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INCOME TAXES (Tables) | 12 Months Ended
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Dec. 31, 2022
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:
| 2022 |  | 2021 |  | 2020
U.S. | $ | 840 |  |  | $ | 1,861 |  |  | $ | (40) |
Foreign | 5,875 |  |  | 5,798 |  |  | 1,837 |
Total | $ | 6,715 |  |  | $ | 7,659 |  |  | $ | 1,797 |
Schedule of Benefit from (Provision for) income taxes | FCX’s provision for income taxes for the years ended December 31 consists of the following:
| 2022 |  | 2021 |  | 2020 |
Current income taxes: |  |  |  |  |  |
Federal | $ | — |  |  | $ | — |  |  | $ | 53 |  | a
State | 1 |  |  | (11) |  |  | (1) |  |
Foreign | (2,232) |  |  | (2,460) |  |  | (816) |  | b
Total current | (2,231) |  |  | (2,471) |  |  | (764) |  |
Deferred income taxes: |  |  |  |  |  |
Federal | (149) |  |  | (184) |  |  | 3 |  |
State | (6) |  |  | (4) |  |  | 5 |  |
Foreign | (144) |  |  | (23) |  |  | (306) |  |
Total deferred | (299) |  |  | (211) |  |  | (298) |  |
Adjustments | 1 |  |  | 193 |  | c | 37 |  |
Operating loss carryforwards | 262 |  |  | 190 |  |  | 81 |  |
Provision for income taxes | $ | (2,267) |  |  | $ | (2,299) |  |  | $ | (944) |  |
a.Includes a credit of $53 million associated with the reversal of the charge associated with the sale of FCX’s interest in the lower zone of the Timok exploration project. b.Includes a charge of $135 million associated with the gain on sale of FCX’s interest in the Kisanfu undeveloped project. c.Primarily reflects the release of valuation allowances on NOLs at PT Rio Tinto (see below).
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:
| 2022 |  | 2021 |  | 2020
| Amount |  | % |  | Amount |  | % |  | Amount |  | %
U.S. federal statutory tax rate | $ | (1,410) |  |  | (21) | % |  | $ | (1,608) |  |  | (21) | % |  | $ | (377) |  |  | (21) | %
Withholding and other impacts on |  |  |  |  |  |  |  |  |  |  |
foreign earnings | (673) |  |  | (10) |  |  | (678) |  |  | (9) |  |  | (193) |  |  | (11) |
Effect of foreign rates different than the U.S. |  |  |  |  |  |  |  |  |  |  |
federal statutory rate | (314) |  |  | (5) |  |  | (328) |  |  | (4) |  |  | (109) |  |  | (6) |
Percentage depletion | 189 |  |  | 3 |  |  | 221 |  |  | 3 |  |  | 104 |  |  | 6 |
Foreign tax credit limitation | (28) |  |  | (1) |  |  | (11) |  |  | — |  |  | 28 |  |  | 2 |
Uncertain tax positions | (17) |  |  | — |  |  | 13 |  |  | — |  |  | (15) |  |  | (1) |
PT-FI historical tax disputes a | (8) |  |  | — |  |  | (193) |  |  | (3) |  |  | (8) |  |  | — |
Valuation allowance b | 6 |  |  | — |  |  | 221 |  |  | 3 |  |  | (210) |  |  | (12) |
State income taxes | (4) |  |  | — |  |  | (14) |  |  | — |  |  | (2) |  |  | — |
PT Rio Tinto valuation allowance b | — |  |  | — |  |  | 189 |  |  | 2 |  |  | — |  |  | — |
Sale of Kisanfu | — |  |  | — |  |  | — |  |  | — |  |  | (135) |  |  | (8) |
Timok exploration project sale | — |  |  | — |  |  | — |  |  | — |  |  | 53 |  |  | 3 |
Cerro Verde historical tax disputes | — |  |  | — |  |  | — |  |  | — |  |  | (39) |  |  | (2) |
Other items, net | (8) |  |  | — |  |  | (111) |  |  | (1) |  |  | (41) |  |  | (3) |
Provision for income taxes | $ | (2,267) |  |  | (34) | % |  | $ | (2,299) |  |  | (30) | % |  | $ | (944) |  |  | (53) | %
a.Refer to “Indonesia Tax Matters” below. b.Refer to “Valuation Allowances” below.
Components of deferred tax assets and liabilities | The components of deferred taxes follow:
| December 31,
| 2022 |  | 2021
Deferred tax assets: |  |  |
Foreign tax credits | $ | 1,514 |  |  | $ | 1,536 |
NOLs | 1,923 |  |  | 2,220 |
Accrued expenses | 1,303 |  |  | 1,193 |
Employee benefit plans | 99 |  |  | 105 |
Other | 230 |  |  | 252 |
Deferred tax assets | 5,069 |  |  | 5,306 |
Valuation allowances | (3,985) |  |  | (4,087) |
Net deferred tax assets | 1,084 |  |  | 1,219 |
Deferred tax liabilities: |  |  |
Property, plant, equipment and mine development costs | (4,330) |  |  | (4,492) |
Undistributed earnings | (810) |  |  | (807) |
Other | (211) |  |  | (152) |
Total deferred tax liabilities | (5,351) |  |  | (5,451) |
Net deferred tax liabilities | $ | (4,267) |  |  | $ | (4,232) |
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.
| 2022 |  | 2021 |  | 2020
Balance at beginning of year | $ | 808 |  |  | $ | 474 |  |  | $ | 491 |
Additions: |  |  |  |  |
Prior year tax positions | 26 |  |  | 330 |  |  | 56 |
Current year tax positions | 25 |  |  | 71 |  |  | 60 |
Decreases: |  |  |  |  |
Prior year tax positions | (12) |  |  | (30) |  |  | (82) |
Settlements with taxing authorities | (37) |  |  | (37) |  |  | (51) |
Balance at end of year | $ | 810 |  |  | $ | 808 |  |  | $ | 474 |
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, 2019-2022
Indonesia |  | 2012-2017 |  | 2020-2022
Peru |  | - |  | 2017-2022
Chile |  | 2020-2021 |  | 2019,2022
A summary of these assessments follows:
Tax Year |  | Tax Assessment |  | Penalties and Interest |  | Total |
2003 to 2008 |  | $ | 48 |  |  | $ | 130 |  |  | $ | 178 |  |
2009 |  | 56 |  |  | 52 |  |  | 108 |  |
2010 |  | 54 |  |  | 125 |  |  | 179 |  |
2011 and 2012 |  | 42 |  |  | 73 |  |  | 115 |  |
2013 |  | 48 |  |  | 66 |  |  | 114 |  |
2014 to 2017 |  | 73 |  |  | 30 |  |  | 103 |  |
|  | $ | 321 |  |  | $ | 476 |  |  | $ | 797 |  |
Excluding surface water tax assessments discussed below and the Indonesia government’s previous imposition of a 7.5% 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, including potential penalties follows:
Tax Year |  | Tax Assessment |  | Penalties and Interest |  | Total
2005 |  | $ | 62 |  |  | $ | 29 |  |  | $ | 91 |
2007 |  | 45 |  |  | 22 |  |  | 67 |
2012 and 2013 |  | 41 |  |  | 41 |  |  | 82 |
2014 and 2015 |  | 108 |  |  | — |  |  | 108 |
2016 |  | 257 |  |  | 336 |  |  | 593 |
2017 |  | 7 |  |  | 2 |  |  | 9 |
|  | $ | 520 |  |  | $ | 430 |  |  | $ | 950 |

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