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Tax | 6 Months Ended
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Jun. 30, 2016
Income Tax Disclosure [Abstract] |
Tax | 8. Tax The effective tax rate for the three and six months ended June 30, 2016 was 35.8% and 41.6%, respectively, compared to 26.9% and 32.9% for the same periods in 2015. Lower tax rates on income earned in foreign jurisdictions, foreign dividends net of foreign tax credits, foreign exchange losses for tax reporting in Norway, and a reduction in tax reserves due to audit settlements provided tax benefits which, when applied to losses generated during the six-month period, resulted in a higher effective tax rate than the U.S. statutory rate. The tax benefits were partially offset by nondeductible expenses and an increase in valuation allowance on deferred taxes. The difference between the effective tax rate reflected in the provision for income taxes and the U.S. federal statutory rate of 35% was as follows (in millions):
|  | Three Months Ended |  |  | Six Months Ended |
|  | June 30, |  |  | June 30, |
|  | 2016 |  |  | 2015 |  |  | 2016 |  |  | 2015 |
Federal income tax at U.S. federal statutory rate |  | $ | (118 | ) |  | $ | 137 |  |  | $ | (201 | ) |  | $ | 313 |
Foreign income tax rate differential |  |  | 3 |  |  |  | (41 | ) |  |  | (24 | ) |  |  | (87 | )
State income tax, net of federal benefit |  |  | (1 | ) |  |  | — |  |  |  | (5 | ) |  |  | 3 |
Nondeductible expenses |  |  | 9 |  |  |  | 12 |  |  |  | 21 |  |  |  | 17 |
Tax benefit of manufacturing deduction |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (10 | )
Foreign dividends, net of foreign tax credits |  |  | (24 | ) |  |  | 8 |  |  |  | (19 | ) |  |  | 15 |
Tax impact of foreign exchange |  |  | 1 |  |  |  | (19 | ) |  |  | (7 | ) |  |  | (18 | )
Change in valuation allowance |  |  | 11 |  |  |  | 3 |  |  |  | 21 |  |  |  | 6 |
Tax rate change on temporary differences |  |  | (5 | ) |  |  | 1 |  |  |  | (3 | ) |  |  | (3 | )
Change in tax reserves |  |  | 3 |  |  |  | — |  |  |  | (20 | ) |  |  | 69 |
Other |  |  | — |  |  |  | 4 |  |  |  | (2 | ) |  |  | (11 | )
Provision for income taxes |  | $ | (121 | ) |  | $ | 105 |  |  | $ | (239 | ) |  | $ | 294 |
The balance of unrecognized tax benefits at June 30, 2016 was $27 million. The Company does not anticipate its total unrecognized tax benefits at June 30, 2016 to significantly change due to the settlement of audits or the expiration of statutes of limitation within 12 months of this reporting date. The Company is subject to taxation in the U.S., various states and foreign jurisdictions. The Company has significant operations in the United States, Canada, the United Kingdom, the Netherlands and Norway. Tax years that remain subject to examination by major tax jurisdiction vary by legal entity, but are generally open in the U.S. for tax years after 2012 and outside the U.S. for tax years after 2008. To the extent penalties and interest would be assessed on any underpayment of income tax, such accrued amounts have been classified as a component of income tax expense in the financial statements. For the three and six months ended June 30, 2016, the Company is utilizing the discrete-period method to compute its interim tax provision due to significant variations in the relationship between income tax expense and pre-tax accounting income or loss; consequently, the actual effective rate for the interim period is being reported. The discrete-period method is applied when the application of the estimated annual effective tax rate is impractical because it is not possible to reliably estimate the annual effective tax rate. For the three and six months ended June 30, 2015, the Company utilized the estimated annual effective tax rate method in computing its interim tax provisions. The relationship between pre-tax accounting income and income tax for these periods allowed the Company to estimate the annual effective tax rate to be applied to year-to-date income in those periods. On January 1, 2016, the Company adopted Accounting Standard Update No. 2015-17, “Balance Sheet Classification of Deferred Taxes” on a retrospective basis. Rather than classify deferred tax assets and liabilities as current and non-current, this update requires that deferred tax assets and liabilities be classified as non-current in the Consolidated Balance Sheet. Adoption of this standard resulted in a reclassification of our current deferred tax assets and liabilities to non-current deferred tax assets and liabilities in our Consolidated Balance Sheet. Prior periods have been retrospectively adjusted. At December 31, 2015, $376 million of current deferred tax assets have been reclassified to non-current deferred tax liabilities, $358 million of non-current deferred tax assets have been reclassified to non-current deferred tax liabilities, and $291 million of current deferred tax liabilities have been reclassified to non-current deferred tax liabilities.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32537-109319 + Details
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