 2018 |  | 2017 |  | 2016
Balance at beginning of year | $ | 390 |  |  | $ | 101 |  |  | $ | 110 |
Additions: |  |  |  |  |
Prior year tax positions | 100 |  |  | 302 |  |  | 5 |
Current year tax positions | 14 |  |  | 6 |  |  | 28 |
Decreases: |  |  |  |  |
Prior year tax positions | (86 | ) |  | (1 | ) |  | (3 | )
Settlements with taxing authorities | (9 | ) |  | (17 | ) |  | — |
Lapse of statute of limitations | (5 | ) |  | (1 | ) |  | (39 | )
Balance at end of year | $ | 404 |  |  | $ | 390 |  |  | $ | 101 |
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 |  | N/A |  | 2014-2018
Indonesia |  | 2008, 2011-2016 |  | 2017-2018
Peru |  | 2012-2013 |  | 2014-2018
Chile |  | 2016-2017 |  | 2018
Excluding surface water and withholding tax assessments discussed below and the Indonesian government’s previous imposition of a 7.5 percent export duty that PT-FI paid under protest during the period April 2017 to December 21, 2018 (refer to Note 13), a summary of these assessments follows:
Tax Year |  | Tax Assessment |  | Interest Assessment |  | Total
2005 |  | $ | 73 |  |  | $ | 35 |  |  | $ | 108 |
2007 |  | 47 |  |  | 23 |  |  | 70 |
2008, 2010 to 2011 |  | 55 |  |  | 37 |  |  | 92 |
2012 |  | 124 |  |  | — |  |  | 124 |
2013 |  | 154 |  |  | 74 |  |  | 228 |
2014 |  | 139 |  |  | 6 |  |  | 145 |
2015 |  | 158 |  |  | — |  |  | 158 |
2016 |  | 266 |  |  | 113 |  |  | 379 |
|  | $ | 1,016 |  |  | $ | 288 |  |  | $ | 1,304 |
A summary of these assessments follows:
Tax Year |  | Tax Assessment |  | Penalty and Interest Assessment |  | Total |
2003 to 2008 |  | $ | 56 |  |  | $ | 130 |  |  | $ | 186 |  |
2009 |  | 57 |  |  | 51 |  |  | 108 |  |
2010 |  | 63 |  |  | 105 |  |  | 168 |  |
2011 |  | 49 |  |  | 65 |  |  | 114 |  |
2014 to 2018 |  | 32 |  |  | — |  |  | 32 |  |
|  | $ | 257 |  |  | $ | 351 |  |  | $ | 608 |  |

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