Income Taxes (Tables)

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Income (loss) before income tax expense (benefit) from U.S. and international operations

Income (loss) before income tax expense (benefit) was as follows (in millions):

	Year Ended December 31,
	2020		2019		2018
U.S. operations	$	(2,072)	$	2,496	$	3,168
International operations	62		990		1,064
Income (loss) before income tax expense (benefit)	$	(2,010)	$	3,486	$	4,232

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

Statutory income tax rates applicable to the countries in which we operate during each of the years ended December 31, 2020, 2019, and 2018 were as follows:

U.S.	21	%
Canada	15	%
U.K.	19	%
Ireland	13	%
Peru	30	%
Mexico	30	%

The following is a reconciliation of income tax expense (benefit) computed by applying statutory income tax rates to actual income tax expense (benefit) (in millions):

	U.S.				International				Total
	Amount		Percent		Amount		Percent		Amount		Percent
Year ended December 31, 2020
Income tax benefit at statutory rates	$	(435)	21.0	%	$	(10)	(16.1)	%	$	(445)	22.1	%
U.S. state and Canadian provincial tax expense (benefit), net of federal income tax effect	(33)		1.6	%	27		43.5	%	(6)		0.3	%
Permanent differences	(23)		1.1	%	15		24.2	%	(8)		0.4	%
CARES Act (a)	(360)		17.4	%	—		—		(360)		17.9	%
Lapse of federal statute of limitations	(39)		1.8	%	—		—		(39)		1.9	%
Change in tax law	—		—		21		33.9	%	21		(1.0)	%
Tax effects of income associated with noncontrolling interests	(66)		3.2	%	(8)		(12.9)	%	(74)		3.7	%
Other, net	7		(0.3)	%	1		1.6	%	8		(0.4)	%
Income tax expense (benefit)	$	(949)	45.8	%	$	46	74.2	%	$	(903)	44.9	%

________________________

See notes on page 114.

	U.S.				International				Total
	Amount		Percent		Amount		Percent		Amount		Percent
Year ended December 31, 2019
Income tax expense at statutory rates	$	524	21.0	%	$	147	14.8	%	$	671	19.2	%
U.S. state and Canadian provincial tax expense, net of federal income tax effect	16		0.7	%	88		8.9	%	104		3.0	%
Permanent differences	(36)		(1.5)	%	10		1.0	%	(26)		(0.7)	%
GILTI tax (b)	115		4.6	%	—		—		115		3.3	%
Foreign tax credits	(95)		(3.8)	%	—		—		(95)		(2.7)	%
Repatriation withholding tax	45		1.8	%	—		—		45		1.3	%
Tax effects of income associated with noncontrolling interests	(77)		(3.1)	%	2		0.2	%	(75)		(2.2)	%
Other, net	(36)		(1.4)	%	(1)		(0.1)	%	(37)		(1.1)	%
Income tax expense	$	456	18.3	%	$	246	24.8	%	$	702	20.1	%
Year ended December 31, 2018
Income tax expense at statutory rates	$	665	21.0	%	$	163	15.3	%	$	828	19.6	%
U.S. state and Canadian provincial tax expense, net of federal income tax effect	44		1.4	%	80		7.5	%	124		2.9	%
Permanent differences	(9)		(0.3)	%	—		—		(9)		(0.2)	%
GILTI tax (b)	67		2.1	%	—		—		67		1.6	%
Foreign tax credits	(50)		(1.6)	%	—		—		(50)		(1.2)	%
Effects of Tax Reform (b)	(12)		(0.4)	%	—		—		(12)		(0.3)	%
Tax effects of income associated with noncontrolling interests	(49)		(1.5)	%	—		—		(49)		(1.2)	%
Other, net	(23)		(0.7)	%	3		0.3	%	(20)		(0.5)	%
Income tax expense	$	633	20.0	%	$	246	23.1	%	$	879	20.7	%

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(a)See “CARES Act” on page 119 for a discussion of significant changes in tax law in the U.S that were enacted in 2020.

(b)Relates to the Tax Cuts and Jobs Act of 2017 (Tax Reform), which, among other provisions, resulted in a minimum tax on the income of international subsidiaries (the GILTI tax).

