INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2017

Income Tax Contingency [Line Items]

Schedule of geographic allocation of income

Geographic Allocation of Income and Provision (Credit) for Income Taxes
In millions	2017			2016			2015
Income (Loss) Before Income Taxes
Domestic	$	856		$	49		$	1,254
Foreign	(6		)	8			(11		)
Income before income taxes	$	850		$	57		$	1,243
Current tax expense (benefit)
Federal	$	226		$	265		$	373
State and local	2			(3		)	2
Foreign	3			3			104
Total current tax expense	$	231		$	265		$	479
Deferred tax expense (benefit)
Federal 1	$	392		$	(285	)	$	(31	)
State and local	22			(12		)	(13		)
Total deferred tax expense (benefit)	$	414		$	(297	)	$	(44	)
Provision (Credit) for income taxes	$	645		$	(32	)	$	435
Net Income	$	205		$	89		$	808

1. 2017 includes the impact of The Act; 2016 includes the impact of the asbestos-related charge.

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

Reconciliation to U.S. Statutory Rate	2017		2016		2015
Statutory U.S. federal income tax rate	35.0	%	35.0	%	35.0	%
U.S. manufacturing deductions	—		(14.0	)	(0.6	)
Unrecognized tax benefits	(0.4	)	(45.6	)	1.9
Federal tax accrual adjustments	(1.1	)	(12.3	)	(0.6	)
Impact of U.S. tax reform	29.4		—		—
Deferred intercompany gain	11.4		—		—
State and local tax impact	2.2		(24.6	)	(0.9	)
Other - net	(0.6	)	5.4		0.2
Effective Tax Rate 1	75.9	%	(56.1	)%	35.0	%

1. The tax rate for 2017 was unfavorably impacted by The Act and the recognition of a deferred gain. The tax rate for 2016 was favorably impacted by the release of a reserve in excess of the settlement of an uncertain tax position and from the asbestos-related charge. The tax rate for 2015 was favorably impacted by changes in valuation allowances on state income tax attributes. A change in uncertain tax positions in the fourth quarter of 2015 unfavorably impacted the tax rate and resulted in an increase in "Deferred income tax assets" and "Other noncurrent obligations" in the consolidated balance sheets.

Schedule of Deferred Tax Assets and Liabilities [Table Text Block]

Deferred Tax Balances at Dec 31	2017					2016
In millions	Assets			Liabilities		Assets			Liabilities
Property	$	—		$	132	$	—		$	183
Tax loss and credit carryforwards	47			—		53			—
Postretirement benefit obligations	251			—		442			—
Other accruals and reserves	349			1		611			—
Inventory	8			—		14			—
Other - net	9			1		13			2
Subtotal	$	664		$	134	$	1,133		$	185
Valuation allowances 1	(19		)	—		(20		)	—
Total	$	645		$	134	$	1,113		$	185

1. Primarily related to the realization of recorded tax benefits on state tax loss carryforwards from operations in the United States.

Summary of Operating Loss Carryforwards [Table Text Block]

Operating Loss and Tax Credit Carryforwards	2017		2016
In millions	Asset		Asset
Operating loss carryforwards
Expire within 5 years	$	29	$	31
Expire after 5 years or indefinite expiration	12		17
Total operating loss carryforwards	$	41	$	48
Tax credit carryforwards
Expire within 5 years	$	1	$	1
Expire after 5 years or indefinite expiration	5		4
Total tax credit carryforwards	$	6	$	5

Schedule of Total Gross Unrecognized Tax Benefits [Table Text Block]

Total Gross Unrecognized Tax Benefits
In millions	2017			2016			2015
Total unrecognized tax benefits at Jan 1	$	1		$	68		$	1
Increases related to positions taken on items from prior years	—			139			67
Settlement of uncertain tax positions with tax authorities	—			(206		)	—
Total unrecognized tax benefits at Dec 31	$	1		$	1		$	68
Total unrecognized tax benefits that, if recognized, would impact the effective tax rate	$	1		$	1		$	1
Total amount of interest and penalties (benefit) recognized in "Provision (Credit) for income taxes"	$	(6	)	$	(36	)	$	37
Total accrual for interest and penalties recognized in the consolidated balance sheets	$	—		$	—		$	38

In the fourth quarter of 2016, a settlement in the amount of $206 million was reached for a tax matter regarding a historical change in the legal ownership structure of a nonconsolidated affiliate. As a result of the settlement, the Corporation recorded a net decrease to uncertain tax positions of $67 million in "Other noncurrent obligations" in the consolidated balance sheets.

Schedule of Tax Years Subject to Examination by Major Tax Jurisdiction

The Corporation is included in Dow's consolidated federal income tax group and consolidated tax return. Current and deferred tax expenses are calculated for the Corporation as a stand-alone group and are allocated to the group from the consolidated totals, consistent with the Dow-UCC Tax Sharing Agreement. UCC is currently under examination in a number of tax jurisdictions, including the U.S. federal and various state jurisdictions. It is reasonably possible that these examinations may be resolved within twelve months. The impact on the Corporation’s results of operations is not expected to be material.

Tax years that remain subject to examination for the Corporation's major tax jurisdictions are shown below:

Tax Years Subject to Examination by Major Tax Jurisdiction at Dec 31, 2017	Earliest Open Year
Jurisdiction
United States:
Federal income tax	2004
State and local income tax	2004