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INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2019

Schedule of Components of Earnings (Loss) from Continuing Operations and Provisions for Income Taxes

Components of earnings before income taxes and the provision for (benefit from) U.S. and other income taxes from operations follow:



	For years ended December 31,
(Dollars in millions)	2019			2018			2017
Earnings before income taxes
United States	$	454		$	718		$	654
Outside the United States	448			592			635
Total	$	902		$	1,310		$	1,289
Provision for (benefit from) income taxes
United States Federal
Current ⁽¹⁾	$	55		$	161		$	220
Deferred ⁽²⁾	19			(11		)	(383		)
Outside the United States
Current	62			86			62
Deferred	(32		)	(22		)	2
State and other
Current	—			30			13
Deferred	36			(18		)	(13		)
Total	$	140		$	226		$	(99	)


⁽¹⁾	A one-time transition tax of $71 million on deferred foreign income tax is included for 2017.


⁽²⁾	Includes a one-time benefit of $517 million primarily due to the remeasurement of certain net deferred tax liabilities using the lower U.S. corporate income tax rate and a one-time $72 million valuation allowance on deferred tax assets for foreign tax credit carryforwards for 2017.

Schedule of Deferred Tax Charge (Benefit) Recorded as a Component of Accumulated Other Comprehensive Loss

The following represents the deferred tax (benefit) charge recorded as a component of AOCI in the Consolidated Statements of Financial Position:



	For years ended December 31,
(Dollars in millions)	2019			2018			2017
Defined benefit pension and other postretirement benefit plans	$	(10	)	$	(10	)	$	(16	)
Derivatives and hedging	(2		)	3			8
Total	$	(12	)	$	(7	)	$	(8	)

Schedule of Income Tax Expense (Benefit) Included in Consolidated Financial Statement

Total income tax expense (benefit) included in the consolidated financial statements was composed of the following:



	For years ended December 31,
(Dollars in millions)	2019			2018			2017
Earnings before income taxes	$	140		$	226		$	(99	)
Other comprehensive income	(12		)	(7		)	(8		)
Total	$	128		$	219		$	(107	)

Schedule of Reconciliation of Income Taxes on Earnings from Continuing Operations at Federal Statutory Income Tax Rate

Differences between the provision for (benefit from) income taxes and income taxes computed using the U.S. Federal statutory income tax rate follow:



	For years ended December 31,
(Dollars in millions)	2019			2018			2017
Amount computed using the statutory rate	$	189		$	274		$	450
State income taxes, net	36			6			(4		)
Foreign rate variance	(68		)	(52		)	(150		)
Domestic manufacturing deduction	—			—			(18		)
Change in reserves for tax contingencies	36			21			20
General business credits	(52		)	(60		)	(65		)
U.S. tax on foreign earnings	(17		)	10			29
Foreign tax credits	—			(12		)	(26		)
Tax law changes and tax loss from outside-U.S. entity reorganizations ⁽¹⁾	7			20			(339		)
Other	9			19			4
Provision for (benefit from) income taxes	$	140		$	226		$	(99	)

Effective income tax rate	16		%	17		%	(8		)%

⁽¹⁾

Includes a one-time net benefit primarily due to the remeasurement of certain net deferred tax liabilities using the lower U.S. corporate income tax rate partially offset by the transition tax on deferred foreign income and changes in the valuation of deferred tax assets associated with tax law changes and the tax impact from intercompany reorganization activities in 2017 and a net incremental adjustment to those amounts under the Tax Reform Act in 2018 and 2019.

Schedule of Significant Components of Deferred Tax Assets and Liabilities

The significant components of deferred tax assets and liabilities follow:



	December 31,
(Dollars in millions)	2019			2018 ⁽¹⁾
Deferred tax assets
Post-employment obligations	$	247		$	230
Net operating loss carryforwards	606			634
Tax credit carryforwards	239			239
Environmental reserves	68			70
Unrealized derivative loss	18			18
Other	173			94
Total deferred tax assets	1,351			1,285
Less: Valuation allowance	453			487
Deferred tax assets less valuation allowance	$	898		$	798
Deferred tax liabilities
Property, plant, and equipment	$	(895	)	$	(856	)
Intangible assets	(439		)	(473		)
Investments	(235		)	(179		)
Other	(178		)	(131		)
Total deferred tax liabilities	$	(1,747	)	$	(1,639	)
Net deferred tax liabilities	$	(849	)	$	(841	)
As recorded in the Consolidated Statements of Financial Position:
Other noncurrent assets	$	66		$	43
Deferred income tax liabilities	(915		)	(884		)
Net deferred tax liabilities	$	(849	)	$	(841	)


⁽¹⁾	Revised from Note 7, "Income Taxes", to the Company's 2018 Annual Report on Form 10-K, which reported net operating loss carryforwards as $708 million, valuation allowance as $466 million, and investments as $(274) million.

Schedule of Tax Receivables and Payables

Amounts due to and from tax authorities as recorded in the Consolidated Statements of Financial Position:



	December 31,
(Dollars in millions)	2019		2018
Miscellaneous receivables	$	211	$	135

Payables and other current liabilities	$	36	$	43
Other long-term liabilities	139		162
Total income taxes payable	$	175	$	205

Schedule of Reconciliation of Beginning and Ending Amounts of Unrecognized Tax Benefits

A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:



(Dollars in millions)	2019			2018			2017
Balance at January 1	$	182		$	142		$	114
Adjustments based on tax positions related to current year	22			44			29
Lapse of statute of limitations	(2		)	(4		)	(1		)
Balance at December 31 ⁽¹⁾	$	202		$	182		$	142


⁽¹⁾	All of the unrecognized tax benefits would, if recognized, impact the Company's effective tax rate.

A reconciliation of the beginning and ending amounts of accrued interest related to unrecognized tax positions is as follows:



(Dollars in millions)	2019			2018		2017
Balance at January 1	$	10		$	6	$	4
Expense for interest, net of tax	5			4		3
Income for interest, net of tax	(2		)	—		(1		)
Balance at December 31	$	13		$	10	$	6

Accrued penalties related to unrecognized tax positions were immaterial as of December 31, 2019, 2018, and 2017.