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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2015

Income Tax Disclosure [Abstract]

Schedule of Effective Income Tax Rate Reconciliation

The following table summarizes the difference between income tax expense at the United States statutory rate of 35% and the income tax expense at effective worldwide tax rates for the respective periods:

Millions of dollars		2015				2014				2013
Earnings before income taxes
United States		$	555			$	325			$	149
Foreign		476				556				768
Earnings before income taxes		1,031				881				917
Income tax computed at United States statutory rate		361				308				321
U.S. government tax incentives, including Energy Tax Credits		(13		)		(10		)		(142		)
Foreign government tax incentives, including BEFIEX		(19		)		(46		)		(63		)
Foreign tax rate differential		(36		)		(17		)		(17		)
U.S. foreign tax credits		(103		)		(148		)		(231		)
Valuation allowances		(95		)		9				16
State and local taxes, net of federal tax benefit		18				5				7
Foreign withholding taxes		16				16				29
U.S. tax on foreign dividends and subpart F income		57				56				195
Settlement of global tax audits		16				(5		)		(54		)
Other items, net		7				21				7
Income tax computed at effective worldwide tax rates		$	209			$	189			$	68

Schedule of Components of Income Tax Expense (Benefit)

The following table summarizes our income tax (benefit) provision for 2015, 2014 and 2013:

		2015								2014								2013
Millions of dollars		Current				Deferred				Current				Deferred				Current				Deferred
United States		$	98			$	55			$	7			$	8			$	(60	)		$	(57	)
Foreign		181				(143		)		182				12				187				(9		)
State and local		10				8				(2		)		(18		)		2				5
		$	289			$	(80	)		$	187			$	2			$	129			$	(61	)
Total income tax expense						$	209							$	189							$	68

Schedule of Deferred Tax Assets and Liabilities

The following table summarizes the significant components of our deferred tax liabilities and assets at December 31, 2015 and 2014:

Millions of dollars		2015				2014
Deferred tax liabilities
Intangibles		$	770			$	800
Property, net		175				156
LIFO inventory		57				45
Other		214				193
Total deferred tax liabilities		1,216				1,194
Deferred tax assets
U.S. general business credit carryforwards, including Energy Tax Credits		1,010				1,005
Pensions		315				316
Loss carryforwards		683				650
Postretirement obligations		168				199
Foreign tax credit carryforwards		253				249
Research and development capitalization		306				358
Employee payroll and benefits		164				141
Accrued expenses		133				110
Product warranty accrual		64				62
Receivable and inventory allowances		106				73
Other		353				300
Total deferred tax assets		3,555				3,463
Valuation allowances for deferred tax assets		(286		)		(308		)
Deferred tax assets, net of valuation allowances		3,269				3,155
Net deferred tax assets		$	2,053			$	1,961

Reconciliation of Unrecognized Tax Benefits

The following table represents a reconciliation of the beginning and ending amount of unrecognized tax benefits that if recognized would impact the effective tax rate, excluding federal benefits of state and local tax positions, and interest and penalties:

Millions of dollars		2015				2014				2013
Balance, January 1		$	141			$	113			$	178
Additions for tax positions of the current year		12				17				17
Additions for tax positions of prior years		27				4				6
Reductions for tax positions of prior years		(25		)		(23		)		(81		)
Settlements during the period		(5		)		(11		)		(3		)
Positions assumed in acquisitions		—				42				—
Lapses of applicable statute of limitation		(7		)		(1		)		(4		)
Balance, December 31		$	143			$	141			$	113

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Tabular disclosure of the components of income tax expense attributable to continuing operations for each year presented including, but not limited to: current tax expense (benefit), deferred tax expense (benefit), investment tax credits, government grants, the benefits of operating loss carryforwards, tax expense that results from allocating certain tax benefits either directly to contributed capital or to reduce goodwill or other noncurrent intangible assets of an acquired entity, adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates or a change in the tax status of the entity, and adjustments of the beginning-of-the-year balances of a valuation allowance because of a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years.

+ References

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-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 9
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Tabular disclosure of the components of net deferred tax asset or liability recognized in an entity's statement of financial position, including the following: the total of all deferred tax liabilities, the total of all deferred tax assets, the total valuation allowance recognized for deferred tax assets.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 2
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Tabular disclosure of the reconciliation using percentage or dollar amounts of the reported amount of income tax expense attributable to continuing operations for the year to the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income from continuing operations.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 12
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Tabular disclosure of the change in unrecognized tax benefits, excluding amounts pertaining to examined tax returns.

+ References

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-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 15A
-URI http://asc.fasb.org/extlink&oid=6907707&loc=SL6600010-109319

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