Components of income tax expense (benefit)

Components of income tax expense (benefit) were as follows (in millions):

	U.S.		International		Total
Year ended December 31, 2020
Current:
Country	$	(1,033)	$	(34)	$	(1,067)
U.S. state / Canadian provincial	9		(3)		6
Total current	(1,024)		(37)		(1,061)
Deferred:
Country	126		53		179
U.S. state / Canadian provincial	(51)		30		(21)
Total deferred	75		83		158
Income tax expense (benefit)	$	(949)	$	46	$	(903)
Year ended December 31, 2019
Current:
Country	$	145	$	186	$	331
U.S. state / Canadian provincial	37		100		137
Total current	182		286		468
Deferred:
Country	290		(28)		262
U.S. state / Canadian provincial	(16)		(12)		(28)
Total deferred	274		(40)		234
Income tax expense	$	456	$	246	$	702
Year ended December 31, 2018
Current:
Country	$	432	$	141	$	573
U.S. state / Canadian provincial	37		66		103
Total current	469		207		676
Deferred:
Country	145		25		170
U.S. state / Canadian provincial	19		14		33
Total deferred	164		39		203
Income tax expense	$	633	$	246	$	879

Schedule of income taxes paid (refunded), net

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

	Year Ended December 31,
	2020		2019			2018
U.S.	$	130	$	(298)	(a)	$	1,016
International	73		182			345
Income taxes paid (refunded), net	$	203	$	(116)		$	1,361

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(a)This amount includes a refund of $348 million, including interest, that we received related to the settlement of the combined audit of our U.S. federal income tax returns for 2010 and 2011. See “Tax Returns Under Audit – U.S. Federal” on page 119.

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,
	2020		2019
Deferred income tax assets:
Tax credit carryforwards	$	681	$	683
Net operating losses (NOLs)	678		582
Inventories	70		141
Compensation and employee benefit liabilities	199		213
Environmental liabilities	64		69
Other	128		156
Total deferred income tax assets	1,820		1,844
Valuation allowance	(1,223)		(1,200)
Net deferred income tax assets	597		644
Deferred income tax liabilities:
Property, plant, and equipment	4,895		4,924
Deferred turnaround costs	302		331
Inventories	269		217
Investments	171		122
Other	235		153
Total deferred income tax liabilities	5,872		5,747
Net deferred income tax liabilities	$	5,275	$	5,103

Income tax credit and loss carryforwards

We had the following income tax credit and loss carryforwards as of December 31, 2020 (in millions):

	Amount		Expiration
U.S. state income tax credits (gross amount)	$	86	2021 through 2033
U.S. state income tax credits (gross amount)	17		Unlimited
U.S. foreign tax credits	598		2027
U.S. state income tax NOLs (gross amount)	12,333		2021 through 2040
U.S. state income tax NOLs (gross amount)	34		Unlimited
International NOLs (gross amount)	20		2021 through 2030
International NOLs (gross amount)	120		Unlimited

Reconciliation of the change in unrecognized tax benefits

The following is a reconciliation of the change in unrecognized tax benefits, excluding related interest and penalties, (in millions):

	Year Ended December 31,
	2020		2019		2018
Balance as of beginning of year	$	897	$	970	$	941
Additions for tax positions related to the current year	5		19		23
Additions for tax positions related to prior years	9		30		28
Reductions for tax positions related to prior years	(20)		(101)		(19)
Reductions for tax positions related to the lapse of applicable statute of limitations	(44)		(14)		(1)
Settlements	—		(7)		(2)
Balance as of end of year	$	847	$	897	$	970

Additional information about our liability for unrecognized tax benefits

The following is a reconciliation of unrecognized tax benefits to our liability for unrecognized tax benefits presented in our balance sheets (in millions).

	December 31,
	2020		2019
Unrecognized tax benefits	$	847	$	897
Tax refund claims not yet filed but that we intend to file	(26)		(29)
Interest and penalties	110		100
Liability for unrecognized tax benefits presented in our balance sheets	$	931	$	968

Our liability for unrecognized tax benefits is reflected in the following balance sheet line items (in millions):

	December 31,
	2020		2019
Income taxes payable	$	59	$	—
Other long-term liabilities	859		954
Deferred tax liabilities	13		14
Liability for unrecognized tax benefits presented in our balance sheets	$	931	$	968