Income Taxes (Tables)

12 Months Ended

Dec. 31, 2020

Schedule of Income Before Income Tax, Domestic and Foreign [Table Text Block]

The components of International Paper’s earnings from continuing operations before income taxes and equity earnings by taxing jurisdiction were as follows:


In millions	2020		2019		2018
Earnings (loss)
U.S.	$	727	$	1,342	$	1,450
Non-U.S.	(77)		262		331
Earnings (loss) from continuing operations before income taxes and equity earnings (losses)	$	650	$	1,604	$	1,781

Schedule of Components of Income Tax Expense (Benefit) [Table Text Block]

The provision (benefit) for income taxes from continuing operations (excluding noncontrolling interests) by taxing jurisdiction was as follows:


In millions	2020		2019		2018
Current tax provision (benefit)
U.S. federal	$	124	$	271	$	227
U.S. state and local	35		29		37
Non-U.S.	77		122		165
	$	236	$	422	$	429
Deferred tax provision (benefit)
U.S. federal	$	(6)	$	44	$	12
U.S. state and local	1		(23)		50
Non-U.S.	14		191		(46)
	$	9	$	212	$	16
Income tax provision (benefit)	$	245	$	634	$	445

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

A reconciliation of income tax expense using the statutory U.S. income tax rate compared with the actual income tax provision follows:


In millions	2020			2019			2018
Earnings (loss) from continuing operations before income taxes and equity earnings	$	650		$	1,604		$	1,781
Statutory U.S. income tax rate	21		%	21		%	21		%
Tax expense (benefit) using statutory U.S. income tax rate	137			337			374
State and local income taxes	28			6			72
Impact of rate differential on non-U.S. permanent differences and earnings	22			31			35
Foreign valuation allowance	—			203			—
Tax expense (benefit) on manufacturing activities	—			—			(1)
Non-deductible business expenses	5			7			6
Non-deductible impairments	92			31			—
Non-deductible compensation	11			3			11
Tax audits	(38)			—			28
Deemed repatriation, net of foreign tax credits	14			1			(25)
U.S. federal tax rate change	7			—			(13)
Foreign derived intangible income deduction	—			2			(25)
US tax on non-U.S. earnings (GILTI and Subpart F)	11			36			19
Foreign tax credits	(4)			(2)			(15)
General business and other tax credits	(45)			(33)			(26)
Tax expense (benefit) on equity earnings	8			10			10
Other, net	(3)			2			(5)
Income tax provision (benefit)	$	245		$	634		$	445
Effective income tax rate	38		%	40		%	25		%

Schedule of Deferred Tax Assets and Liabilities [Table Text Block]

The tax effects of significant temporary differences, representing deferred income tax assets and liabilities at December 31, 2020 and 2019, were as follows:


In millions	2020		2019
Deferred income tax assets:
Postretirement benefit accruals	$	91	$	90
Pension obligations	288		421
Tax credits	296		290
Net operating and capital loss carryforwards	590		621
Compensation reserves	179		181
Lease obligations	114		106
Environmental reserves	117		93
Other	218		126
Gross deferred income tax assets	$	1,893	$	1,928
Less: valuation allowance (a)	(685)		(691)
Net deferred income tax asset	$	1,208	$	1,237
Deferred income tax liabilities:
Intangibles	$	(159)	$	(152)
Investments	(251)		(265)
Right of use assets	(114)		(106)
Plants, properties and equipment	(1,958)		(1,866)
Forestlands, related installment sales, and investment in subsidiary	(1,400)		(1,407)
Gross deferred income tax liabilities	$	(3,882)	$	(3,796)
Net deferred income tax liability	$	(2,674)	$	(2,559)

(a) The net change in the total valuation allowance for the years ended December 31, 2020 and 2019 was a decrease of $(6) million and an increase of $250 million, respectively. The net change in the prior year is primarily due to tax law changes in foreign jurisdictions impacting future utilization of deferred tax assets of $203 million.

Schedule of Unrecognized Tax Benefits Rollforward [Table Text Block]

A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31, 2020, 2019 and 2018 is as follows:


In millions	2020		2019		2018
Balance at January 1	$	(189)	$	(220)	$	(188)
(Additions) reductions for tax positions related to current year	(10)		(5)		(7)
(Additions) for tax positions related to prior years	(10)		(6)		(37)
Reductions for tax positions related to prior years	30		5		5
Settlements	13		31		2
Expiration of statutes of limitations	1		3		2
Currency translation adjustment	(1)		3		3
Balance at December 31	$	(166)	$	(189)	$	(220)

Summary of Operating Loss and Tax Credit Carryforwards [Table Text Block]

The following details the scheduled expiration dates of the Company’s net operating loss and income tax credit carryforwards:


In millions	2021 Through 2030		2031 Through 2040		Indefinite		Total
U.S. federal and non-U.S. NOLs	$	2	$	53	$	457	$	512
State taxing jurisdiction NOLs (a)	61		16		—		77
U.S. federal, non- U.S. and state tax credit carryforwards (a)	169		8		119		296
Total	$	232	$	77	$	576	$	885
Less: valuation allowance (a)	(145)		(49)		(410)		(604)
Total, net	$	87	$	28	$	166	$	281

(a) State amounts are presented net of federal benefit.