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Note 15 - Income Taxes | 12 Months Ended
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Dec. 31, 2017
Income Tax Disclosure [Abstract] |
Income Tax Disclosure [Text Block] | NOTE 15: INCOME TAXES The 2017 Tax Act was signed into law on December 22, 2017. The 2017 Tax Act changed many aspects of U.S. corporate income taxation and included a reduction of the corporate income tax rate from 35% to 21%, the implementation of a territorial tax system and the imposition of a tax on deemed repatriated earnings of foreign subsidiaries. Kodak recognized the tax effects of the 2017 Tax Act in the year ended December 31, 2017. The changes to existing U.S. tax laws as a result of the 2017 Tax Act, which Kodak believes have the most significant impact on Kodak’s federal income taxes are as follows: Reduction of the U.S. Corporate Income Tax Rate Kodak measures deferred tax assets and liabilities using enacted tax rates that will apply in the years in which the temporary differences are expected to be recovered or paid. Accordingly, Kodak’s deferred tax assets and liabilities were remeasured to reflect the reduction in the U.S. corporate income tax rate from 35% to 21%, resulting in a $202 million decrease in Kodak’s net deferred tax assets for the year ended December 31, 2017. This reduction in deferred tax assets was mainly offset by Kodak’s U.S. valuation allowance except for the impact on deferred tax liabilities related to Kodak’s goodwill and tradename, which resulted in a benefit of approximately $7 million. Transition Tax on Foreign Earnings Kodak recognized provisional income tax expense of $14 million for the year ended December 31, 2017 related to the one-time transition tax on certain foreign earnings which will be offset by the utilization of foreign tax credits. The determination of the transition tax requires further analysis regarding the amount and composition of Kodak’s historical foreign earnings, which is expected to be completed in the second half of 2018. The 2017 Tax Act also includes a provision to tax global intangible low-taxed income (“GILTI”) of foreign subsidiaries and a base erosion anti-abuse tax (“BEAT”) measure that taxes certain payments between a U.S. corporation and its subsidiaries. Kodak will be subject to the GILTI and BEAT provisions effective beginning January 1, 2018 and is in the process of analyzing their effects, including how to account for the GILTI provision from an accounting policy standpoint. Therefore, Kodak has not provided any deferred tax impacts of GILTI in its consolidated financial statements for the year ended December 31, 2017. On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (SAB 118) to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the 2017 Tax Act. Kodak has recognized the provisional tax impacts related to deemed repatriated earnings and the re-measurement of deferred tax assets and liabilities to the extent needed and included these amounts in its consolidated financial statements for the year ended December 31, 2017. The ultimate impact may differ from these provisional amounts, possibly materially, due to, among other things, additional analysis, changes in interpretations and assumptions Kodak has made, additional regulatory guidance that may be issued, and actions Kodak may take as a result of the 2017 Tax Act. The accounting is expected to be complete when the 2017 U.S. corporate income tax return is filed in 2018. The components of (Loss) earnings from continuing operations before income taxes and the related (benefit) provision for U.S. and other income taxes were as follows (in millions):
|  | Year Ended December 31, |
|  | 2017 |  |  | 2016 |  |  | 2015 |
(Loss) earnings from continuing operations before income taxes: |  |  |  |  |  |  |  |  |  |  |  |
U.S. |  | $ | (84 | ) |  | $ | (66 | ) |  | $ | (169 | )
Outside the U.S. |  |  | 71 |  |  |  | 117 |  |  |  | 134 |
Total |  | $ | (13 | ) |  | $ | 51 |  |  | $ | (35 | )
U.S. income taxes: |  |  |  |  |  |  |  |  |  |  |  |
Current provision |  | $ | 1 |  |  | $ | 2 |  |  | $ | 1 |
Deferred (benefit) provision |  |  | (31 | ) |  |  | 6 |  |  |  | 9 |
Income taxes outside the U.S.: |  |  |  |  |  |  |  |  |  |  |  |
Current provision |  |  | 15 |  |  |  | 14 |  |  |  | 22 |
Deferred (benefit) provision |  |  | (94 | ) |  |  | 11 |  |  |  | — |
State and other income taxes: |  |  |  |  |  |  |  |  |  |  |  |
Current benefit |  |  | (1 | ) |  |  | — |  |  |  | — |
Total provision |  | $ | (110 | ) |  | $ | 33 |  |  | $ | 32 |
The differences between income taxes computed using the U.S. federal income tax rate and the (benefit) provision for income taxes for continuing operations were as follows (in millions):
|  | Year Ended December 31, |
|  | 2017 |  |  | 2016 |  |  | 2015 |
Amount computed using the statutory rate |  | $ | (5 | ) |  | $ | 18 |  |  | $ | (12 | )
Increase (reduction) in taxes resulting from: |  |  |  |  |  |  |  |  |  |  |  |
Unremitted foreign earnings |  |  | 2 |  |  |  | 6 |  |  |  | 26 |
