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INCOME TAXES | 12 Months Ended
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Dec. 31, 2019
Income Tax Disclosure [Abstract] |
INCOME TAXES |
NOTE 12 - INCOME TAXES
The following summarizes domestic and foreign components of income (loss) from continuing operations before domestic and foreign income taxes for the years ended December 31:
millions |  | 2019 |  |  | 2018 |  |  | 2017 |
Domestic |  | $ | (1,632 | ) |  | $ | 3,431 |  |  | $ | (609 | )
Foreign |  | 1,818 |  |  | 2,177 |  |  | 1,937 |
Total |  | $ | 186 |  |  | $ | 5,608 |  |  | $ | 1,328 |
The following summarizes components of income tax expense (benefit) on continuing operations for the years ended December 31:
millions |  | 2019 |  |  | 2018 |  |  | 2017 |
Current |  |  |  |  |  |
Federal |  | $ | 33 |  |  | $ | (23 | ) |  | $ | (81 | )
State and Local |  | 46 |  |  | 52 |  |  | 11 |
Foreign |  | 1,641 |  |  | 1,077 |  |  | 806 |
Total current tax expense |  | $ | 1,720 |  |  | $ | 1,106 |  |  | $ | 736 |
Deferred |  |  |  |  |  |
Federal |  | (130 | ) |  | 422 |  |  | (856 | )
State and Local |  | 17 |  |  | 12 |  |  | 23 |
Foreign |  | (914 | ) |  | (63 | ) |  | 114 |
Total deferred tax expense (benefit) |  | $ | (1,027 | ) |  | $ | 371 |  |  | $ | (719 | )
Total income tax expense |  | $ | 693 |  |  | $ | 1,477 |  |  | $ | 17 |
The following reconciliation of the U.S federal statutory income tax rate to Occidental’s worldwide effective tax rate on income from continuing operations for the years ended December 31 is stated as a percentage of income (loss) from continuing operations before income taxes:
|  | 2019 |  |  | 2018 |  |  | 2017 |
U.S. federal statutory tax rate |  | 21 | % |  | 21 | % |  | 35 | %
Enhanced oil recovery credit and other general business credits |  | (4 | ) |  | (3 | ) |  | (9 | )
Change in federal income tax rate |  | — |  |  | — |  |  | (44 | )
Tax (benefit) expense due to reversal of indefinite reinvestment assertion |  | — |  |  | (2 | ) |  | 7 |
Tax impact from foreign operations |  | 187 |  |  | 11 |  |  | 12 |
State income taxes, net of federal benefit |  | 28 |  |  | 1 |  |  | 2 |
Uncertain tax positions |  | 13 |  |  | — |  |  | — |
Transaction costs |  | 19 |  |  | — |  |  | — |
Non-controlling interest |  | (16 | ) |  | — |  |  | — |
Executive compensation limitation |  | 24 |  |  | — |  |  | — |
Stock warrants |  | (9 | ) |  | — |  |  | — |
WES loss of control |  | 113 |  |  | — |  |  | — |
Other |  | (3 | ) |  | (2 | ) |  | (2 | )
Worldwide effective tax rate |  | 373 | % |  | 26 | % |  | 1 | %
In 2019, Occidental’s worldwide effective tax rate was 373%, which was largely a result of Acquisition-related costs and charges associated with the loss of control of WES for which Occidental received no tax benefit. The tax effects of temporary differences resulting in deferred income taxes at December 31, 2019, and 2018 were as follows:
millions |  | 2019 |  |  | 2018 |
Deferred tax liabilities |  |  |  |
Property, plant and equipment differences |  | $ | (12,375 | ) |  | $ | (2,089 | )
Equity investments, partnerships and foreign subsidiaries |  | (989 | ) |  | (161 | )
Gross long-term deferred tax liabilities |  | (13,364 | ) |  | (2,250 | )
Deferred tax assets |  |  |  |
Environmental reserves |  | 261 |  |  | 195 |
Postretirement benefit accruals |  | 441 |  |  | 176 |
Deferred compensation and benefits |  | 266 |  |  | 170 |
Asset retirement obligations |  | 906 |  |  | 280 |
Foreign tax credit carryforwards |  | 4,379 |  |  | 2,356 |
General business credit carryforwards |  | 443 |  |  | 429 |
Net operating loss carryforward |  | 692 |  |  | 29 |
Interest expense carryforward |  | 492 |  |  | — |
All other |  | 782 |  |  | 111 |
Gross long-term deferred tax assets |  | 8,662 |  |  | 3,746 |
Valuation allowance |  | (4,959 | ) |  | (2,403 | )
Net long-term deferred tax assets |  | $ | 3,703 |  |  | $ | 1,343 |
Less: Foreign deferred tax asset in long-term receivables and other assets, net |  | $ | (56 | ) |  | $ | — |
Total deferred income taxes, net |  | $ | (9,717 | ) |  | $ | (907 | )
