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Income Taxes | 12 Months Ended
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Dec. 31, 2017
Income Tax Disclosure [Abstract] |
Income Taxes | 14. Income Taxes On December 22, 2017 the United States enacted significant changes to the U.S. tax law following the passage and signing of H.R.1, “An Act to Provide the Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018” (the “Act”) (previously known as “The Tax Cuts and Jobs Act”). The Act reduces the U.S. federal corporate tax rate from 35% to 21% and requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred. The Act includes new anti-deferral provisions on Global Intangible Low Taxed Income (“GILTI”). Beginning in 2018 these provisions result in incremental taxability of our foreign subsidiaries income in excess of an allowed return on certain tangible property. The FASB has determined that filers have a policy choice to account for this tax on either a period basis or a deferred tax basis. We are still evaluating the impacts of GILTI on our business model and have not yet made any accounting adjustments or policy decisions regarding this new source of incremental US taxable income. Due to the timing of the enactment and the complexity involved in applying the provision of the Act, we have made reasonable estimates of the effects and recorded provisional amounts in our financial statement as of December 31, 2017. As we collect and prepare necessary data, and interpret the Act and any additional guidance issued by the U.S. Treasury Department, the IRS, and other standard-setting bodies, we may make adjustments to the provisional amounts. We recognized an income tax benefit of $242 million in the year ended December 31, 2017 associated with the revaluation of our net deferred tax liability. Our provisional estimate of the one-time transition tax resulted in no additional tax expense and has been considered in our disclosure of undistributed earnings. The accounting for the tax effects of the Act will be completed in 2018. The domestic and foreign components of income (loss) before income taxes were as follows (in millions):
|  | Years Ended December 31, |
|  | 2017 |  |  | 2016 |  |  | 2015 |
Domestic |  | $ | (470 | ) |  | $ | (2,095 | ) |  | $ | (1,577 | )
Foreign |  |  | 78 |  |  |  | (528 | ) |  |  | 988 |
|  | $ | (392 | ) |  | $ | (2,623 | ) |  | $ | (589 | )
The components of the provision for income taxes consisted of (in millions):
|  | Years Ended December 31, |
|  | 2017 |  |  | 2016 |  |  | 2015 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 23 |  |  | $ | (79 | ) |  | $ | 30 |
State |  |  | 1 |  |  |  | (4 | ) |  |  | (58 | )
Foreign |  |  | 161 |  |  |  | 74 |  |  |  | 464 |
Total current income tax provision |  |  | 185 |  |  |  | (9 | ) |  |  | 436 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (332 | ) |  |  | (132 | ) |  |  | (41 | )
State |  |  | (2 | ) |  |  | (7 | ) |  |  | (38 | )
Foreign |  |  | (7 | ) |  |  | (59 | ) |  |  | (179 | )
Total deferred income tax provision |  |  | (341 | ) |  |  | (198 | ) |  |  | (258 | )
Total income tax provision |  | $ | (156 | ) |  | $ | (207 | ) |  | $ | 178 |
The difference between the effective tax rate reflected in the provision for income taxes and the U.S. federal statutory rate was as follows (in millions):
|  | Years Ended December 31, |
|  | 2017 |  |  | 2016 |  |  | 2015 |
Federal income tax at U.S. statutory rate |  | $ | (137 | ) |  | $ | (918 | ) |  | $ | (206 | )
Foreign income tax rate differential |  |  | (21 | ) |  |  | 32 |  |  |  | (110 | )
Goodwill impairment |  |  | — |  |  |  | 271 |  |  |  | 462 |
Nondeductible expenses |  |  | 38 |  |  |  | 30 |  |  |  | 66 |
Foreign dividends, net of foreign tax credits |  |  | (132 | ) |  |  | (25 | ) |  |  | 28 |
Tax rate change on timing differences |  |  | (245 | ) |  |  | (8 | ) |  |  | (45 | )
Change in uncertain tax positions |  |  | 81 |  |  |  | 11 |  |  |  | 69 |
Prior years taxes |  |  | (26 | ) |  |  | (29 | ) |  |  | (47 | )
Tax impact on foreign exchange |  |  | 5 |  |  |  | (4 | ) |  |  | (46 | )
Change in deferred tax valuation allowance |  |  | 280 |  |  |  | 476 |  |  |  | 15 |
Other |  |  | 1 |  |  |  | (43 | ) |  |  | (8 | )
Total income tax provision |  | $ | (156 | ) |  | $ | (207 | ) |  | $ | 178 |
The effective tax rate for the year ended December 31, 2017 was 39.8%, compared to 7.9% for 2016. For the year ended December 31, 2017, the revaluation of net deferred tax liabilities in the U.S. partially offset by valuation allowances established on foreign tax credits generated during the year, when applied to losses resulted in a higher effective tax rate than the U.S. statutory rate. For the year ended December 31, 2016, the impairment of goodwill not deductible for tax purposes, lower tax rates on losses incurred in foreign jurisdictions, and the establishment of valuation allowances, when applied to losses resulted in a lower effective tax rate than the U.S. statutory rate. Significant components of our deferred tax assets and liabilities were as follows (in millions):
|  | December 31, |
|  | 2017 |  |  | 2016 |
Deferred tax assets: |  |  |  |  |  |  |  |
Allowances and operating liabilities |  | $ | 355 |  |  | $ | 534 |
