v3.10.0.1
Taxes
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12 Months Ended |
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| Income Tax Disclosure [Abstract] |
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| Taxes |
Taxes | | | | | | | | | | | | | | Income Taxes | Year ended December 31 | | | 2018 |
| | | 2017 |
| | 2016 |
| Income tax expense (benefit) | | | | | | | U.S. federal | | | | | | | Current | $ | (181 | ) | | | $ | (382 | ) | | $ | (623 | ) | Deferred | 738 |
| | | (2,561 | ) | | (1,558 | ) | State and local | | | | | | | Current | 183 |
| | | (97 | ) | | (15 | ) | Deferred | (16 | ) | | | 66 |
| | (121 | ) | Total United States | 724 |
| | | (2,974 | ) | | (2,317 | ) | International | | | | | | | Current | 4,662 |
| | | 3,634 |
| | 2,744 |
| Deferred | 329 |
| | | (708 | ) | | (2,156 | ) | Total International | 4,991 |
| | | 2,926 |
| | 588 |
| Total income tax expense (benefit) | $ | 5,715 |
| | | $ | (48 | ) | | $ | (1,729 | ) |
The reconciliation between the U.S. statutory federal income tax rate and the company’s effective income tax rate is detailed in the following table: | | | | | | | | | | | | | | | 2018 |
| | | 2017 |
| | 2016 |
| Income (loss) before income taxes | | | | | | | United States | $ | 4,730 |
| | | $ | (441 | ) | | $ | (4,317 | ) | International | 15,845 |
| | | 9,662 |
| | 2,157 |
| Total income (loss) before income taxes | 20,575 |
| | | 9,221 |
| | (2,160 | ) | Theoretical tax (at U.S. statutory rate of 21% - 2018, 35% - 2017 & 2016) | 4,321 |
| | | 3,227 |
| | (756 | ) | Effect of U.S. tax reform | (26 | ) | | | (2,020 | ) | | — |
| Equity affiliate accounting effect | (1,526 | ) | | | (1,373 | ) | | (704 | ) | Effect of income taxes from international operations* | 3,132 |
| | | (130 | ) | | 608 |
| State and local taxes on income, net of U.S. federal income tax benefit | 162 |
| | | 39 |
| | (44 | ) | Prior year tax adjustments, claims and settlements | (51 | ) | | | (39 | ) | | (349 | ) | Tax credits | (163 | ) | | | (199 | ) | | (188 | ) | Other U.S.* | (134 | ) | | | 447 |
| | (296 | ) | Total income tax expense (benefit) | $ | 5,715 |
| | | $ | (48 | ) | | $ | (1,729 | ) | | | | | | | | Effective income tax rate | 27.8 | % | | | (0.5 | )% | | 80.0 | % |
The 2018 increase in income tax charge of $5,763, from a benefit of $48 in 2017 to a charge of $5,715 in 2018, is a result of the year-over-year increase in total income before income tax expense, which is primarily due to higher crude oil realizations offset by lower gains on asset sales in 2018 compared to 2017. U.S. tax reform resulted in a benefit of $2,020 being recognized in 2017 reflecting the remeasurement of U.S. deferred tax assets and liabilities. The company’s effective tax rate changed from (0.5) percent in 2017 to 28 percent in 2018. The change in effective tax rate is a consequence of the mix effect resulting from the absolute level of earnings or losses and whether they arose in higher or lower tax rate jurisdictions and the impact of U.S. tax reform to both the 2018 and 2017 results. As noted above, U.S. tax reform resulted in the remeasurement of U.S. deferred tax assets and liabilities in 2017. The U.S. tax return for 2017 was prepared and filed in 2018 and did not result in any material change to the the provisional amounts that were recognized in 2017, and the amounts are now considered final. The company records its deferred taxes on a tax-jurisdiction basis. The reported deferred tax balances are composed of the following: | | | | | | | | | | | | | | At December 31 |
| | 2018 |
| | | 2017 |
| Deferred tax liabilities | | | | | Properties, plant and equipment | $ | 20,159 |
| | | $ | 19,869 |
| Investments and other | 4,943 |
| | | 4,796 |
| Total deferred tax liabilities | 25,102 |
| | | 24,665 |
| Deferred tax assets | | | | | Foreign tax credits | (10,536 | ) | | | (11,872 | ) | Asset retirement obligations/environmental reserves | (5,328 | ) | | | (5,511 | ) | Employee benefits | (2,787 | ) | | | (3,129 | ) | Deferred credits | (1,373 | ) | | | (1,769 | ) | Tax loss carryforwards | (4,948 | ) | | | (5,463 | ) | Other accrued liabilities | (595 | ) | | | (842 | ) | Inventory | (505 | ) | | | (336 | ) | Miscellaneous | (3,481 | ) | | | (2,415 | ) | Total deferred tax assets | (29,553 | ) | | | (31,337 | ) | Deferred tax assets valuation allowance | 15,973 |
