Income Taxes (Tables)

Components of income taxes excluding discontinued operations, cumulative effects of changes in accounting principles, other comprehensive income, and equity in net results of affiliated companies accounted for after-tax, for the years ended December 31 were as follows:



	2014			2013			2012
Income before income taxes, excluding equity in net results of affiliated companies accounted for after-tax (in millions)
U.S.	$	4,484		$	6,537		$	6,557
Non-U.S.	(1,417		)	(566		)	493
Total	$	3,067		$	5,971		$	7,050
Provision for/(Benefit from) income taxes (in millions)
Current
Federal	$	(2	)	$	(19	)	$	4
Non-U.S.	389			453			393
State and local	(22		)	(40		)	3
Total current	365			394			400
Deferred
Federal	334			(346		)	1,925
Non-U.S.	186			328			(126		)
State and local	271			(511		)	(173		)
Total deferred	791			(529		)	1,626
Total	$	1,156		$	(135	)	$	2,026
Reconciliation of effective tax rate
U.S. statutory rate	35.0		%	35.0		%	35.0		%
Non-U.S. tax rates under U.S. rates	(2.3		)	(1.4		)	(1.6		)
State and local income taxes	5.2			1.1			0.1
General business credits	(10.9		)	(5.9		)	0.3
Dispositions and restructurings	5.2			(26.0		)	(1.7		)
U.S. tax on non-U.S. earnings	5.5			(2.0		)	(1.0		)
Prior year settlements and claims	(3.7		)	(0.2		)	(1.8		)
Tax-exempt income	(9.7		)	(5.9		)	(3.9		)
Enacted change in tax rates	1.6			3.0			1.7
Valuation allowances	13.0			(0.8		)	1.6
Other	(1.2		)	0.8			—
Effective rate	37.7		%	(2.3		)%	28.7		%

The components of deferred tax assets and liabilities at December 31 were as follows (in millions):



	2014			2013
Deferred tax assets
Employee benefit plans	$	5,898		$	5,060
Net operating loss carryforwards	2,624			2,364
Tax credit carryforwards	6,745			5,720
Research expenditures	1,754			2,236
Dealer and dealers’ customer allowances and claims	2,510			2,106
Other foreign deferred tax assets	298			1,567
Allowance for credit losses	155			143
All other	1,806			2,691
Total gross deferred tax assets	21,790			21,887
Less: valuation allowances	(1,604		)	(1,633		)
Total net deferred tax assets	20,186			20,254
Deferred tax liabilities
Leasing transactions	2,050			1,138
Deferred income	1,624			2,075
Depreciation and amortization (excluding leasing transactions)	1,967			2,430
Finance receivables	647			723
Other foreign deferred tax liabilities	352			311
All other	477			707
Total deferred tax liabilities	7,117			7,384
Net deferred tax assets/(liabilities)	$	13,069		$	12,870

A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31 were as follows (in millions):



	2014			2013
Beginning balance	$	1,564		$	1,547
Increase – tax positions in prior periods	38			128
Increase – tax positions in current period	250			45
Decrease – tax positions in prior periods	(172		)	(24		)
Settlements	(372		)	(79		)
Lapse of statute of limitations	(6		)	(54		)
Foreign currency translation adjustment	(16		)	1
Ending balance	$	1,286		$	1,564

- Definition

Tabular disclosure of tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities (i.e., uncertain tax positions) and other types of income tax contingencies, including: (1) the policy on classification of interest and penalties; (2) a tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period; the total amount(s) of: (3) unrecognized tax benefits that, if recognized, would affect the effective tax rate, and (4) interest and penalties recognized in each of the income statement and balance sheet; (5) for positions for which it is reasonably possible that the total amounts unrecognized will significantly change within 12 months of the reporting date the: (i) nature of the uncertainty, (ii) nature of the event that could occur that would cause the change, and (iii) an estimate of the range of the reasonably possible change or a statement that an estimate of the range cannot be made; and (6) a description of tax years that remain subject to examination by major tax jurisdictions.

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