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Income Taxes (Tables) | 12 Months Ended
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Dec. 31, 2020
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 2020, 2019, and 2018, respectively, and the income tax expense at effective worldwide tax rates for the respective periods:
Millions of dollars |  | 2020 |  | 2019 |  | 2018
Earnings (loss) before income taxes |  |  |  |  |  |
United States |  | $ | 1,020 |  |  | $ | 652 |  |  | $ | 775 |
Foreign |  | 427 |  |  | 878 |  |  | (750) |
Earnings (loss) before income taxes |  | $ | 1,447 |  |  | $ | 1,530 |  |  | $ | 25 |
Income tax (benefit) expense computed at United States statutory rate |  | $ | 304 |  |  | $ | 321 |  |  | $ | 6 |
U.S. government tax incentives |  | (17) |  |  | (21) |  |  | (11) |
Foreign government tax incentives, including BEFIEX |  | (20) |  |  | (13) |  |  | (21) |
Foreign tax rate differential |  | 30 |  |  | 70 |  |  | (24) |
U.S. foreign tax credits |  | (25) |  |  | (86) |  |  | (260) |
Valuation allowances |  | 15 |  |  | (150) |  |  | 75 |
State and local taxes, net of federal tax benefit |  | 40 |  |  | 41 |  |  | 25 |
Foreign withholding taxes |  | 8 |  |  | 54 |  |  | 24 |
U.S. tax on foreign dividends and subpart F income |  | 34 |  |  | 67 |  |  | 72 |
Settlements and changes in unrecognized tax benefits |  | 53 |  |  | 113 |  |  | 72 |
U.S. Transition Tax |  | — |  |  | 26 |  |  | 40 |
Changes in enacted tax rates |  | (6) |  |  | 42 |  |  | (54) |
Nondeductible goodwill |  | — |  |  | — |  |  | 139 |
Nondeductible fines & penalties |  | — |  |  | — |  |  | 30 |
Sale of Embraco |  | — |  |  | 58 |  |  | — |
Legal entity restructuring tax impact |  | (82) |  |  | (147) |  |  | — |
Other items, net |  | 48 |  |  | (27) |  |  | 37 |
Income tax computed at effective worldwide tax rates |  | $ | 382 |  |  | $ | 348 |  |  | $ | 150 |
Schedule of Components of Income Tax Expense (Benefit) | The following table summarizes our income tax (benefit) provision for 2020, 2019 and 2018:
| 2020 |  | 2019 |  | 2018
Millions of dollars | Current |  | Deferred |  | Current |  | Deferred |  | Current |  | Deferred
United States | $ | 90 |  |  | $ | 81 |  |  | $ | 203 |  |  | $ | 69 |  |  | $ | (70) |  |  | $ | 130 |
Foreign | 182 |  |  | (24) |  |  | 432 |  |  | (406) |  |  | 182 |  |  | (119) |
State and local | 42 |  |  | $ | 11 |  |  | 42 |  |  | $ | 8 |  |  | 12 |  |  | $ | 15 |
| $ | 314 |  |  | $ | 68 |  |  | $ | 677 |  |  | $ | (329) |  |  | $ | 124 |  |  | $ | 26 |
Total income tax expense |  |  | $ | 382 |  |  |  |  | $ | 348 |  |  |  |  | $ | 150 |
Schedule of Deferred Tax Assets and Liabilities | The following table summarizes the significant components of our deferred tax liabilities and assets at December 31, 2020 and 2019:
Millions of dollars |  | 2020 |  | 2019
Deferred tax liabilities |  |  |  |
Intangibles |  | $ | 461 |  |  | $ | 439 |
Property, net |  | 196 |  |  | 175 |
Right of use assets |  | 265 |  |  | 238 |
Inventory Reserves |  | 116 |  |  | 120 |
Other |  | 252 |  |  | 215 |
Total deferred tax liabilities |  | $ | 1,290 |  |  | $ | 1,187 |
Deferred tax assets |  |  |  |
U.S. general business credit carryforwards, including Energy Tax Credits |  | $ | 680 |  |  | $ | 787 |
Lease liabilities |  | 275 |  |  | 242 |
Pensions |  | 114 |  |  | 66 |
Loss carryforwards |  | 1,336 |  |  | 1,226 |
Postretirement obligations |  | 49 |  |  | 145 |
Foreign tax credit carryforwards |  | 25 |  |  | 39 |
Research and development capitalization |  | 121 |  |  | 133 |
Employee payroll and benefits |  | 118 |  |  | 96 |
Accrued expenses |  | 96 |  |  | 93 |
Product warranty accrual |  | 76 |  |  | 78 |
Receivable and inventory allowances |  | 112 |  |  | 72 |
Other |  | 646 |  |  | 574 |
Total deferred tax assets |  | 3,648 |  |  | 3,551 |
Valuation allowances for deferred tax assets |  | (214) |  |  | (192) |
Deferred tax assets, net of valuation allowances |  | 3,434 |  |  | 3,359 |
Net deferred tax assets |  | $ | 2,144 |  |  | $ | 2,172 |
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 |  | 2020 |  | 2019 |  | 2018
Balance, January 1 |  | $ | 394 |  |  | $ | 278 |  |  | $ | 219 |
Additions for tax positions of the current year |  | 17 |  |  | 20 |  |  | 21 |
Additions for tax positions of prior years |  | 21 |  |  | 138 |  |  | 60 |
Reductions for tax positions of prior years |  | (2) |  |  | (26) |  |  | (5) |
Settlements during the period |  | — |  |  | (4) |  |  | (8) |
Lapses of applicable statute of limitation |  | (3) |  |  | (12) |  |  | (9) |
Balance, December 31 |  | $ | 427 |  |  | $ | 394 |  |  | $ | 278 |

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