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INCOME TAXES (Tables) | 12 Months Ended
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Dec. 31, 2020
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:
| 2020 |  | 2019 |  | 2018
U.S. | $ | (40) |  |  | $ | (287) |  |  | $ | 390 |
Foreign | 1,837 |  |  | 593 |  |  | 3,502 |
Total | $ | 1,797 |  |  | $ | 306 |  |  | $ | 3,892 |
Schedule of Benefit from (Provision for) income taxes | FCX’s provision for income taxes for the years ended December 31 consist of the following:
| 2020 |  | 2019 |  | 2018 |
Current income taxes: |  |  |  |  |  |
Federal | $ | 53 |  | a | $ | (23) |  | c,d | $ | 46 |  | c,e
State | (1) |  |  | 3 |  |  | 1 |  |
Foreign | (816) |  | b | (462) |  |  | (1,445) |  | e
Total current | (764) |  |  | (482) |  |  | (1,398) |  |
Deferred income taxes: |  |  |  |  |  |
Federal | 3 |  |  | 48 |  |  | (106) |  |
State | 5 |  |  | 8 |  |  | (8) |  |
Foreign | (306) |  |  | (101) |  |  | (102) |  |
Total deferred | (298) |  |  | (45) |  |  | (216) |  |
Adjustments | 37 |  |  | 12 |  |  | 504 |  | f
Operating loss carryforwards | 81 |  |  | 5 |  |  | 119 |  |
Provision for income taxes | $ | (944) |  |  | $ | (510) |  |  | $ | (991) |  |
a.Includes a tax credit of $53 million associated with the reversal of the tax charge discussed in footnote d below. b.Includes a tax charge of $135 million associated with the gain on sale of Kisanfu. c.As a result of the 2017 Tax Cuts and Jobs Act (the Act) guidance regarding a transition tax issued in 2018, FCX recognized a $29 million tax charge in 2018. Additional guidance released in 2019 resulted in a $29 million tax credit in 2019. d.Includes a tax charge of $53 million associated with the sale of FCX’s interest in the lower zone of the Timok exploration project in Serbia. e.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. f.Represents net tax credits resulting from the reduction in PT-FI's statutory tax rates in accordance with its new special mining license (IUPK).
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:
| 2020 |  | 2019 |  | 2018
| Amount |  | Percent |  | Amount |  | Percent |  | Amount |  | Percent
U.S. federal statutory tax rate | $ | (377) |  |  | (21) | % |  | $ | (64) |  |  | (21) | % |  | $ | (817) |  |  | (21) | %
Valuation allowance a | (210) |  |  | (12) |  |  | (149) |  |  | (49) |  |  | 129 |  |  | 3 |
PT-FI historical tax disputes | (8) |  |  | — |  |  | (145) |  |  | (47) |  |  | — |  |  | — |
Percentage depletion | 104 |  |  | 6 |  |  | 118 |  |  | 39 |  |  | 141 |  |  | 4 |
Effect of foreign rates different than the U.S. |  |  |  |  |  |  |  |  |  |  |
federal statutory rate | (109) |  |  | (6) |  |  | (64) |  |  | (21) |  |  | (494) |  |  | (13) |
Withholding and other impacts on |  |  |  |  |  |  |  |  |  |  |
foreign earnings | (193) |  |  | (11) |  |  | (55) |  |  | (18) |  |  | (232) |  |  | (6) |
Adjustment to deferred taxes | — |  |  | — |  |  | (49) |  | b | (16) |  |  | — |  |  | — |
Non-deductible permanent differences | — |  |  | — |  |  | (47) |  |  | (15) |  |  | (25) |  |  | (1) |
Uncertain tax positions | (15) |  |  | (1) |  |  | (47) |  |  | (15) |  |  | (7) |  |  | — |
U.S. tax reform | — |  |  | — |  |  | 29 |  | c | 9 |  |  | 94 |  | c,d | 2 |
Foreign tax credit limitation | 28 |  |  | 2 |  |  | (16) |  |  | (5) |  |  | (195) |  |  | (5) |
State income taxes | (2) |  |  | — |  |  | 16 |  |  | 6 |  |  | 7 |  |  | 1 |
Cerro Verde historical tax disputes e | (39) |  |  | (2) |  |  | 2 |  |  | 1 |  |  | (55) |  |  | (1) |
Change in PT-FI tax rates | — |  |  | — |  |  | — |  |  | — |  |  | 504 |  |  | 13 |
Timok exploration project sale | 53 |  |  | 3 |  |  | (15) |  |  | (5) |  |  | — |  |  | — |
Sale of Kisanfu | (135) |  |  | (8) |  |  | — |  |  | — |  |  | — |  |  | — |
Other items, net | (41) |  |  | (3) |  |  | (24) |  |  | (9) |  |  | (41) |  |  | (1) |
Provision for income taxes | $ | (944) |  |  | (53) | % |  | $ | (510) |  |  | (166) | % |  | $ | (991) |  |  | (25) | %
a.Refer to “Valuation Allowance” below for discussion of changes. b.Represents net tax charges primarily to adjust deferred taxes on historical balance sheet items in accordance with tax accounting principles. c.As a result of the Act guidance regarding a transition tax issued in 2018, FCX recognized a $29 million tax charge in 2018. Additional guidance released in 2019 resulted in a $29 million tax credit in 2019. d.In 2018, FCX completed its analysis of the Act and recognized benefits totaling $123 million ($76 million to the U.S. tax provisions and $47 million to PT-FI’s tax provision) associated with AMT credit refunds. e.Refer to Note 12 for further discussion.
