Income Taxes (Tables)

12 Months Ended

Dec. 31, 2016

Income Tax Disclosure [Abstract]

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,
	2016		2015		2014
U.S. operations	$	1,733	$	5,327	$	4,677
International operations	1,449		644		875
Income from continuing operations before income tax expense	$	3,182	$	5,971	$	5,552

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

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

	Year Ended December 31,
	2016		2015		2014
U.S.	35	%	35	%	35	%
Canada	15	%	15	%	15	%
U.K.	20	%	20	%	21	%
Ireland	13	%	13	%	13	%
Aruba(a)	7	%	7	%	7	%

^{___________________________} 

^(a)  Statutory income tax rate applicable through the date of the Aruba Disposition as described in Note 2.

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

	Year Ended December 31, 2016
	U.S.			International			Total
Income tax expense at statutory rates	$	606		$	256		$	862
U.S. state and Canadian provincial tax expense, net of federal income tax effect	5			31			36
Permanent differences:
Manufacturing deduction	(22		)	—			(22		)
Other	(3		)	(10		)	(13		)
Change in tax law	—			(7		)	(7		)
Tax effects of income associated with noncontrolling interests	(44		)	—			(44		)
Other, net	(37		)	(10		)	(47		)
Income tax expense	$	505		$	260		$	765

	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

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, 2016
	U.S.			International			Total
Current:
Country	$	294		$	194		$	488
U.S. state / Canadian provincial	12			35			47
Total current	306			229			535
Deferred:
Country	203			35			238
U.S. state / Canadian provincial	(4		)	(4		)	(8		)
Total deferred	199			31			230
Income tax expense	$	505		$	260		$	765

	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

Schedule of income taxes paid, net

Income taxes paid to U.S. and international taxing authorities were as follows (in millions):

	Year Ended December 31,
	2016		2015		2014
Income taxes paid, net:
U.S.	$	241	$	2,092	$	1,455
International	203		1		169
Total	$	444	$	2,093	$	1,624

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,
	2016			2015
Deferred income tax assets:
Tax credit carryforwards	$	65		$	33
Net operating losses (NOLs)	374			423
Inventories	93			72
Compensation and employee benefit liabilities	344			331
Environmental liabilities	69			80
Other	100			139
Total deferred income tax assets	1,045			1,078
Less: Valuation allowance	(374		)	(435		)
Net deferred income tax assets	671			643
Deferred income tax liabilities:
Property, plant, and equipment	6,900			6,725
Deferred turnaround costs	450			394
Inventories	356			287
Investments	253			226
Other	73			71
Total deferred income tax liabilities	8,032			7,703
Net deferred income tax liabilities	$	7,361		$	7,060

Income tax credit and loss carryforwards

We had the following income tax credit and loss carryforwards as of December 31, 2016 (in millions):

	Amount		Expiration
U.S. state income tax credits	$	71	2017 through 2026
U.S. state income tax credits	2		Unlimited
U.S. state NOLs (gross amount)	9,018		2017 through 2036
U.S. alternative minimum tax credit	18		Unlimited

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,
	2016			2015			2014
Balance as of beginning of year	$	964		$	989		$	950
Additions based on tax positions related to the current year	36			36			35
Additions for tax positions related to prior years	11			83			118
Reductions for tax positions related to prior years	(46		)	(82		)	(67		)
Reductions for tax positions related to the lapse of applicable statute of limitations	(3		)	(3		)	(1		)
Settlements	(237		)	(59		)	(46		)
Reclassification of uncertain tax receivable to long-term receivable from IRS	211			—			—
Balance as of end of year	$	936		$	964		$	989

Summary of income tax contingencies

The following is a reconciliation of unrecognized tax benefits reflected in the table above to our uncertain tax position liabilities that are presented in our balance sheets (in million).

	December 31,
	2016			2015
Unrecognized tax benefits	$	936		$	964
Tax refund claim not presented in our balance sheets	(433		)	(570		)
Other	(5		)	25
Uncertain tax position liabilities presented in our balance sheets	$	498		$	419

Amounts recognized in our balance sheets for uncertain tax positions include (in millions):

	December 31,
	2016			2015
Deferred charges and other assets, net	$	—		$	195
Income taxes payable	(7		)	(438		)
Other long-term liabilities	(465		)	(148		)
Deferred tax liabilities	(26		)	(28		)
Uncertain tax position liabilities presented in our balance sheets	$	(498	)	$	(419	)