Income and Other Taxes (Tables)

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Schedule of income before income tax, domestic and foreign

Income before income taxes and equity income (pre-tax income) from continuing operations was as follows:

	Year Ended December 31,
	2020		2019		2018
Domestic income	$	353	$	679	$	331
Foreign (loss) income	(101)		143		218
Income before Income Taxes and Equity Income	$	252	$	822	$	549

Schedule of components of income tax expense (benefit)

The components of Income tax expense from continuing operations were as follows:

	Year Ended December 31,
	2020		2019		2018
Federal Income Taxes
Current	$	3	$	(3)	$	37
Deferred	58		98		83
Foreign Income Taxes
Current	19		43		46
Deferred	(34)		5		57
State Income Taxes
Current	8		15		29
Deferred	10		21		(5)
Income Tax Expense	$	64	$	179	$	247

Schedule of effective income tax rate reconciliation

A reconciliation of the U.S. federal statutory income tax rate to the consolidated effective income tax rate was as follows:

	Year Ended December 31,
	2020		2019		2018
U.S. federal statutory income tax rate	21.0	%	21.0	%	21.0	%
Nondeductible expenses	4.1	%	1.3	%	3.7	%
Effect of tax law changes	(10.5)	%	(4.6)	%	14.5	%
Change in valuation allowance for deferred tax assets	9.9	%	2.0	%	0.6	%
State taxes, net of federal benefit	5.5	%	3.5	%	2.3	%
Audit and other tax return adjustments	1.4	%	0.6	%	(1.8)	%
Tax-exempt income, credits and incentives	(5.9)	%	(2.1)	%	(2.2)	%
Foreign rate differential adjusted for U.S. taxation of foreign profits(1)	(2.6)	%	0.1	%	4.8	%
Stock-based compensation	2.3	%	(0.3)	%	0.2	%
Other	0.2	%	0.3	%	1.9	%
Effective Income Tax Rate	25.4	%	21.8	%	45.0	%

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(1)The “U.S. taxation of foreign profits” represents the U.S. tax, net of foreign tax credits, associated with actual and deemed repatriations of earnings from our non-U.S. subsidiaries.

Schedule of allocation of income tax expense (benefit)

Total income tax expense (benefit) was allocated to the following items:

	Year Ended December 31,
	2020		2019		2018
Pre-tax income	$	64	$	179	$	247
Discontinued operations(1)	—		95		10
Common shareholders' equity:
Changes in defined benefit plans	43		(55)		131
Cash flow hedges	1		(1)		5
Translation adjustments	(3)		8		(9)
Retained Earnings	—		—		36
Total Income Tax Expense	$	105	$	226	$	420

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(1)Refer to Note 6 - Divestitures for additional information regarding discontinued operations.

Schedule of unrecognized tax benefits rollforward

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

	2020		2019		2018
Balance at January 1	$	127	$	108	$	125
Additions related to current year	3		42		2
Additions related to prior years positions	8		17		3
Reductions related to prior years positions	(10)		(36)		(13)
Settlements with taxing authorities(1)	(8)		(1)		(6)
Reductions related to lapse of statute of limitations	(7)		(3)		(3)
Currency	2		—		—
Balance at December 31	$	115	$	127	$	108

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(1)The majority of settlements did not result in the utilization of cash.

Schedule of deferred tax assets and liabilities

The tax effects of temporary differences that give rise to significant portions of the deferred taxes were as follows:

	December 31,
	2020		2019(2)
Deferred Tax Assets
Research and development	$	150	$	143
Post-retirement medical benefits	94		98
Net operating losses	377		389
Operating reserves, accruals and deferrals	124		115
Tax credit carryforwards	249		231
Deferred and share-based compensation	13		26
Pension	211		298
Depreciation	35		16
Operating lease liabilities	82		84
Other	44		63
Subtotal	1,379		1,463
Valuation allowance	(396)		(399)
Total	$	983	$	1,064
Deferred Tax Liabilities
Finance lease and installment sales	$	247	$	240
Intangibles and goodwill	140		128
Unremitted earnings of foreign subsidiaries	31		39
Operating lease ROU assets	76		78
Other	16		18
Total	$	510	$	503
Total Deferred Taxes, Net	$	473	$	561
Reconciliation to the Consolidated Balance Sheets
Deferred tax assets	$	508	$	598
Deferred tax liabilities(1)	(35)		(37)
Total Deferred Taxes, Net	$	473	$	561

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(1)Represents the deferred tax liabilities recorded in Other long-term liabilities - refer to Note 15 - Supplementary Financial Information.

(2)The deferred tax assets and liabilities disclosure at December 31, 2019 has been adjusted to primarily reflect the tax effect of the gross deferred tax Operating Lease (ROU) Assets and the tax effect of the related gross deferred tax Operating lease liabilities recognized in accordance with ASC 842. There was no impact on Total Deferred Taxes, Net from this adjustment.