Income Taxes (Tables)

12 Months Ended

Dec. 31, 2015

Provision for Federal & Foreign Income Tax Expense

Our provision for federal and foreign income tax expense for continuing operations consisted of the following (in millions):

	2015			2014			2013
Federal income tax expense (benefit):
Current	$	1,817		$	2,020		$	1,204
Deferred		(473	)		(387	)		3
Total federal income tax expense		1,344			1,633			1,207
Foreign income tax expense (benefit):
Current		46			24			6
Deferred		28			(13	)		(8)
Total foreign income tax expense (benefit)		74			11			(2)
Total income tax expense	$	1,418		$	1,644		$	1,205

Reconciliation of Income Tax Expense Computed Using U.S. Statutory Federal Tax Rate to Actual Income Tax Expense

Our reconciliation of the 35% U.S. federal statutory income tax rate to actual income tax expense for continuing operations is as follows (in millions):

	2015			2014			2013
Income tax expense at the U.S. federal statutory tax rate	$	1,758		$	1,840		$	1,454
U.S. manufacturing deduction benefit		(126	)		(127	)		(100)
Tax deductible dividends		(87	)		(82	)		(77)
Research and development tax credit		(71	)		(66	)		(96)
Goodwill impairment – non-deductible portion		—			30			50
Other, net		(56	)		49			(26)
Income tax expense	$	1,418		$	1,644		$	1,205

Components of Federal and Foreign Deferred Tax Assets and Liabilities

The primary components of our federal and foreign deferred income tax assets and liabilities at December 31 were as follows (in millions):

	2015			2014
Deferred tax assets related to:
Accrued compensation and benefits	$	961		$	965
Pensions (a)		4,462			4,317
Other postretirement benefit obligations		375			386
Contract accounting methods		1,039			989
Foreign company operating losses and credits		70			59
Other		434			198
Valuation allowance (b)		(76	)		(9)
Deferred tax assets, net		7,265			6,905
Deferred tax liabilities related to:
Goodwill and purchased intangibles		474			454
Property, plant and equipment		457			514
Exchanged debt securities and other (c)		409			485
Deferred tax liabilities		1,340			1,453
Net deferred tax assets (d)	$	5,925		$	5,452

^(a)  The increase in 2015 was primarily due to the negative investment return on postretirement plan assets (Note 11).

^(b)  A valuation allowance was provided against certain foreign company deferred tax assets arising from carryforwards of unused tax benefits.

^(c)  Includes deferred taxes associated with the exchange of debt securities in prior years.

^(d)  Includes net foreign current deferred tax liabilities, which are included on the Balance Sheets in other current liabilities.