Components of deferred tax assets and liabilities | The components of deferred taxes follow:
| December 31,
| 2020 |  | 2019
Deferred tax assets: |  |  |
Foreign tax credits | $ | 1,641 |  |  | $ | 1,716 |
Accrued expenses | 1,194 |  |  | 1,108 |
Net operating losses | 2,443 |  |  | 2,249 |
Employee benefit plans | 171 |  |  | 198 |
Other | 238 |  |  | 267 |
Deferred tax assets | 5,687 |  |  | 5,538 |
Valuation allowances | (4,732) |  |  | (4,576) |
Net deferred tax assets | 955 |  |  | 962 |
Deferred tax liabilities: |  |  |
Property, plant, equipment and mine development costs | (4,500) |  |  | (4,372) |
Undistributed earnings | (694) |  |  | (639) |
Other | (169) |  |  | (157) |
Total deferred tax liabilities | (5,363) |  |  | (5,168) |
Net deferred tax liabilities | $ | (4,408) |  |  | $ | (4,206) |
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:
| 2020 |  | 2019 |  | 2018
Balance at beginning of year | $ | 376 |  |  | $ | 404 |  |  | $ | 390 |
Additions: |  |  |  |  |
Prior year tax positions | 48 |  |  | 73 |  |  | 100 |
Current year tax positions | 10 |  |  | 11 |  |  | 14 |
Decreases: |  |  |  |  |
Prior year tax positions | (60) |  |  | (75) |  |  | (86) |
Settlements with taxing authorities | (79) |  |  | (37) |  |  | (9) |
Lapse of statute of limitations | — |  |  | — |  |  | (5) |
Balance at end of year | $ | 295 |  |  | $ | 376 |  |  | $ | 404 |
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 |  | 2017-2018 |  | 2014-2016, 2019-2020
Indonesia |  | 2011-2017, 2019 |  | 2018, 2020
Peru |  | 2014-2016 |  | 2017-2020
Chile |  | 2018-2019 |  | 2020
A summary of these assessments follows:
Tax Year |  | Tax Assessment |  | Penalty and Interest Assessment |  | Total |
2003 to 2008 |  | $ | 50 |  |  | $ | 129 |  |  | $ | 179 |  |
2009 |  | 56 |  |  | 52 |  |  | 108 |  |
2010 |  | 54 |  |  | 118 |  |  | 172 |  |
2011 and 2012 |  | 42 |  |  | 78 |  |  | 120 |  |
2013 |  | 48 |  |  | 66 |  |  | 114 |  |
2014 to 2020 |  | 45 |  |  | — |  |  | 45 |  |
|  | $ | 295 |  |  | $ | 443 |  |  | $ | 738 |  |
Excluding surface water and withholding tax assessments discussed below and the Indonesia 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 |  | $ | 62 |  |  | $ | 30 |  |  | $ | 92 |
2007 |  | 48 |  |  | 23 |  |  | 71 |
2008, 2010 to 2011 |  | 31 |  |  | 8 |  |  | 39 |
2012 |  | 97 |  |  | — |  |  | 97 |
2013 |  | 152 |  |  | 76 |  |  | 228 |
2014 |  | 123 |  |  | — |  |  | 123 |
2015 |  | 159 |  |  | — |  |  | 159 |
2016 |  | 257 |  |  | 113 |  |  | 370 |
2017 |  | 40 |  |  | 19 |  |  | 59 |
|  | $ | 969 |  |  | $ | 269 |  |  | $ | 1,238 |

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