Income Taxes (Tables)

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

Taxes on income

For financial reporting purposes, income before income taxes includes the following components: 

For the Years Ended December 31,
(In millions of dollars)	2018			2017		2016
Income before income taxes:
U.S.	$	460		$	819	$	725
Other	1,784			1,824		1,755
	$	2,244		$	2,643	$	2,480
The expense for income taxes is comprised of:
Current –
U.S. Federal	$	82		$	313	$	208
Other national governments	449			388		366
U.S. state and local	82			36		43
	613			737		617
Deferred –
U.S. Federal	(30		)	286		26
Other national governments	(1		)	72		32
U.S. state and local	(8		)	38		10
	(39		)	396		68
Total income taxes	$	574		$	1,133	$	685

Deferred income tax assets and liabilities

The significant components of deferred income tax assets and liabilities and their balance sheet classifications are as follows:

December 31,
(In millions of dollars)	2018		2017
Deferred tax assets:
Accrued expenses not currently deductible	$	526	$	369
Differences related to non-U.S. operations (a)	170		139
Accrued U.S. retirement benefits	406		394
Net operating losses (b)	48		67
Income currently recognized for tax	20		49
Other	16		31
	$	1,186	$	1,049

Deferred tax liabilities:
Differences related to non-U.S. operations	$	287	$	235
Depreciation and amortization	342		338
Accrued retirement & postretirement benefits - non-U.S. operations	171		172
Capitalized expenses currently recognized for tax	78		—
Other	49		16
	$	927	$	761

(a) Net of valuation allowances of $21 million in 2018 and $18 millionin 2017.

(b) Net of valuation allowances of $45 million in 2018 and $11 million in 2017.

December 31,
(In millions of dollars)	2018		2017
Balance sheet classifications:
Deferred tax assets	$	680	$	669
Other liabilities	$	421	$	381

U.S. Federal statutory income tax rate

A reconciliation from the U.S. Federal statutory income tax rate to the Company’s effective income tax rate is shown below:

For the Years Ended December 31,	2018		2017		2016
U.S. Federal statutory rate	21.0	%	35.0	%	35.0	%
U.S. state and local income taxes—net of U.S. Federal income tax benefit	2.3		1.5		1.5
Differences related to non-U.S. operations	3.3		(8.6	)	(9.2	)
U.S. Tax Reform	(0.3	)	17.4		—
Equity compensation	(1.0	)	(2.6	)	—
Other	0.3		0.2		0.3
Effective tax rate	25.6	%	42.9	%	27.6	%

Unrecognized tax benefits

Following is a reconciliation of the Company’s total gross unrecognized tax benefits for the years ended December 31, 2018, 2017 and 2016:

(In millions of dollars)	2018			2017			2016
Balance at January 1,	$	71		$	65		$	74
Additions, based on tax positions related to current year	6			1			2
Additions for tax positions of prior years	6			14			6
Reductions for tax positions of prior years	—			(6		)	(6		)
Settlements	(2		)	—			(7		)
Lapses in statutes of limitation	(3		)	(3		)	(4		)
Balance at December 31,	$	78		$	71		$	65