Income Taxes (Unaudited)

9 Months Ended

Sep. 30, 2016

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

Variations in the relative proportions of jurisdictional income result in fluctuations to FCX's consolidated effective income tax rate. FCX’s consolidated effective income tax rate was (2) percent for the first nine months of 2016 and 18 percent for the first nine months of 2015. Geographic sources of FCX's benefit from (provision for) income taxes follow (in millions):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
U.S. operations	$	331		$	356		$	293		$	2,020
International operations	(217		)	(7		)	(372		)	(258		)
Total	$	114		$	349		$	(79	)	$	1,762

As a result of the impairment to U.S. oil and gas properties, FCX recorded tax charges of $1.6 billion for the first nine months of 2016 and $2.0 billion for the first nine months of 2015 to establish a valuation allowance primarily against U.S. federal and state deferred tax assets that will not generate a future benefit. In addition, FCX recorded net tax credits of $290 million for the first nine months of 2016 associated with alternative minimum tax credits, changes to valuation allowances and net operating loss carryback claims. Excluding these net charges, FCX's consolidated effective income tax rate was 32 percent for the first nine months of 2016 and 37 percent for the first nine months of 2015.

As of December 31, 2015, FCX had determined that undistributed earnings of TFM were reinvested indefinitely and were allocated toward specifically identifiable needs of the local operations. In connection with the announced sale of its interest in TFHL, management concluded that its share of undistributed earnings of TFM were no longer reinvested indefinitely. This change did not have a material impact on FCX's results of operations.

Applicable accounting standards require that FCX estimate an annual effective tax rate and apply that rate to each year-to-date interim period. However, because FCX’s estimated effective income tax rate for 2016 is highly variable (i.e., minor changes in FCX’s estimated annual (loss) income would have a significant effect on the consolidated annual effective income tax rate), the actual effective income tax rate for the year-to-date reporting period represents a better estimate of the consolidated annual effective income tax rate. Accordingly, for the nine months ended September 30, 2016, the actual consolidated effective income tax rate was used to determine FCX’s income tax provision.