XML 82 R41.htm IDEA: XBRL DOCUMENT

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Components of Loss from Continuing Operations Before Income Taxes

The components of (Loss) income before income taxes were as follows:

	2019			2018			2017
Domestic	$	(1,000	)	$	(752	)	$	(686	)
Foreign		562			2,377			1,886
Total	$	(438	)	$	1,625		$	1,200

Schedule of Provision for Income Taxes on Income from Continuing Operations

Provision for income taxes consisted of the following:

	2019			2018			2017
Current:
Federal	$	(4	)	$	5		$	3
Foreign		404			757			421
State and local		—			—			—
		400			762			424
Deferred:
Federal		2			(21	)		25
Foreign		13			(9	)		143
State and local		—			—			—
		15			(30	)		168
Total	$	415		$	732		$	592

Federal includes U.S. income taxes related to foreign income.

Reconciliation of U.S. Federal Statutory Rate to Alcoa's Effective Tax Rate

A reconciliation of the U.S. federal statutory rate to Alcoa’s effective tax rate was as follows (the effective tax rate was a provision on loss in 2019 and a provision on income in 2018 and 2017):

	2019			2018			2017
U.S. federal statutory rate		21.0	%		21.0	%		35.0	%
Changes in valuation allowances		(65.3	)		3.4			24.9
Non-deductible losses on foreign divestitures		(22.6	)		—			—
Taxes on foreign operations—rate differential		(19.3	)		12.6			(10.4	)
Noncontrolling interest		(6.8	)		1.0			1.4
Global intangible low-taxed income		—			9.9			—
Other		(1.9	)		(2.9	)		(1.6	)
Effective tax rate		(94.9	)%		45.0	%		49.3	%

Schedule of Components of Net Deferred Tax Assets and Liabilities

The components of deferred tax assets and liabilities based on the underlying attributes without regard to jurisdiction were as follows:

	2019					2018
December 31,	Deferred tax assets			Deferred tax liabilities		Deferred tax assets			Deferred tax liabilities
Tax loss carryforwards	$	1,411		$	—	$	1,231		$	—
Employee benefits		698			—		683			—
Loss provisions		203			—		212			—
Investment basis differences		164			—		162			—
Depreciation		72			438		91			428
Derivatives and hedging activities		154			22		53			39
Tax credit carryforwards		26			—		27			—
Deferred income/expense		11			134		10			103
Other		49			6		87			1
		2,788			600		2,556			571
Valuation allowance		(1,778	)		—		(1,684	)		—
Total	$	1,010		$	600	$	872		$	571

Schedule of Expiration Periods of Deferred Tax Assets

The following table details the expiration periods of the deferred tax assets presented above:

December 31, 2019	Expires within 10 years			Expires within 11-20 years			No expiration			Other			Total
Tax loss carryforwards	$	333		$	323		$	755		$	—		$	1,411
Tax credit carryforwards		17			9			—			—			26
Other		—			—			170			1,181			1,351
Valuation allowance		(350	)		(318	)		(300	)		(810	)		(1,778	)
Total	$	—		$	14		$	625		$	371		$	1,010

Deferred tax assets with no expiration may still have annual limitations on utilization. Other represents deferred tax assets whose expiration is dependent upon the reversal of the underlying temporary difference.

Composition of Net Deferred Tax Asset by Jurisdiction

The total deferred tax asset (net of valuation allowance) is supported by projections of future taxable income exclusive of reversing temporary differences and taxable temporary differences that reverse within the carryforward period. The composition of Alcoa’s net deferred tax asset by jurisdiction as of December 31, 2019 was as follows:

	Domestic			Foreign			Total
Deferred tax assets	$	1,054		$	1,734		$	2,788
Valuation allowance		(898	)		(880	)		(1,778	)
Deferred tax liabilities		(149	)		(451	)		(600	)
Total	$	7		$	403		$	410

Schedule of Changes in Valuation Allowance

Accordingly, management concluded that the net deferred tax assets of the Foreign Filers will more likely than not be realized in future periods, resulting in no need for a partial or full valuation allowance as of December 31, 2019.

The following table details the changes in the valuation allowance:

December 31,	2019			2018			2017
Balance at beginning of year	$	(1,684	)	$	(1,927	)	$	(1,755	)
Establishment of new allowances⁽¹⁾		—			(86	)		(94	)
Net change to existing allowances⁽²⁾		(101	)		312			(33	)
Foreign currency translation		7			17			(45	)
Balance at end of year	$	(1,778	)	$	(1,684	)	$	(1,927	)

⁽¹⁾	This line item reflects valuation allowances initially established as a result of a change in management’s judgment regarding the realizability of deferred tax assets.

⁽²⁾

This line item reflects movements in previously established valuation allowances, which increase or decrease as the related deferred tax assets increase or decrease. Such movements occur as a result of remeasurement due to a tax rate change and changes in the underlying attributes of the deferred tax assets, including expiration of the attribute and reversal of the temporary difference that gave rise to the deferred tax asset.

Reconciliation of Unrecognized Tax Benefits (Excluding Interest and Penalties)

A reconciliation of the beginning and ending amount of unrecognized tax benefits (excluding interest and penalties) was as follows:

December 31,	2019			2018			2017
Balance at beginning of year	$	30		$	10		$	23
Additions for tax positions of the current year		—			1			1
Additions for tax positions of prior years		—			20			—
Reductions for tax positions of prior years		—			—			(5	)
Settlements with tax authorities		—			—			(6	)
Expiration of the statute of limitations		—			—			(3	)
Foreign currency translation		(1	)		(1	)		—
Balance at end of year	$	29		$	30		$	10