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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

Schedule of Effective Income Tax Rate Reconciliation

The following table summarizes the difference between an income tax benefit at the United States statutory rate of 21% in 2018, and 35% in 2017 and 2016, respectively, and the income tax expense at effective worldwide tax rates for the respective periods:

Millions of dollars		2018				2017				2016
Earnings (loss) before income taxes
United States		$	729			$	671			$	605
Foreign		(750		)		216				509
Earnings (loss) before income taxes		(21		)		887				1,114
Income tax (benefit) expense computed at United States statutory rate		(4		)		310				390
U.S. government tax incentives		(11		)		(13		)		(9		)
Foreign government tax incentives, including BEFIEX		(21		)		(29		)		(11		)
Foreign tax rate differential		(24		)		(14		)		(50		)
U.S. foreign tax credits		(260		)		17				(86		)
Valuation allowances		75				(68		)		(121		)
State and local taxes, net of federal tax benefit		23				29				20
Foreign withholding taxes		24				41				36
U.S. tax on foreign dividends and subpart F income		72				12				63
Settlement of global tax audits		72				48				(40		)
U.S. Transition Tax		40				190				—
Changes in enacted tax rates		(54		)		49				32
Nondeductible goodwill		139				—				—
Nondeductible fines & penalties		30				—				—
Other items, net		37				(22		)		(38		)
Income tax computed at effective worldwide tax rates		$	138			$	550			$	186

Schedule of Components of Income Tax Expense (Benefit)

The following table summarizes our income tax (benefit) provision for 2018, 2017 and 2016:

	2018								2017								2016
Millions of dollars	Current				Deferred				Current				Deferred				Current				Deferred
United States	$	(70	)		$	120			$	138			$	386			$	34			$	120
Foreign	182				(119		)		213				(233		)		167				(154		)
State and local	12				13				12				34				7				12
	$	124			$	14			$	363			$	187			$	208			$	(22	)
Total income tax expense					$	138							$	550							$	186

Schedule of Deferred Tax Assets and Liabilities

The following table summarizes the significant components of our deferred tax liabilities and assets at December 31, 2018 and 2017:

Millions of dollars		2018				2017
Deferred tax liabilities
Intangibles		$	450			$	610
Property, net		195				185
LIFO inventory		37				38
Other		262				177
Total deferred tax liabilities		944				1,010
Deferred tax assets
U.S. general business credit carryforwards, including Energy Tax Credits		875				927
Pensions		144				220
Loss carryforwards		1,051				880
Postretirement obligations		99				109
Research and development capitalization		135				129
Employee payroll and benefits		98				56
Accrued expenses		154				170
Product warranty accrual		55				55
Receivable and inventory allowances		85				56
Other		536				521
Total deferred tax assets		3,232				3,123
Valuation allowances for deferred tax assets		(348		)		(178		)
Deferred tax assets, net of valuation allowances		2,884				2,945
Net deferred tax assets		$	1,940			$	1,935

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		2018				2017				2016
Balance, January 1		$	219			$	102			$	143
Additions for tax positions of the current year		21				25				14
Additions for tax positions of prior years		60				110				1
Reductions for tax positions of prior years		(5		)		(1		)		(33		)
Settlements during the period		(8		)		(10		)		(20		)
Lapses of applicable statute of limitation		(9		)		(7		)		(3		)
Balance, December 31		$	278			$	219			$	102

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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.

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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.

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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.

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Tabular disclosure of the change in unrecognized tax benefits, excluding amounts pertaining to examined tax returns.

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