Provision (Benefit) for Income Taxes

6 Months Ended

Jun. 30, 2013

Provision (Benefit) for Income Taxes [Abstract]

Provision (Benefit) for Income Taxes

Note 5. Provision (Benefit) for Income Taxes

The provision (benefit) for income taxes includes:

		Three months ended				Six months ended
		June 30,				June 30,
			2013		2012		2013		2012
			(Millions)				(Millions)
Current:
	Federal	$	(61)	$	33	$	(72)	$	54
	State		1		4		3		8
	Foreign		(1)		3		1		24
			(61)		40		(68)		86
Deferred:
	Federal		130		30		212		117
	State		19		(3)		32		(6)
	Foreign		14		4		22		7
			163		31		266		118
Total provision (benefit)		$	102	$	71	$	198	$	204

The effective income tax rates for the total provision for the three and six months ended June 30, 2013, are less than the federal statutory rate primarily due to the impact of nontaxable noncontrolling interests and taxes on foreign operations, partially offset by the effect of state income taxes. The deferred provision includes $10 million related to the impact of a second-quarter Texas franchise tax law change, net of federal benefit.

The effective income tax rate for the total provision for the three months ended June 30, 2012, is less than the federal statutory rate primarily due to the impact of nontaxable noncontrolling interests.

The effective income tax rate for the total provision for the six months ended June 30, 2012, is less than the federal statutory rate primarily due to the impact of nontaxable noncontrolling interests and taxes on foreign operations.

During the first quarter of 2013, we finalized a settlement with the Internal Revenue Service (IRS) on tax matters related to the IRS's examination of our 2009 and 2010 consolidated corporate income tax returns.  We recorded a tax provision of approximately $2 million related to these matters during the third quarter of 2012.  With respect to the examined years, we made cash payments of $12 million to the IRS in February of 2013.

With the spin-off of WPX Energy, Inc. (WPX) on December 31, 2011, WPX entered into a tax sharing agreement with us under which we are generally liable for all U.S. federal, state, local and foreign income taxes attributable to WPX with respect to taxable periods ending on or before the distribution date. We are also principally responsible for managing any income tax audits by the various tax jurisdictions for pre-spin-off periods. In 2012, we prepared pro forma tax returns for each tax period in which WPX or any of its subsidiaries were combined or consolidated with us for purposes of any 2011 tax return. In the first quarter of 2013, we reimbursed WPX a net $2 million for the additional losses shown on the pro forma tax returns, offset with additional tax resulting from the 2009 to 2010 IRS settlement.

During the next 12 months, we do not expect ultimate resolution of any unrecognized tax benefit associated with domestic or international matters to have a material impact on our unrecognized tax benefit position.