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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2020

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


For the Years Ended December 31,
(In millions of dollars)	2020		2019		2018
Income before income taxes:
U.S.	$	1,075	$	657	$	460
Other	1,718		1,782		1,784
	$	2,793	$	2,439	$	2,244

The expense (benefit) for income taxes is comprised of:

Current –
U.S. Federal	$	172	$	70	$	82
Other national governments	456		455		449
U.S. state and local	79		57		82
	707		582		613
Deferred –
U.S. Federal	40		69		(30)
Other national governments	(14)		(16)		(1)
U.S. state and local	14		31		(8)
	40		84		(39)
Total income taxes	$	747	$	666	$	574

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


December 31,
(In millions of dollars)	2020		2019
Deferred tax assets:
Accrued expenses not currently deductible	$	547	$	492
Differences related to non-U.S. operations (a)	294		324

Accrued U.S. retirement benefits	494		438
Net operating losses (b)	60		70
Income currently recognized for tax	25		19

Other	43		27
	$	1,463	$	1,370


Deferred tax liabilities:

Differences related to non-U.S. operations	$	569	$	400
Depreciation and amortization	491		594
Accrued retirement & postretirement benefits - non-U.S. operations	143		151
Capitalized expenses currently recognized for tax	87		77
Other	32		37
	$	1,322	$	1,259

(a)Net of valuation allowances of $123 million in 2020 and $54 million in 2019.

(b)Net of valuation allowances of $75 million in 2020 and $72 million in 2019.


December 31,
(In millions of dollars)	2020		2019
Balance sheet classifications:



Deferred tax assets	$	702	$	676
Other liabilities	$	561	$	565

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,	2020		2019		2018
U.S. Federal statutory rate	21.0	%	21.0	%	21.0	%
U.S. state and local income taxes—net of U.S. Federal income tax benefit	2.5		3.0		2.3
Differences related to non-U.S. operations	2.3		3.0		3.3
U.S. Tax Reform	—		—		(0.3)
Equity compensation	(1.4)		(1.3)		(1.0)
Uncertain Tax Positions	1.1		—		—
Other	1.2		1.6		0.3
Effective tax rate	26.7	%	27.3	%	25.6	%

Following is a reconciliation of the Company’s total gross unrecognized tax benefits for the years ended December 31, 2020, 2019 and 2018:


(In millions of dollars)	2020		2019		2018
Balance at January 1,	$	86	$	78	$	71
Additions, based on tax positions related to current year	9		8		6
Additions for tax positions of prior years	25		15		6
Reductions for tax positions of prior years	(9)		(1)		—

Settlements	(4)		(1)		(2)
Lapses in statutes of limitation	(9)		(13)		(3)
Balance at December 31,	$	98	$	86	$	78

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