Impact of goodwill and intangible impairments |  |  | (21 | ) |  |  | — |  |  |  | — |
Operations outside the U.S. |  |  | 13 |  |  |  | 20 |  |  |  | 28 |
Legislative tax law and rate changes |  |  | 150 |  |  |  | 6 |  |  |  | — |
Valuation allowance |  |  | (259 | ) |  |  | (58 | ) |  |  | (71 | )
Tax settlements and adjustments, including interest |  |  | (11 | ) |  |  | 2 |  |  |  | 2 |
Discharge of debt and other reorganization related items |  |  | 39 |  |  |  | 40 |  |  |  | 60 |
Embedded derivative liability conversion |  |  | (17 | ) |  |  | — |  |  |  | — |
Other, net |  |  | (1 | ) |  |  | (1 | ) |  |  | (1 | )
(Benefit) provision for income taxes |  | $ | (110 | ) |  | $ | 33 |  |  | $ | 32 |
The significant components of deferred tax assets and liabilities were as follows (in millions):
|  | As of December 31, |
|  | 2017 |  |  | 2016 |
Deferred tax assets |  |  |  |  |  |  |  |
Pension and postretirement obligations |  | $ | 96 |  |  | $ | 162 |
Restructuring programs |  |  | 1 |  |  |  | 1 |
Foreign tax credit |  |  | 343 |  |  |  | 335 |
Inventories |  |  | 10 |  |  |  | 10 |
Investment tax credit |  |  | 58 |  |  |  | 71 |
Employee deferred compensation |  |  | 25 |  |  |  | 41 |
Depreciation |  |  | 68 |  |  |  | 63 |
Research and development costs |  |  | 80 |  |  |  | 144 |
Tax loss carryforwards |  |  | 307 |  |  |  | 435 |
Other deferred revenue |  |  | 4 |  |  |  | 11 |
Other |  |  | 74 |  |  |  | 80 |
Total deferred tax assets |  | $ | 1,066 |  |  | $ | 1,353 |
Deferred tax liabilities |  |  |  |  |  |  |  |
Leasing |  | $ | 2 |  |  | $ | 1 |
Goodwill/intangibles |  |  | 16 |  |  |  | 48 |
Unremitted foreign earnings |  |  | 20 |  |  |  | 76 |
Total deferred tax liabilities |  |  | 38 |  |  |  | 125 |
Net deferred tax assets before valuation allowance |  |  | 1,028 |  |  |  | 1,228 |
Valuation allowance |  |  | 856 |  |  |  | 1,209 |
Net deferred tax assets |  | $ | 172 |  |  | $ | 19 |
Deferred tax assets (liabilities) are reported in the following components within the Consolidated Statement of Financial Position (in millions):
|  | As of December 31, |
|  | 2017 |  |  | 2016 |
Deferred income taxes |  | $ | 188 |  |  | $ | 35 |
Other long-term liabilities |  |  | (16 | ) |  |  | (16 | )
Net deferred tax assets |  | $ | 172 |  |  | $ | 19 |
As of December 31, 2017, Kodak had available domestic and foreign NOL carry-forwards for income tax purposes of approximately $1,375 million, of which approximately $542 million have an indefinite carry-forward period. The remaining $833 million expire between the years 2018 and 2037. As of December 31, 2017, Kodak had unused foreign tax credits and investment tax credits of $343 million and $58 million, respectively, with various expiration dates through 2032. Utilization of post-emergence NOL carry-forwards and tax credits may be subject to limitations in the event of significant changes in stock ownership of the Company in the future. Section 382 of the Internal Revenue Code of 1986, as amended, imposes annual limitations on the utilization of NOL carryforwards, other tax carryforwards, and certain built-in losses as defined under that Section, upon an ownership change. In general terms, an ownership change may result from transactions that increase the aggregate ownership of certain stockholders in Kodak’s stock by more than 50 percentage points over a three-year testing period. The 2017 Tax Act includes a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017. The one-time transition tax as of December 31, 2017 resulted in the recognition of a previously recorded deferred tax liability on the undistributed foreign earnings and was fully offset by Kodak’s U.S. valuation allowance, resulting in no net tax benefit. Kodak had a deferred tax liability (net of related foreign tax credits) of $56 million on the foreign subsidiaries’ undistributed earnings as of December 31, 2016. Kodak has a deferred tax liability of $20 million for the potential foreign withholding taxes on the undistributed earnings as of December 31, 2017 and 2016. Kodak’s valuation allowance as of December 31, 2017 was $856 million. Of this amount, $159 million was attributable to Kodak’s net deferred tax assets outside the U.S. of $353 million, and $697 million related to Kodak’s net deferred tax assets in the U.S. of $675 million, for which Kodak believes it is not more likely than not that the assets will be realized. During 2017, Kodak determined that it was more likely than not that a portion of the deferred tax assets outside the U.S. would be realized as a result of increased profits in a location outside the U.S. and accordingly, recorded a benefit of $101 million associated with the release of a valuation allowance on those deferred tax assets. Additionally, during 2017, Kodak determined that it was more likely than not that a portion of the deferred tax assets outside the U.S. would not be realized due to reduced manufacturing volumes negatively impacting profitability in a location outside the U.S. and accordingly, recorded a provision of $7 million associated with the