Income Taxes (Tables)

12 Months Ended

Dec. 31, 2017

Income Taxes.

Income Before Income Taxes

Income Before Income Taxes

(Millions)	2017		2016		2015
United States	$	4,149	$	4,366	$	4,399
International		3,399		2,687		2,424
Total	$	7,548	$	7,053	$	6,823

Provision for Income Taxes

Provision for Income Taxes

(Millions)	2017		2016		2015
Currently payable
Federal	$	1,022	$	1,192	$	1,338
State		59		75		101
International		722		733		566
Tax Cuts and Jobs Act (TCJA) non-current transition tax provision		623		—		—
Deferred
Federal		162		(3)		(55)
State		15		9		6
International		76		(11)		26
Total	$	2,679	$	1,995	$	1,982

Components of Deferred Tax Assets and Liabilities

Components of Deferred Tax Assets and Liabilities

(Millions)	2017		2016
Deferred tax assets:
Accruals not currently deductible
Employee benefit costs	$	178	$	195
Product and other claims		204		326
Miscellaneous accruals		98		92
Pension costs		760		1,217
Stock-based compensation		210		302
Net operating/capital loss carryforwards		89		93
Foreign tax credits		32		22
Currency translation		59		—
Inventory		51		53
Gross deferred tax assets		1,681		2,300
Valuation allowance		(81)		(47)
Total deferred tax assets	$	1,600	$	2,253
Deferred tax liabilities:
Product and other insurance receivables	$	(6)	$	(27)
Accelerated depreciation		(447)		(730)
Intangible amortization		(784)		(903)
Currency translation		—		(276)
Other		(87)		(40)
Total deferred tax liabilities	$	(1,324)	$	(1,976)
Net deferred tax assets	$	276	$	277

Reconciliation of Effective Income Tax Rate

Reconciliation of Effective Income Tax Rate

	2017		2016		2015
Statutory U.S. tax rate	35.0	%	35.0	%	35.0	%
State income taxes - net of federal benefit	0.8		0.9		1.1
International income taxes - net	(6.3)		(2.7)		(3.9)
U.S. TCJA - net impacts	10.1		—		—
U.S. research and development credit	(0.7)		(0.5)		(0.5)
Reserves for tax contingencies	2.2		0.2		(1.0)
Domestic Manufacturer’s deduction	(1.8)		(1.8)		(1.8)
Employee share-based payments	(3.2)		(2.8)		(0.1)
All other - net	(0.6)		—		0.3
Effective worldwide tax rate	35.5	%	28.3	%	29.1	%

Reconciliation of Federal, State and Foreign Tax Gross Unrecognized Tax Benefits

Federal, State and Foreign Tax

(Millions)	2017		2016		2015
Gross UTB Balance at January 1	$	319	$	381	$	583
Additions based on tax positions related to the current year		119		67		77
Additions for tax positions of prior years		149		43		140
Reductions for tax positions of prior years		(38)		(66)		(399)
Settlements		(3)		(95)		(4)
Reductions due to lapse of applicable statute of limitations		(16)		(11)		(16)
Gross UTB Balance at December 31	$	530	$	319	$	381
Net UTB impacting the effective tax rate at December 31	$	526	$	333	$	369