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INCOME TAXES (Tables)

12 Months Ended

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 allowancea			(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 disputese			(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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