establishment of a valuation allowance on those deferred tax assets. Kodak’s valuation allowance as of December 31, 2016 was $1,209 million. Of this amount, $237 million was attributable to Kodak’s net deferred tax assets outside the U.S. of $312 million, and $972 million related to Kodak’s net deferred tax assets in the U.S. of $916 million, for which Kodak believes it is not more likely than not that the assets will be realized. The net deferred tax assets in excess of the valuation allowance of approximately $172 million and $19 million as of December 31, 2017 and 2016, respectively, relate primarily to NOL carry-forwards, certain tax credits, and pension related tax benefits for which Kodak believes it is more likely than not that the assets will be realized. Accounting for Uncertainty in Income Taxes A reconciliation of the beginning and ending amount of Kodak’s liability for income taxes associated with unrecognized tax benefits is as follows (in millions):
|  | Year Ended December 31, |
|  | 2017 |  |  | 2016 |  |  | 2015 |
Balance as of January 1 |  | $ | 84 |  |  | $ | 85 |  |  | $ | 92 |
Tax positions related to the current year: |  |  |  |  |  |  |  |  |  |  |  |
Additions |  |  | 7 |  |  |  | — |  |  |  | 1 |
Tax positions related to prior years: |  |  |  |  |  |  |  |  |  |  |  |
Additions |  |  | 6 |  |  |  | 1 |  |  |  | — |
Reductions |  |  | (28 | ) |  |  | (2 | ) |  |  | (7 | )
Settlements with taxing jurisdictions |  |  | (4 | ) |  |  | — |  |  |  | — |
Lapses in statute of limitations |  |  | (4 | ) |  |  | — |  |  |  | (1 | )
Balance as of December 31 |  | $ | 61 |  |  | $ | 84 |  |  | $ | 85 |
Kodak’s policy regarding interest and/or penalties related to income tax matters is to recognize such items as a component of income tax (benefit) expense. Kodak had approximately $17 million and $23 million of interest and penalties associated with uncertain tax benefits accrued as of December 31, 2017 and 2016, respectively. Kodak had uncertain tax benefits of approximately $29 and $36 million as of December 31, 2017 and 2016, respectively, that, if recognized, would affect the effective income tax rate. Kodak has classified certain income tax liabilities as current or noncurrent based on management’s estimate of when these liabilities will be settled. The current liabilities are recorded in Other current liabilities in the Consolidated Statement of Financial Position. Noncurrent income tax liabilities are recorded in Other long-term liabilities in the Consolidated Statement of Financial Position. It is reasonably possible that the liability associated with Kodak’s unrecognized tax benefits will increase or decrease within the next twelve months. These changes may be the result of settling ongoing audits or the expiration of statutes of limitations. Such changes to the unrecognized tax benefits could range from $0 to $15 million based on current estimates. Audit outcomes and the timing of audit settlements are subject to significant uncertainty. Although management believes that adequate provision has been made for such issues, there is the possibility that the ultimate resolution of such issues could have an adverse effect on the earnings of Kodak. Conversely, if these issues are resolved favorably in the future, the related provision would be reduced, thus having a positive impact on earnings. The 2017 Tax Act corporate tax rate decrease from 35% to 21% resulted in the re-measurement of uncertain tax positions (“UTPs”), reducing a reserve held in the U.S. by approximately $22 million. Unrecognized tax benefits are presented in the financial statements as a reduction to deferred tax assets for a NOL carryforward, a similar tax loss or a tax credit carryforward. As a result, the reduction of this UTP has been recorded as a reduction in Kodak’s deferred tax asset and is fully offset by valuation allowance, therefore there is no net tax provision associated with this change. During 2017, Kodak agreed to terms with a tax authority outside of the U.S. and settled audits for calendar years 2008 through 2012. For these years, Kodak originally recorded liabilities for a UTP totaling $6 million (plus interest of approximately $2 million). The settlement resulted in a reduction in Other current liabilities in the Consolidated Statement of Financial Position and the recognition of a $1 million tax benefit. Kodak is subject to taxation and files income tax returns in the U.S. federal jurisdiction and in many state and foreign jurisdictions. Kodak has substantially concluded all U.S. federal and state income tax matters for years through 2012 with respective tax authorities. Kodak is currently under examination by the Internal Revenue Service for years 2013 and 2014. With respect to countries outside the U.S., Kodak has substantially concluded all material foreign income tax matters through 2010 with respective foreign tax jurisdiction authorities.

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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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