Total deferred tax assets, after valuation allowances, were $3.7 billion and $1.3 billion as of December 31, 2019, and 2018, respectively. Occidental expects to realize the recorded deferred tax assets, net of any allowances, through future operating income and reversal of temporary differences. The total deferred tax liabilities were $13.4 billion and $2.3 billion as of December 31, 2019 and 2018, respectively. The increase in net deferred tax liability in 2019 over 2018 is primarily due to the acquisition of Anadarko offset by the generation of interest expense and operating loss carryforwards in 2019. As of December 31, 2019, Occidental had foreign tax credit carryforwards of $4.4 billion, federal general business credits carryforwards of $404 million, tax-effected foreign net operating loss carryforwards of $209 million, tax-effected state operating loss carryforwards of $292 million and state tax credit carryforwards of $39 million. These carryforward balances have varying carryforward periods through 2039. Occidental has recorded a valuation allowance for all of the foreign tax credit carryforwards, $240 million of the tax-effected state net operating loss carryforwards $32 million of the state tax credit carryforwards and all of the tax-effected foreign net operating loss carryforwards. A deferred tax liability has not been recognized for temporary differences related to unremitted earnings of certain consolidated international subsidiaries aggregating approximately $889 million at December 31, 2019, as it is Occidental’s intention to reinvest such earnings indefinitely. If the earnings of these international subsidiaries were not indefinitely reinvested, an additional deferred tax liability of approximately $206 million would be required. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
millions |  | 2019 |  |  | 2018 |  |  | 2017 |
Balance at January 1 |  | $ | — |  |  | $ | 22 |  |  | $ | 22 |
Increase related to Anadarko Acquisition |  | 2,143 |  |  | — |  |  | — |
Increases related to current-year positions |  | 30 |  |  | — |  |  | — |
Settlements |  | — |  |  | (22 | ) |  | — |
Balance at December 31 |  | $ | 2,173 |  |  | $ | — |  |  | $ | 22 |
The December 31, 2019 balance of unrecognized tax benefits of $2.2 billion included potential benefits of $2.0 billion of which, if recognized, $1.7 billion would affect the effective tax rate on income. Also included are benefits of $131 million related to tax positions for which the ultimate deductibility is highly certain, but the timing of such deductibility is uncertain. Occidental records estimated potential interest and penalties related to liabilities for unrecognized tax benefits in the provisions for domestic and foreign income taxes. The Company accrued approximately $199 million of interest related to liabilities for unrecognized tax benefits as of December 31, 2019. During 2019, Occidental recorded interest related to liabilities for unrecognized tax benefits of $30 million. There were no interest and penalties associated with liabilities for unrecognized tax benefits recorded for the years ended December 31, 2018 and 2017. Over the next 12 months, it is reasonably possible that the total amount of unrecognized tax benefits could decrease by $100 million to $110 million due to settlements with taxing authorities or lapse in statutes of limitation. Occidental has recognized $86 million and $68 million in federal and state income tax receivables at December 31, 2019, and 2018, respectively, which was recorded in other current assets. In addition, Occidental has recognized $36 million and $68 million in federal alternative minimum tax non-current receivables at December 31, 2019, and 2018, respectively, which was recorded in long-term receivables and other assets, net. Occidental is subject to audit by various tax authorities in varying periods. See Note 11 - Lawsuits, Claims, Commitments and Contingencies for a discussion of these matters.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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