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Income Taxes (Tables)

12 Months Ended

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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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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