Income Taxes (Tables)

12 Months Ended

Dec. 31, 2015

Income from continuing operations before income tax expense from U.S. and international operations

Income from continuing operations before income tax expense was as follows (in millions):



	Year Ended December 31,
	2015		2014		2013
U.S. operations	$	5,327	$	4,677	$	3,531
International operations	644		875		445
Income from continuing operations before income tax expense	$	5,971	$	5,552	$	3,976

Reconciliation of income tax expense related to continuing operations to income tax expense at statutory rate

The following is a reconciliation of income tax expense computed by applying statutory income tax rates as reflected in the table below to actual income tax expense related to continuing operations (in millions):



	Year Ended December 31, 2015
	U.S.			International			Total
Income tax expense at statutory rates	$	1,864		$	92		$	1,956
U.S. state and Canadian provincial tax expense, net of federal income tax effect	45			73			118
Permanent differences:
Manufacturing deduction	(102		)	—			(102		)
Other	(18		)	(5		)	(23		)
Change in tax law	—			(17		)	(17		)
Tax effects of income associated with noncontrolling interests	(39		)	—			(39		)
Other, net	(25		)	2			(23		)
Income tax expense	$	1,725		$	145		$	1,870



	Year Ended December 31, 2014
	U.S.			International		Total
Income tax expense at statutory rates	$	1,637		$	145	$	1,782
U.S. state and Canadian provincial tax expense, net of federal income tax effect	62			71		133
Permanent differences:
Manufacturing deduction	(74		)	—		(74		)
Other	(16		)	1		(15		)
Tax effects of income associated with noncontrolling interests	(28		)	—		(28		)
Other, net	(22		)	1		(21		)
Income tax expense	$	1,559		$	218	$	1,777



	Year Ended December 31, 2013
	U.S.			International			Total
Income tax expense at statutory rates	$	1,236		$	84		$	1,320
U.S. state and Canadian provincial tax expense, net of federal income tax effect	62			24			86
Permanent differences:
Manufacturing deduction	(36		)	—			(36		)
Nontaxable gain on disposition (See Notes 3 and 10)	(114		)	—			(114		)
Other	10			(1		)	9
Change in tax law	(10		)	(22		)	(32		)
Tax effects of income associated with noncontrolling interests	(3		)	—			(3		)
Other, net	44			(20		)	24
Income tax expense	$	1,189		$	65		$	1,254

Statutory income tax rates applicable to the countries in which we operate were as follows:



	Year Ended December 31,
	2015		2014		2013
U.S.	35	%	35	%	35	%
Canada	15	%	15	%	15	%
U.K.	20	%	21	%	23	%
Ireland	13	%	13	%	13	%
Aruba	7	%	7	%	7	%

Components of income tax expense related to continuing operations

Components of income tax expense related to continuing operations were as follows (in millions):



	Year Ended December 31, 2015
	U. S.			International		Total
Current:
Country	$	1,513		$	64	$	1,577
U.S. state / Canadian provincial	85			43		128
Total current	1,598			107		1,705
Deferred:
Country	143			8		151
U.S. state / Canadian provincial	(16		)	30		14
Total deferred	127			38		165
Income tax expense	$	1,725		$	145	$	1,870



	Year Ended December 31, 2014
	U. S.		International		Total
Current:
Country	$	1,196	$	53	$	1,249
U.S. state / Canadian provincial	59		24		83
Total current	1,255		77		1,332
Deferred:
Country	268		94		362
U.S. state / Canadian provincial	36		47		83
Total deferred	304		141		445
Income tax expense	$	1,559	$	218	$	1,777



	Year Ended December 31, 2013
	U. S.		International			Total
Current:
Country	$	635	$	53		$	688
U.S. state / Canadian provincial	36		29			65
Total current	671		82			753
Deferred:
Country	459		(12		)	447
U.S. state / Canadian provincial	59		(5		)	54
Total deferred	518		(17		)	501
Income tax expense	$	1,189	$	65		$	1,254

Deferred income tax assets and liabilities

The tax effects of significant temporary differences representing deferred income tax assets and liabilities were as follows (in millions):



	December 31,
	2015			2014
Deferred income tax assets:
Tax credit carryforwards	$	33		$	37
Net operating losses (NOLs)	423			436
Inventories	72			160
Compensation and employee benefit liabilities	331			358
Environmental liabilities	80			92
Other	139			178
Total deferred income tax assets	1,078			1,261
Less: Valuation allowance	(435		)	(393		)
Net deferred income tax assets	643			868

Deferred income tax liabilities:
Property, plant, and equipment	6,725			6,682
Deferred turnaround costs	394			356
Inventories	287			426
Investments	226			152
Other	71			73
Total deferred income tax liabilities	7,703			7,689
Net deferred income tax liabilities	$	7,060		$	6,821

Income tax credit and loss carryforwards

We had the following income tax credit and loss carryforwards as of December 31, 2015 (in millions):



	Amount		Expiration
U.S. state income tax credits	$	51	2016 through 2027
U.S. state NOLs (gross amount)	7,302		2016 through 2035
International NOLs	1,465		Unlimited

Subsequently recognized tax benefits related to the valuation allowance for deferred income tax assets

Should we ultimately recognize tax benefits related to the valuation allowance for deferred income tax assets as of December 31, 2015, such amounts will be allocated as follows (in millions):



Income tax benefit	$	429
Additional paid-in capital	6
Total	$	435

Reconciliation of the change in unrecognized tax benefits

The following is a reconciliation of the change in unrecognized tax benefits, excluding related penalties, interest (net of the U.S. federal and state income tax effects), and the U.S. federal income tax effect of state unrecognized tax benefits (in millions):



	Year Ended December 31,
	2015			2014			2013
Balance as of beginning of year	$	989		$	950		$	341
Additions based on tax positions related to the current year	36			35			64
Additions for tax positions related to prior years	83			118			576
Reductions for tax positions related to prior years	(82		)	(67		)	(26		)
Reductions for tax positions related to the lapse of applicable statute of limitations	(3		)	(1		)	(4		)
Settlements	(59		)	(46		)	(1		)
Balance as of end of year	$	964		$	989		$	950

Reconciliation of unrecognized tax benefits to uncertain tax position liabilities

The following is a reconciliation of unrecognized tax benefits reflected in the table above to our uncertain tax position liabilities as of December 31, 2015 and 2014 that are reflected in Note 9 (in millions):



	December 31,
	2015			2014
Unrecognized tax benefits	$	964		$	989
Tax refund claim not recognized in our financial statements	(570		)	(554		)
Reduction of deferred tax asset	(28		)	—
Penalties, interest (net of U.S. federal and state income tax effect), and the U.S. federal income tax effect of state unrecognized tax benefits	25			49
Uncertain tax position liabilities	$	391		$	484