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Income Taxes

6 Months Ended

Jun. 30, 2017

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

	Quarter ended								Year to date
	2017				2016				2017				2016
Income tax provision	$	105			$	98			$	172			$	180
Effective tax rate	33.8		%		27.0		%		26.2		%		26.8		%

Our effective tax rate is lower than the U.S. federal statutory rate of 35% primarily due to the majority of our income being earned outside the U.S. where tax rates are generally lower than the U.S. rate.

Our second quarter effective tax rate was higher than the prior year primarily due to the unfavorable impacts associated with our 2017 planned refranchising gains, substantially all of which will be taxed at the U.S. rate, and the pre-tax charges recorded in the current quarter associated with refranchising certain international markets for which we are not able to record a tax benefit. The second quarter tax rate was also higher than the prior year due to lapping the benefit associated with a prior year income tax return amendment, partially offset by the inclusion in the current year of $15 million of excess benefits on share based compensation related to the adoption of a new accounting standard in the quarter ended March 31, 2017. See Note 1.

Our year to date effective tax rate was lower than prior year primarily due to the inclusion of $64 million of excess tax benefits on share-based compensation related to the adoption of a new accounting standard in the quarter ended March 31, 2017. See Note 1. These excess benefits were largely associated with the deferred compensation payouts to recently retired employees. This benefit was partially offset by the unfavorable impacts associated with our 2017 planned refranchising gains, substantially all of which will be taxed at the U.S. rate, the pre-tax charges recorded in the quarter ended June 30, 2017 associated with refranchising certain international markets for which we are not able to record a tax benefit and the repatriation of foreign earnings.

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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://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-URI http://asc.fasb.org/topic&trid=2144680

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