SEC Filings


10-K
CUMMINS INC filed this Form 10-K on 02/11/2019
Entire Document
 

2017 IMPACT OF TAX LEGISLATION
Deferred tax assets and liabilities
We remeasured certain deferred tax assets and liabilities based on the rates at which they were expected to reverse in the future, which was generally 21 percent. The provisional amount related to the remeasurement of our deferred tax balance was an incremental tax expense of $152 million in 2017. See NOTE 3, "INVESTMENTS IN EQUITY INVESTEES," for the impact to our equity investees.
One-time transition tax
The one-time transition tax was based on our total post-1986 unrepatriated earnings and profits not previously subject to U.S. income tax. The recorded provisional amount for our one-time transition tax was a tax expense of $298 million with a cash impact of $338 million.
Withholding tax
Withholding tax is an additional cost associated with the distribution of earnings from some jurisdictions. As a result of the Tax Legislation, we reconsidered previous assertions regarding earnings that were considered permanently reinvested, which required us to record withholding taxes on earnings likely to be distributed in the foreseeable future. The assertion as to which earnings are permanently reinvested for purposes of calculating withholding tax was provisional as we refined the underlying calculations of the amount of earnings subject to the tax and the rate at which it will be taxed. The recorded provisional amount for the withholding tax resulted in an incremental tax expense of $331 million. See NOTE 3, "INVESTMENTS IN EQUITY INVESTEES," and NOTE 17, "NONCONTROLLING INTERESTS," for the impact of withholding taxes to our equity investees and noncontrolling interests.
2018 ADJUSTMENTS TO TAX LEGISLATION
We completed accounting for the tax effects of the enactment of the Tax Legislation at December 31, 2018 and included $12 million of unfavorable discrete tax items in our 2018 tax provision.
The adjustments for income tax expense (benefit) during the one-year Tax Legislation measurement period for each group and other Tax Legislation adjustments consisted of the following:
 
 
Years Ended December 31,
 
 
In millions
 
2018
 
2017
 
Total Impact
One-year measurement adjustments to 2017 estimates
 
 
 
 
 
 
Withholding tax accrued
 
$
(148
)
 
$
331

 
$
183

Deferred tax balances
 
7

 
152

 
159

One-time transition tax
 
111

 
298

 
409

Net impact of measurement period changes
 
(30
)
 
781

 
751

Other 2018 adjustments
 
 
 
 
 
 
Deferred tax charges(1)
 
35

 

 
35

Foreign currency adjustment related to Tax Legislation
 
7

 

 
7

Net impact of 2018 adjustments
 
42

 

 
42

Total Tax Legislation impact
 
$
12

 
$
781

 
$
793

____________________________________________________
(1) Charges relate to one-time recognition of deferred tax charges at historical tax rates on intercompany profit in inventory.


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