| | | 16,574 |
| Total deferred taxes, net | $ | 11,522 |
| | | $ | 9,902 |
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Deferred tax liabilities at the end of 2018 increased by approximately $400 from year-end 2017. The increase was primarily related to property, plant and equipment temporary differences. Deferred tax assets decreased by approximately $1,800 in 2018. The decrease primarily related to lower foreign tax credits and the utilization of tax loss carryforwards. The overall valuation allowance relates to deferred tax assets for U.S. foreign tax credit carryforwards, tax loss carryforwards and temporary differences. It reduces the deferred tax assets to amounts that are, in management’s assessment, more likely than not to be realized. At the end of 2018, the company had tax loss carryforwards of approximately $13,731 and tax credit carryforwards of approximately $1,198, primarily related to various international tax jurisdictions. Whereas some of these tax loss carryforwards do not have an expiration date, others expire at various times from 2019 through 2036. U.S. foreign tax credit carryforwards of $10,536 will expire between 2019 and 2028. At December 31, 2018 and 2017, deferred taxes were classified on the Consolidated Balance Sheet as follows: | | | | | | | | | | | At December 31 | | | 2018 |
| | | 2017 |
| Deferred charges and other assets | $ | (4,399 | ) | | | $ | (4,750 | ) | Noncurrent deferred income taxes | 15,921 |
| | | 14,652 |
| Total deferred income taxes, net | $ | 11,522 |
| | | $ | 9,902 |
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Enactment of U.S. tax reform in 2017 imposed a one-time U.S. federal tax on the deemed repatriation of unremitted earnings indefinitely reinvested abroad, which did not have a material impact on the company’s financial results. The indefinite reinvestment assertion continues to apply for the purpose of determining deferred tax liabilities for U.S. state and foreign withholding tax purposes. U.S. state and foreign withholding taxes are not accrued for unremitted earnings of international operations that have been or are intended to be reinvested indefinitely. Undistributed earnings of international consolidated subsidiaries and affiliates for which no deferred income tax provision has been made for possible future remittances totaled approximately $59,900 at December 31, 2018. This amount represents earnings reinvested as part of the company’s ongoing international business. It is not practicable to estimate the amount of state and foreign taxes that might be payable on the possible remittance of earnings that are intended to be reinvested indefinitely. The company does not anticipate incurring significant additional taxes on remittances of earnings that are not indefinitely reinvested. Uncertain Income Tax Positions The company recognizes a tax benefit in the financial statements for an uncertain tax position only if management’s assessment is that the position is “more likely than not” (i.e., a likelihood greater than 50 percent) to be allowed by the tax jurisdiction based solely on the technical merits of the position. The term “tax position” in the accounting standards for income taxes refers to a position in a previously filed tax return or a position expected to be taken in a future tax return that is reflected in measuring current or deferred income tax assets and liabilities for interim or annual periods. The following table indicates the changes to the company’s unrecognized tax benefits for the years ended December 31, 2018, 2017 and 2016. The term “unrecognized tax benefits” in the accounting standards for income taxes refers to the differences between a tax position taken or expected to be taken in a tax return and the benefit measured and recognized in the financial statements. Interest and penalties are not included. | | | | | | | | | | | | | | | 2018 |
| | | 2017 |
| | 2016 |
| Balance at January 1 | $ | 4,828 |
| | | $ | 3,031 |
| | $ | 3,042 |
| Foreign currency effects | (6 | ) | | | 43 |
| | 1 |
