Income taxes (Tables)

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Reconciliation of the U.S. federal statutory rate to effective rate

Reconciliation of the U.S. federal statutory rate to effective rate:

	Years ended December 31,
(Millions of dollars)	2023				2022				2021
Taxes at U.S. statutory rate	$	2,740	21.0	%	$	1,838	21.0	%	$	1,723	21.0	%
(Decreases) increases resulting from:
Non-U.S. subsidiaries taxed at other than the U.S. rate	129		1.0	%	184		2.1	%	224		2.7	%
State and local taxes, net of federal 1	93		0.7	%	91		1.0	%	21		0.3	%
U.S. tax incentives	(170)		(1.3)	%	(166)		(1.9)	%	(123)		(1.5)	%
Nondeductible goodwill	—		—	%	159		1.8	%	—		—	%
Other—net	(11)		(0.1)	%	(39)		(0.4)	%	(103)		(1.3)	%
Provision (benefit) for income taxes	$	2,781	21.3	%	$	2,067	23.6	%	$	1,742	21.2	%
1 Excludes amount included in nondeductible goodwill line item.

Components of profit (loss) before taxes

The components of profit (loss) before taxes were:
	Years ended December 31,
(Millions of dollars)	2023		2022		2021
U.S.	$	6,463	$	2,962	$	2,740
Non-U.S.	6,587		5,790		5,464
	$	13,050	$	8,752	$	8,204

Components of the provision (benefit) for income taxes

The components of the provision (benefit) for income taxes were:
	Years ended December 31,
(Millions of dollars)	2023		2022		2021
Current tax provision (benefit):
U.S.1	$	1,627	$	1,055	$	766
Non-U.S.	1,592		1,255		1,283
State (U.S.)	154		134		76
	3,373		2,444		2,125
Deferred tax provision (benefit):
U.S.1	(391)		(404)		(387)
Non-U.S.	(164)		50		54
State (U.S.)	(37)		(23)		(50)
	(592)		(377)		(383)
Total provision (benefit) for income taxes	$	2,781	$	2,067	$	1,742
1 Includes U.S. taxes related to non-U.S. earnings. We account for U.S. taxes on global intangible low-taxed income as a period cost.

Deferred income tax assets and liabilities

The amount of deferred income taxes at December 31, included on the following lines in Statement 3, were as follows:

	December 31,
(Millions of dollars)	2023		2022
Assets:
Noncurrent deferred and refundable income taxes	$	2,634	$	2,047
Liabilities:
Other liabilities	454		471
Deferred income taxes—net	$	2,180	$	1,576

The components of deferred tax assets and liabilities were:
	December 31,
(Millions of dollars)	2023		2022
Deferred income tax assets:
Tax carryforwards	$	1,389	$	1,349
Research expenditures	1,350		949
Postemployment benefits	656		728
Employee compensation and benefits	634		459
Warranty reserves	325		282
Post sale discounts	253		159
Lease obligations	144		144
Inventory valuation	138		147
Allowance for credit losses	109		113
Other—net	197		376
	5,195		4,706
Deferred income tax liabilities:
Capital and intangible assets, including lease basis differences	(1,312)		(1,401)
Undistributed profits, including translation adjustments	(401)		(344)
Other outside basis differences	(267)		(264)
Bond discount	(101)		(107)
	(2,081)		(2,116)
Valuation allowance for deferred tax assets	(934)		(1,014)
Deferred income taxes—net	$	2,180	$	1,576

Reconciliation of unrecognized tax benefits

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits for uncertain tax positions, including positions impacting only the timing of tax benefits, follows.

 

Reconciliation of unrecognized tax benefits: 1
	Years ended December 31,
(Millions of dollars)	2023		2022		2021
Beginning balance	$	1,140	$	1,886	$	1,759
Additions for tax positions related to current year	94		72		141
Additions for tax positions related to prior years	42		91		43
Reductions for tax positions related to prior years	(19)		(66)		(30)
Reductions for settlements 2	(27)		(840)		(24)
Reductions for expiration of statute of limitations	(7)		(3)		(3)
Ending balance	$	1,223	$	1,140	$	1,886
Amount that, if recognized, would impact the effective tax rate	$	997	$	874	$	1,688

1Foreign currency impacts are included within each line as applicable.

2Includes cash payment or other reduction of assets to settle liability.