Income Taxes (Tables)

12 Months Ended

Dec. 31, 2018

Income Taxes.

Income Before Income Taxes

Income Before Income Taxes

(Millions)	2018		2017		2016
United States	$	3,487	$	4,149	$	4,366
International		3,513		3,399		2,687
Total	$	7,000	$	7,548	$	7,053

Provision for Income Taxes

Provision for Income Taxes

(Millions)	2018		2017		2016
Currently payable
Federal	$	698	$	1,022	$	1,192
State		109		59		75
International		763		722		733
Tax Cuts and Jobs Act (TCJA) non-current transition tax provision		176		623		—
Deferred
Federal		(38)		162		(3)
State		(17)		15		9
International		(54)		76		(11)
Total	$	1,637	$	2,679	$	1,995

Components of Deferred Tax Assets and Liabilities

Components of Deferred Tax Assets and Liabilities

(Millions)	2018		2017
Deferred tax assets:
Accruals not currently deductible
Employee benefit costs	$	187	$	178
Product and other claims		228		204
Miscellaneous accruals		113		98
Pension costs		643		760
Stock-based compensation		203		210
Net operating/capital loss/tax credit carryforwards		71		89
Foreign tax credits		—		32
Currency translation		—		59
Inventory		54		51
Other		24		—
Gross deferred tax assets		1,523		1,681
Valuation allowance		(67)		(81)
Total deferred tax assets	$	1,456	$	1,600
Deferred tax liabilities:
Product and other insurance receivables	$	(7)	$	(6)
Accelerated depreciation		(521)		(447)
Intangible amortization		(799)		(784)
Currency translation		(35)		—
Other		(8)		(87)
Total deferred tax liabilities	$	(1,370)	$	(1,324)
Net deferred tax assets	$	86	$	276

Reconciliation of Effective Income Tax Rate

Reconciliation of Effective Income Tax Rate

	2018		2017		2016
Statutory U.S. tax rate	21.0	%	35.0	%	35.0	%
State income taxes - net of federal benefit	1.0		0.8		0.9
International income taxes - net	0.2		(6.3)		(2.7)
Global Intangible Low Taxed Income (GILTI)	1.1		—		—
Foreign Derived Intangible Income (FDII)	(1.3)		—		—
U.S. TCJA enactment - net impacts	2.5		10.1		—
U.S. research and development credit	(1.5)		(0.7)		(0.5)
Reserves for tax contingencies	1.2		2.2		0.2
Domestic Manufacturer’s deduction	—		(1.8)		(1.8)
Employee share-based payments	(1.4)		(3.2)		(2.8)
All other - net	0.6		(0.6)		—
Effective worldwide tax rate	23.4	%	35.5	%	28.3	%

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

Federal, State and Foreign Tax

(Millions)	2018		2017		2016
Gross UTB Balance at January 1	$	530	$	319	$	381
Additions based on tax positions related to the current year		129		119		67
Additions for tax positions of prior years		146		149		43
Reductions for tax positions of prior years		(123)		(38)		(66)
Settlements		(17)		(3)		(95)
Reductions due to lapse of applicable statute of limitations		(18)		(16)		(11)
Gross UTB Balance at December 31	$	647	$	530	$	319
Net UTB impacting the effective tax rate at December 31	$	655	$	526	$	333