INCOME TAXES

6 Months Ended

Jun. 30, 2019

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

INCOME TAXES

	Three Months Ended June 30,						Six Months Ended June 30,
Dollars in Millions	2019			2018			2019			2018
Earnings Before Income Taxes	$	1,776		$	517		$	3,755		$	2,296
Provision for Income Taxes	337			135			601			419
Effective Tax Rate	19.0		%	26.1		%	16.0		%	18.2		%

The reduction in the effective tax rate was primarily due to a non-deductible equity investment fair value loss adjustment relating to Nektar in the second quarter of 2018. Jurisdictional tax rates and other tax impacts attributed to non-deductible R&D charges, equity investment fair value adjustments and other specified items increased the effective tax rate by 0.5% in the second quarter of 2019 and decreased by 0.6% year-to-date. These items increased the effective tax rate by 8.6% in the second quarter of 2018 and by 0.9% year-to-date. The tax impact of these discrete items are reflected immediately and are not considered in estimating the annual effective tax rate. Additional changes to the effective tax rate may occur in future periods due to various reasons including pretax earnings mix, tax reserves, cash repatriations and revised interpretations of the relevant tax code.

The Company is currently under examination by a number of tax authorities, which have proposed or are considering proposing material adjustments to tax positions for issues such as transfer pricing, certain tax credits and the deductibility of certain expenses. It is reasonably possible that new issues will be raised by tax authorities, which may require adjustments to the amount of unrecognized tax benefits; however, an estimate of such adjustments cannot reasonably be made at this time.

It is also reasonably possible that the total amount of unrecognized tax benefits at June 30, 2019 could decrease in the range of approximately $365 million to $405 million in the next twelve months as a result of the settlement of certain tax audits and other events. The expected change in unrecognized tax benefits may result in the payment of additional taxes, adjustment of certain deferred taxes and/or recognition of tax benefits. It is reasonably possible that new issues will be raised by tax authorities that may increase unrecognized tax benefits; however, an estimate of such increases cannot reasonably be made at this time. The Company believes that it has adequately provided for all open tax years by tax jurisdiction.