| Additions based on tax positions taken in current year | 239 |
| | | 1,853 |
| | 245 |
| Additions for tax positions taken in prior years | 153 |
| | | 1,166 |
| | 181 |
| Reductions for tax positions taken in prior years | (131 | ) | | | (90 | ) | | (390 | ) | Settlements with taxing authorities in current year | (13 | ) | | | (1,173 | ) | | (36 | ) | Reductions as a result of a lapse of the applicable statute of limitations | — |
| | | (2 | ) | | (12 | ) | Balance at December 31 | $ | 5,070 |
| | | $ | 4,828 |
| | $ | 3,031 |
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Approximately 82 percent of the $5,070 of unrecognized tax benefits at December 31, 2018, would have an impact on the effective tax rate if subsequently recognized. Certain of these unrecognized tax benefits relate to tax carryforwards that may require a full valuation allowance at the time of any such recognition. Tax positions for Chevron and its subsidiaries and affiliates are subject to income tax audits by many tax jurisdictions throughout the world. For the company’s major tax jurisdictions, examinations of tax returns for certain prior tax years had not been completed as of December 31, 2018. For these jurisdictions, the latest years for which income tax examinations had been finalized were as follows: United States – 2013, Nigeria – 2000, Australia – 2006 and Kazakhstan – 2007. The company engages in ongoing discussions with tax authorities regarding the resolution of tax matters in the various jurisdictions. Both the outcome of these tax matters and the timing of resolution and/or closure of the tax audits are highly uncertain. However, it is reasonably possible that developments on tax matters in certain tax jurisdictions may result in significant increases or decreases in the company’s total unrecognized tax benefits within the next 12 months. Given the number of years that still remain subject to examination and the number of matters being examined in the various tax jurisdictions, the company is unable to estimate the range of possible adjustments to the balance of unrecognized tax benefits. On the Consolidated Statement of Income, the company reports interest and penalties related to liabilities for uncertain tax positions as “Income tax expense.” As of December 31, 2018, accruals of $33 for anticipated interest and penalty obligations were included on the Consolidated Balance Sheet, compared with accruals of $178 as of year-end 2017. Income tax expense (benefit) associated with interest and penalties was $8, $(161) and $38 in 2018, 2017 and 2016, respectively. | | | | | | | | | | | | | | Taxes Other Than on Income | Year ended December 31 | | | 2018 |
| | | 2017 |
| | 2016 |
| United States | | | | | | | Excise and similar taxes on products and merchandise* | $ | 4,830 |
| | | $ | 4,398 |
| | $ | 4,335 |
| Consumer excise taxes collected on behalf of third parties* | (4,830 | ) | | | — |
| | — |
| Import duties and other levies | 15 |
| | | 11 |
| | 9 |
| Property and other miscellaneous taxes | 1,577 |
| | | 1,824 |
| | 1,680 |
| Payroll taxes | 246 |
| | | 241 |
| | 252 |
| Taxes on production | 325 |
| | | 206 |
| | 159 |
| Total United States | 2,163 |
| | | 6,680 |
| | 6,435 |
| International | | | | | | | Excise and similar taxes on products and merchandise* | 3,031 |
| | | 2,791 |
| | 2,570 |
| Consumer excise taxes collected on behalf of third parties* | (3,031 | ) | | | — |
| | — |
| Import duties and other levies | 37 |
| | | 45 |
| | 33 |
| Property and other miscellaneous taxes | 2,370 |
| | | 2,563 |
| | 2,379 |
| Payroll taxes | 132 |
| | | 137 |
| | 145 |
| Taxes on production | 165 |
| | | 115 |
| | 106 |
| Total International | 2,704 |
| | | 5,651 |
| | 5,233 |
| Total taxes other than on income | $ | 4,867 |
| | | $ | 12,331 |
| | $ | 11,668 |
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* Beginning in 2018, these taxes are netted in "Taxes other than on income" in accordance with ASU 2014-09. Refer to Note 25, "Revenue" beginning on page 88. |
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- DefinitionThe entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.
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