Income Taxes

The components of the provision (benefit) for income taxes from continuing operations for each of the three years in the period ended December 31, 2012 are as follows:



	Year ended December 31,
	2012			2011		2010
Current
Federal	$	—		$	—	$	—
Foreign	27			22		16
State and local	2			2		1
	29			24		17
Deferred
Federal	(22		)	36		(48		)
Foreign	2			1		(1		)
State and local	4			2		(9		)
	(16		)	39		(58		)
Total	$	13		$	63	$	(41	)

A reconciliation of the provision (benefit) for income taxes and the amount computed by applying the statutory federal income tax rate of 35 percent to the income (loss) from continuing operations before provision (benefit) for income taxes for each of the three years in the period ended December 31, 2012 is as follows:



	Year ended December 31,
	2012			2011			2010
Computed tax at statutory tax rate	$	31		$	57		$	(22	)
State income taxes, net of federal tax benefit (1)	5			3			(8		)
Non-deductible expenses and other (2)	(8		)	12			(6		)
Foreign taxes	(15		)	(9		)	(5		)
Total	$	13		$	63		$	(41	)


(1)	2012 state income taxes, net of federal tax benefit includes $8 of expense primarily related to the write-off of certain state deferred tax assets as a result of the RSC acquisition.

(2) 2012 non-deductible expenses and other includes a $6 Canadian tax benefit due to settlements with the Canadian Revenue Authority and a $2 transfer pricing tax benefit. 2011 non-deductible expenses and other includes $6 due to the non-deductibility of certain costs associated with the proposed RSC acquisition and $3 related to an adjustment of federal and state deferred tax liabilities. 2010 non-deductible expenses and other includes a benefit of $7 related to a correction of a deferred tax asset recognized in prior periods.

The components of deferred income tax assets (liabilities) are as follows:



	December 31, 2012								December 31, 2011
	Current		Non Current			Total			Current		Non Current			Total
Reserves and allowances	$	61	$	58		$	119		$	45	$	33		$	78
Intangibles	—		—			—			—		45			45
Debt cancellation and other	—		37			37			—		—			—
Net operating loss and credit carryforwards	204		245			449			59		97			156
Total deferred tax assets	265		340			605			104		175			279
Property and equipment	—		(1,236		)	(1,236		)	—		(620		)	(620		)
Intangibles	—		(405		)	(405		)	—		(5		)	(5		)
Debt cancellation and other	—		—			—			—		(18		)	(18		)
Valuation allowance	—		(1		)	(1		)	—		(2		)	(2		)
Total deferred tax liability	—		(1,642		)	(1,642		)	—		(645		)	(645		)
Total deferred income tax asset (liability)	$	265	$	(1,302	)	$	(1,037	)	$	104	$	(470	)	$	(366	)

The Company's liability for unrecognized tax benefits relates to various foreign jurisdictions. The following table summarizes the activity related to the unrecognized tax benefits:



	2012			2011
Balance at January 1	$	6		$	6
Additions for tax positions of prior years	7			—
Additions for tax positions of prior years related to RSC acquisition	6			—
Settlements	(2		)	—
Balance at December 31	$	17		$	6

The gross unrecognized tax benefits as of December 31, 2012 and 2011 include $6 and $4, respectively, of tax benefits that would impact our effective tax rate if recognized.

We include interest accrued on the underpayment of income taxes in interest expense, and penalties, if any, related to unrecognized tax benefits in selling, general and administrative expense. Interest expense of less than $1 related to income tax was reflected in our consolidated statements of income for each of the years ended December 31, 2012, 2011 and 2010.

We file income tax returns in the United States and in several foreign jurisdictions. With few exceptions, we have completed our domestic and international income tax examinations, or the statute of limitations has expired in the respective jurisdictions, for years prior to 2006. The Internal Revenue Service (“IRS”) has completed audits for periods prior to 2010. Canadian authorities have concluded income tax audits for periods through 2010. The Company paid a cash settlement of $1 in the first quarter of 2010 relating to the 2003 through 2005 Canadian transfer pricing audit, which is now closed. Transfer pricing for 2006 through 2010 is currently under audit. Included in the balance of unrecognized tax benefits at December 31, 2012 are certain tax positions under audit by the Canadian Revenue Authority ("CRA"), and it is reasonably possible that these audits will be concluded within the next 12 months. It is reasonably possible that the conclusion of these audits will result in a settlement of reported unrecognized tax benefits for those tax positions during the next 12 months. However, based on the status of the ongoing audit examinations and alternative settlement options available to the Company for certain of these tax positions, which could include legal proceedings, it is not possible to estimate the amount of the change, if any, to the previously recorded uncertain tax positions.

For financial reporting purposes, income from continuing operations before income taxes for our foreign subsidiaries was $143, $86 and $54 for the years ended December 31, 2012, 2011 and 2010, respectively. At December 31, 2012, unremitted earnings of foreign subsidiaries were approximately $347. Since it is our intention to indefinitely reinvest these earnings, no U.S. taxes have been provided for these amounts. If we changed our reinvestment policy and decided to remit earnings as a dividend, a deferred tax liability would arise. Determination of the amount of unrecognized deferred tax liability on these unremitted taxes is not practicable.

We have net operating loss carryforwards (“NOLs”) of $1,545 for state income tax purposes that expire from 2013 through 2033. We have recorded a valuation allowance against this deferred asset of less than $1 and $2 as of December 31, 2012 and 2011, respectively. We have NOLs of $1,032 for federal income tax purposes that expire beginning in 2030. We have not recorded a valuation allowance against this deferred tax asset because it is deemed more likely than not that such benefit will be realized in the future. The federal tax benefit of NOLs for 2012 was $16.