Income Taxes (Notes)

6 Months Ended

Jun. 30, 2019

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

INCOME TAXES

The Company’s provision for income taxes is based on the estimated annual effective tax rate, plus discrete items. The effective tax rates for the three and six month periods ended June 30, 2019 were 48% and 36%, respectively. The effective tax rates for the three and six month periods ended June 30, 2018 were 39% and 27%, respectively. The difference between the Company’s effective tax rates for the 2019 and 2018 periods and the U.S. statutory tax rate of 21% related primarily to U.S. taxes on foreign earnings, foreign tax rate differentials, the impacts of foreign currency fluctuations at certain foreign subsidiaries, and nondeductible expenses.

In the first quarter of 2019, the U.S. Treasury issued final regulations related to the one-time transition tax which further amended the guidance of the proposed regulations. As a result, we recorded $3 million of discrete tax expense in the first quarter.

In the first quarter of 2018, the Company completed the sale of its entire 51% equity interest in Masinloc, resulting in pre-tax gain of approximately $777 million. The sale resulted in approximately $155 million of discrete tax expense in the U.S. under the new GILTI provision, which subjects the earnings of foreign subsidiaries to current U.S. taxation to the extent those earnings exceed an allowable return. See Note 19—Held-for-Sale and Dispositions for details of the sale.

In the second quarter of 2018, the Company completed the sale of Electrica Santiago for total proceeds of $307 million, subject to customary post-closing adjustments, resulting in a pre-tax gain on sale of $89 million. The sale resulted in approximately $31 million of discrete tax expense. See Note 19—Held-for-Sale and Dispositions for details of the sale.