Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

The following table sets forth the geographic split of earnings before income taxes:

Significant components of income taxes are as follows:

¹ Includes the impact of the Tax Cuts and Jobs Act as discussed on page 85.

Significant components of deferred tax liabilities and assets are as follows:



	December 31, 2019			December 31, 2018
	(In millions)
Deferred tax liabilities
Property, plant, and equipment	$	1,012		$	944
Intangibles	286			130
Right of use assets	220			—
Equity in earnings of affiliates	72			70
Inventory reserves	32			—
Debt exchange	80			81
Reserves and other accruals	20			25
Other	109			83
	$	1,831		$	1,333
Deferred tax assets
Pension and postretirement benefits	$	155		$	122
Lease liabilities	225			—
Stock compensation	62			55
Foreign tax loss carryforwards	411			313
Capital loss carryforwards	62			55
State tax attributes	74			74
Unrealized foreign currency losses	—			48
Reserves and other accruals	—			18
Other	147			56
Gross deferred tax assets	1,136			741
Valuation allowances	(325		)	(289		)
Net deferred tax assets	$	811		$	452

Net deferred tax liabilities	$	1,020		$	881

The net deferred tax liabilities are classified as follows:
Noncurrent assets (foreign)	$	174		$	186
Noncurrent liabilities	(969		)	(929		)
Noncurrent liabilities (foreign)	(225		)	(138		)
	$	(1,020	)	$	(881	)

Reconciliation of the statutory federal income tax rate to the Company’s effective income tax rate on earnings is as follows:



	Year Ended
	December 31
	2019		2018		2017

Statutory rate	21.0	%	21.0	%	35.0	%
State income taxes, net of federal tax benefit	0.6		0.3		1.7
Foreign earnings taxed at rates other than the U.S. statutory rate	(2.2	)	(1.5	)	(4.7	)
Foreign currency effects/remeasurement	0.7		(1.9	)	(0.7	)
Income tax adjustment to filed returns	0.2		(1.9	)	(3.0	)
Tax benefit on U.S. biodiesel credits	(7.5	)	(2.3	)	—
Tax benefit on U.S. railroad credits	(3.6	)	—		—
Tax benefit on U.S. qualified production activity deduction	—		—		(2.2	)
Tax on global intangible low-taxed income	1.4		1.0		—
Tax benefit on foreign derived intangible income deduction	—		(1.0	)	—
Valuation allowances	1.3		—		0.3
U.S. tax reform impacts	0.4		(1.1	)	(23.9	)
Other	0.9		(0.7	)	(2.1	)
Effective income tax rate	13.2	%	11.9	%	0.4	%

The following table sets forth a rollforward of activity of unrecognized tax benefits for the year ended December 31, 2019 and 2018 as follows:



	Unrecognized Tax Benefits
	December 31, 2019			December 31, 2018
	(In millions)
Beginning balance	$	107		$	56
Additions related to current year’s tax positions	8			3
Additions related to prior years’ tax positions	—			46
Additions related to acquisitions	32			7
Reductions related to prior years’ tax positions	(14		)	—
Reductions related to lapse of statute of limitations	(2		)	(2		)
Settlements with tax authorities	(1		)	(3		)
Ending balance	$	130		$	107