Net operating loss carryforwards |  |  | 182 |  |  |  | 153 |
Postretirement benefits |  |  | 31 |  |  |  | 60 |
Tax credit carryforwards |  |  | 1,002 |  |  |  | 405 |
Other |  |  | 78 |  |  |  | 164 |
Valuation allowance |  |  | (1,202 | ) |  |  | (544 | )
Total deferred tax assets |  |  | 446 |  |  |  | 772 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Tax over book depreciation |  |  | 174 |  |  |  | 267 |
Intangible assets |  |  | 716 |  |  |  | 1,148 |
Deferred income |  |  | 111 |  |  |  | 185 |
Accrued tax on unremitted earnings |  |  | 17 |  |  |  | 53 |
Other |  |  | 92 |  |  |  | 97 |
Total deferred tax liabilities |  |  | 1,110 |  |  |  | 1,750 |
Net deferred tax liability |  | $ | 664 |  |  | $ | 978 |
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in millions):
|  | 2017 |  |  | 2016 |  |  | 2015 |
Unrecognized tax benefit at beginning of year |  | $ | 78 |  |  | $ | 46 |  |  | $ | 115 |
Gross increase for current period tax positions |  |  | 10 |  |  |  | 3 |  |  |  | 8 |
Gross increase for tax positions in prior years |  |  | 64 |  |  |  | 65 |  |  |  | 75 |
Gross decrease for tax positions in prior years |  |  | (14 | ) |  |  | (21 | ) |  |  | (75 | )
Settlements |  |  | — |  |  |  | (3 | ) |  |  | (69 | )
Lapse of statute of limitations |  |  | (6 | ) |  |  | (12 | ) |  |  | (8 | )
Unrecognized tax benefit at end of year |  | $ | 132 |  |  | $ | 78 |  |  | $ | 46 |
The balance of unrecognized tax benefits at December 31, 2017, 2016 and 2015 was $132 million, $78 million and $46 million, respectively. Accruals related to foreign jurisdiction audits of prior years’ resulted in uncertain tax position increases of $64 million and $65 million in 2017 and 2016, respectively. For the year ended December 31, 2015 a $69 million uncertain tax position was identified in a foreign jurisdiction that was included as an increase and settlement during the year and the completion of audits in foreign jurisdictions resulted in a $75 million decrease in uncertain tax positions. Substantially all of the unrecognized tax benefits, if ultimately realized, would be recorded as a benefit to the effective tax rate. The Company anticipates that it is reasonably possible that the amount of unrecognized tax benefits may decrease by up to $75 million in the next twelve months due to settlements and conclusions of tax examinations. 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 consistent with the Company’s policy. For the years ended December 31, 2017, 2016 and 2015, we recorded income tax expense of $17 million, $10 million and $1 million, respectively, for interest and penalty related to unrecognized tax benefits. As of December 31, 2017 and 2016, the Company had accrued $32 million and $15 million, respectively, of interest and penalty relating to unrecognized tax benefits. The Company is subject to taxation in the United States, various states and foreign jurisdictions. The Company has significant operations in the United States, Norway, Canada, the United Kingdom, the Netherlands, France and Denmark. Tax years that remain subject to examination by major tax jurisdictions vary by legal entity, but are generally open in the U.S. for tax years ending after 2012 and outside the U.S. for tax years ending after 2010. Net operating loss carryforwards by jurisdiction and expiration as of December 31, 2017 were as follows (in millions):
|  | Federal |  |  | State |  |  | Foreign |  |  | Total |
2018 - 2021 Expiration |  | $ | 6 |  |  | $ | 2 |  |  | $ | 57 |  |  | $ | 65 |
2022 - 2033 Expiration |  |  | 16 |  |  |  | 16 |  |  |  | 123 |  |  |  | 155 |
2034 - 2037 Expiration |  |  | — |  |  |  | 127 |  |  |  | 97 |  |  |  | 224 |
Unlimited Expiration |  |  | — |  |  |  | — |  |  |  | 372 |  |  |  | 372 |
Total Net Operating Loss (NOL) |  | $ | 22 |  |  | $ | 145 |  |  | $ | 649 |  |  | $ | 816 |
Tax Effected NOL |  | $ | 5 |  |  | $ | 8 |  |  | $ | 169 |  |  | $ | 182 |
Valuation Allowance (VA) |  |  | (4 | ) |  |  | (8 | ) |  |  | (145 | ) |  |  | (157 | )
NOL Net of VA |  | $ | 1 |  |  | $ | — |  |  | $ | 24 |  |  | $ | 25 |
The Company has $658 million of excess foreign tax credits in the United States as of December 31, 2017, of which $11 million, $141 million, $287 million and $219 million will expire in 2020, 2022, 2026 and 2027, respectively. As of December 31, 2017, the Company has remaining tax-deductible goodwill of $153 million, resulting from acquisitions. The amortization of this goodwill is deductible over various periods ranging up to 13 years. Undistributed earnings of certain of the Company’s foreign subsidiaries amounted to $5,302 million at December 31, 2017. These earnings are considered to be indefinitely reinvested and no provision for U.S. federal and state income taxes has been made. Distribution of these earnings in the form of dividends or otherwise could result in incremental U.S. federal and state taxes at statutory rates and withholding taxes payable in various foreign countries.

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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 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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