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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

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



For the Years Ended December 31,
(In millions of dollars)	2019			2018			2017
Income before income taxes:
U.S.	$	657		$	460		$	819
Other	1,782			1,784			1,824
	$	2,439		$	2,244		$	2,643

The expense (benefit) for income taxes is comprised of:
Current –
U.S. Federal	$	70		$	82		$	313
Other national governments	455			449			388
U.S. state and local	57			82			36
	582			613			737
Deferred –
U.S. Federal	69			(30		)	286
Other national governments	(16		)	(1		)	72
U.S. state and local	31			(8		)	38
	84			(39		)	396
Total income taxes	$	666		$	574		$	1,133

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



December 31,
(In millions of dollars)	2019		2018
Deferred tax assets:
Accrued expenses not currently deductible	$	492	$	526
Differences related to non-U.S. operations ^(a)	324		170
Accrued U.S. retirement benefits	438		406
Net operating losses ^(b)	70		48
Income currently recognized for tax	19		20
Other	27		16
	$	1,370	$	1,186



Deferred tax liabilities:
Differences related to non-U.S. operations	$	400	$	287
Depreciation and amortization	594		342
Accrued retirement & postretirement benefits - non-U.S. operations	151		171
Capitalized expenses currently recognized for tax	77		78
Other	37		49
	$	1,259	$	927


(a)	Net of valuation allowances of $54 million in 2019 and $21 million in 2018.


(b)	Net of valuation allowances of $72 million in 2019 and $45 million in 2018.



December 31,
(In millions of dollars)	2019		2018
Balance sheet classifications:
Deferred tax assets	$	676	$	680
Other liabilities	$	565	$	421

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,	2019		2018		2017
U.S. Federal statutory rate	21.0	%	21.0	%	35.0	%
U.S. state and local income taxes—net of U.S. Federal income tax benefit	3.0		2.3		1.5
Differences related to non-U.S. operations	3.0		3.3		(8.6	)
U.S. Tax Reform	—		(0.3	)	17.4
Equity compensation	(1.3	)	(1.0	)	(2.6	)
Other	1.6		0.3		0.2
Effective tax rate	27.3	%	25.6	%	42.9	%

Following is a reconciliation of the Company’s total gross unrecognized tax benefits for the years ended December 31, 2019, 2018 and 2017:



(In millions of dollars)	2019			2018			2017
Balance at January 1,	$	78		$	71		$	65
Additions, based on tax positions related to current year	8			6			1
Additions for tax positions of prior years	15			6			14
Reductions for tax positions of prior years	(1		)	—			(6		)
Settlements	(1		)	(2		)	—
Lapses in statutes of limitation	(13		)	(3		)	(3		)
Balance at December 31,	$	86		$	78		$	71

The status of audits for significant jurisdictions outside the United States are summarized in the table below: