INCOME TAXES

Income tax expense was $61 million and $64 million for the three and nine months ended September 30, 2016, respectively, compared to income tax expense of $17 million and $116 million in the same periods of 2015. For the three and nine months ended September 30, 2016, changes in the effective tax rate from the prior period include tax planning and related valuation allowance releases, and favorable audits and settlements in the second quarter of 2016. The following table summarizes the difference between income tax expense at the United States statutory rate of 35% and the income tax expense at effective worldwide tax rates for the respective periods:



	Three Months Ended September 30,						Nine Months Ended September 30,
Millions of dollars	2016			2015			2016			2015
Earnings before income taxes	$	305		$	267		$	806		$	749

Income tax expense computed at United States statutory tax rate	107			93			282			262
Valuation allowance releases	(59		)	(68		)	(164		)	(126		)
Audits and settlements	(3		)	6			(35		)	8
U.S. foreign income items, net of credits	4			(18		)	(6		)	(32		)
Foreign government tax incentive	(2		)	—			(5		)	(8		)
Other	14			4			(8		)	12
Income tax expense computed at effective worldwide tax rates	$	61		$	17		$	64		$	116

At the end of each interim period, we make our best estimate of the effective tax rate expected to be applicable for the full fiscal year and the impact of discrete items, if any, and adjust the quarterly rate as necessary.