Annual report pursuant to Section 13 and 15(d)

INCOME TAXES (Tables)

v2.4.1.9
INCOME TAXES (Tables)
 12 Months Ended
Dec. 31, 2014
Income Tax Disclosure [Abstract]  
Income before income taxes
 
 
Years ended December 31,
In millions
 
2014
 
2013
 
2012
Income before income taxes
 
 
 
 
 
 
U.S. income
 
$
1,407

 
$
1,058

 
$
998

Foreign income
 
1,027

 
1,061

 
1,273

Total
 
$
2,434

 
$
2,119

 
$
2,271

Income tax expense
Income tax expense consists of the following:
 
 
Years ended December 31,
In millions
 
2014
 
2013
 
2012
Current
 
 
 
 
 
 
U.S. federal and state
 
$
470

 
$
239

 
$
118

Foreign
 
197

 
192

 
299

Total current
 
667

 
431

 
417

Deferred
 
 
 
 
 
 
U.S. federal and state
 
39

 
67

 
108

Foreign
 
(8
)
 
33

 
8

Total deferred
 
31

 
100

 
116

Income tax expense
 
$
698

 
$
531

 
$
533

Reconciliation of the U.S. federal income tax rate to the actual effective tax rate
A reconciliation of the statutory U.S. federal income tax rate to the effective tax rate was as follows:
 
 
Years ended December 31,
 
 
2014
 
2013
 
2012
Statutory U.S. federal income tax rate
 
35.0
 %
 
35.0
 %
 
35.0
 %
State income tax, net of federal effect
 
1.1

 
0.2

 
1.0

Differences in rates and taxability of foreign subsidiaries and joint ventures
 
(5.7
)
 
(6.0
)
 
(12.1
)
Research tax credits
 
(1.5
)
 
(3.7
)
 
(0.4
)
Other, net
 
(0.2
)
 
(0.4
)
 
—

Effective tax rate
 
28.7
 %
 
25.1
 %
 
23.5
 %
Net deferred tax assets
Carryforward tax benefits and the tax effect of temporary differences between financial and tax reporting that give rise to net deferred tax assets were as follows:
 
 
December 31,
In millions
 
2014
 
2013
Deferred tax assets
 
 
 
 
U.S. state carryforward benefits
 
$
124

 
$
124

Foreign carryforward benefits
 
66

 
63

Employee benefit plans
 
367

 
328

Warranty expenses
 
354

 
332

Accrued expenses
 
89

 
70

Other
 
45

 
51

Gross deferred tax assets
 
1,045

 
968

Valuation allowance
 
(144
)
 
(101
)
Total deferred tax assets
 
901

 
867

Deferred tax liabilities
 
 
 
 
Property, plant and equipment
 
(329
)
 
(304
)
Unremitted income of foreign subsidiaries and joint ventures
 
(204
)
 
(201
)
Employee benefit plans
 
(161
)
 
(158
)
Other
 
(23
)
 
(27
)
Total deferred tax liabilities
 
(717
)
 
(690
)
Net deferred tax assets
 
$
184

 
$
177

Reconciliation of the beginning and ending amount of unrecognized tax benefits
A reconciliation of unrecognized tax benefits for the years ended December 31, 2014, 2013 and 2012 was as follows:
In millions
 
 
Balance at December 31, 2011
 
$
86

Additions based on tax positions related to the current year
 
4

Additions based on tax positions related to the prior years
 
57

Reductions for tax positions related to prior years
 
(2
)
Balance at December 31, 2012
 
145

Additions based on tax positions related to the current year
 
10

Additions based on tax positions related to the prior years
 
21

Reductions for tax positions related to prior years
 
(6
)
Reductions for tax positions relating to lapse of statute of limitations
 
(1
)
Balance at December 31, 2013
 
169

Additions based on tax positions related to the current year
 
8

Additions based on tax positions related to the prior years
 
5

Reductions for tax positions related to prior years
 
(2
)
Reductions for tax positions relating to settlements with taxing authorities
 
(5
)
Reductions for tax positions relating to lapse of statute of limitations
 
(1
)
Balance at December 31, 2014
 
$
174