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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Schedule of U.S. and Foreign Pre-tax Income Table

Pre-tax income applicable to U.S. and foreign operations is as follows: 

(Millions of dollars) Year Ended December 31,			2020						2019						2018
United States			$	1,253					$	1,161					$	931
Foreign (a)			2,131						1,766						4,118
Total income before income taxes			$	3,384					$	2,927					$	5,049

(a) 2019 includes a $164 million gain related to the Praxair India divestiture and 2018 includes a $3,294 million gain related to the Praxair Europe divestiture (See Note 2).

Schedule of the Provision for Income Taxes Table

The following is an analysis of the provision for income taxes: 

(Millions of dollars) Year Ended December 31,			2020						2019 (a)						2018(b)
Current tax expense (benefit)
U.S. federal			$	185					$	64					$	390
State and local			17						39						(7)
Foreign			1,013						969						620
			1,215						1,072						1,003
Deferred tax expense (benefit)
U.S. federal			20						85						8
State and local			7						—						15
Foreign			(395)						(388)						(209)
			(368)						(303)						(186)
Total income taxes			$	847					$	769					$	817

(a)2019 includes $70 million related to divestitures, foreign current tax expense of $48 million and foreign deferred tax expense of $22 million.

(b)2018 includes a benefit of $61 million related to the Tax Act (See below) and a charge of $371 million ($252 million U.S., $4 million state, $114 million foreign current tax expense and $1 million of U.S. deferred income tax expense) related to divestitures (See Note 2).

Schedule of the Difference Between the Actual Income Tax Provision and the Amount Computed By Applying the US Statutory Income Tax Rate Table

An analysis of the difference between the provision for income taxes and the amount computed by applying the U.S. statutory income tax rate to pre-tax income follows:      

(Dollar amounts in millions) Year Ended December 31,			2020												2019												2018
U.S. statutory income tax			$	711					21.0		%				$	615					21.0		%				$	1,060					21.0		%
State and local taxes – net of federal benefit			21						0.6		%				31						1.1		%				30						0.6		%
U.S. tax credits and deductions (a)			(8)						(0.2)		%				(31)						(1.1)		%				(12)						(0.2)		%
Foreign tax differentials (b)			167						4.9		%				113						3.9		%				57						1.1		%
Share-Based compensation			(53)						(1.6)		%				(41)						(1.4)		%				(22)						(0.4)		%
Tax Act			—						—		%				—						—		%				(61)						(1.2)		%
Divestitures (c)			—						—		%				36						1.2		%				(321)						(6.4)		%
Other – net (d)			9						0.3		%				46						1.6		%				86						1.7		%
Provision for income taxes			$	847					25.0		%				$	769					26.3		%				$	817					16.2		%

________________________

(a)U.S. tax credits and deductions relate to foreign derived intangible income and the research and experimentation tax credit in 2020, 2019 and 2018.

(b)Primarily related to differences between the U.S. tax rate and the statutory tax rate in the countries where the company operates. Other permanent items and tax rate changes were not significant.

(c)Divestitures primarily relate to the sale of the company’s Indian business in 2019 and European business in 2018 (See Note 2).

(d)Other - net includes $11 million, $26 million and $34 million of U.S tax related to Global Intangible Low-Taxed Income in 2020, 2019 and 2018, respectively and an increase in unrecognized tax benefits in Europe of $44 million in 2018.

Schedule of the Composition of the Net Deferred Tax Liabilities in the Consolidated Balance Sheets Table

Net deferred tax liabilities included in the consolidated balance sheets are comprised of the following: 

(Millions of dollars) December 31,			2020						2019
Deferred tax liabilities
Fixed assets			$	3,430					$	3,539
Goodwill			173						145
Other intangible assets			3,703						3,688
Subsidiary/equity investments			609						664
Other (a)			791						789
			$	8,706					$	8,825
Deferred tax assets
Carryforwards			$	386					$	441
Benefit plans and related (b)			814						721
Inventory			70						72
Accruals and other (c)			1,243						1,167
			$	2,513					$	2,401
Less: Valuation allowances (d)			(243)						(222)
			$	2,270					$	2,179
Net deferred tax liabilities			$	6,436					$	6,646
Recorded in the consolidated balance sheets as (Note 7):
Other long-term assets			268						243
Deferred credits			6,704						6,889
			$	6,436					$	6,646

________________________

(a)Includes $255 million in 2020 and 2019 related to right-of-use lease assets.

(b)Includes deferred taxes of $560 million and $446 million in 2020 and 2019, respectively, related to pension / OPEB funded status (See Notes 7 and 16).

(c)Includes $255 million in 2020 and 2019 related to lease liabilities and $63 million and $81 million in 2020 and 2019, respectively, related to research and development costs.

(d)Summary of valuation allowances relating to deferred tax assets follows (millions of dollars):

			2020						2019						2018
Balance, January 1,			$	(222)					$	(237)					$	(76)
Income tax (charge) benefit			(21)						(31)						(51)
Merger with Linde AG			—						18						(121)
Other, including write-offs (i)			2						26						7
Translation adjustments			(2)						2						4
Balance, December 31,			$	(243)					$	(222)					$	(237)

(i)2019 includes $26 million related to the squeeze out of Linde AG (See Note 14).

Schedule of Valuation Allowances Relating To Deferred Tax Assets Table

Summary of valuation allowances relating to deferred tax assets follows (millions of dollars):

			2020						2019						2018
Balance, January 1,			$	(222)					$	(237)					$	(76)
Income tax (charge) benefit			(21)						(31)						(51)
Merger with Linde AG			—						18						(121)
Other, including write-offs (i)			2						26						7
Translation adjustments			(2)						2						4
Balance, December 31,			$	(243)					$	(222)					$	(237)

(i)2019 includes $26 million related to the squeeze out of Linde AG (See Note 14).

Schedule of Reconciliation of Unrecognized Tax Benefits Table

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: 

(Millions of dollars)			2020						2019						2018
Unrecognized income tax benefits, January 1			$	472					$	319					$	54
Additions for tax positions of prior years (a)			35						151						104
Reductions for tax positions of prior years			(34)						(3)						(7)
Additions for current year tax positions (b)			11						33						179
Reductions for settlements with taxing authorities (c)			(39)						(26)						(3)
Foreign currency translation and other			7						(2)						(8)
Unrecognized income tax benefits, December 31			$	452					$	472					$	319

________________________

(a)Increase primarily relates to tax positions in the United States and Europe, $66 million in 2019 related to the merger with Linde AG.

(b)2018 includes $167 million related to the merger with Linde AG.

(c)Settlements are uncertain tax positions that were effectively settled with the taxing authorities, including positions where the company has agreed to amend its tax returns to eliminate the uncertainty.

Schedule of Open Tax Years Subject to Examination by Major Jurisdiction Table

As of December 31, 2020, the company remained subject to examination in the following major tax jurisdictions for the tax years as indicated below: 

Major tax jurisdictions			Open Years
North and South America
United States			2017 through 2020
Canada			2013 through 2020
Mexico			2014 through 2020
Brazil			2003 through 2020
Europe and Africa
France			2014 through 2020
Germany			2015 through 2020
Netherlands			2015 through 2020
Republic of South Africa			2017 through 2020
Spain			2006 through 2020
United Kingdom			2015 through 2020
Asia and Australia
Australia			2016 through 2020
China			2015 through 2020
India			2006 through 2020
South Korea			2015 through 2020
Taiwan			2015 through 2020

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