Income Taxes

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Tax Act was enacted in December 2017. The Tax Act reduced the U.S. federal corporate tax rate from 35 percent to 21 percent, required companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and created new taxes on certain foreign earnings. As of December 31, 2018, we have completed our accounting for the tax effects of enactment of the Tax Act. During the year ended December 31, 2017, we recognized the reasonably estimated (i) effects on our existing deferred tax balances and (ii) one-time transition tax. During the year ended December 31, 2018, we finalized the accounting for the enactment of the Tax Act. The following table presents the impact of the accounting for the enactment of the Tax Act on our provision (benefit) for income taxes for the years ended December 31, 2018 and 2017:

	Year ended December 31,
	2018		2017
Revaluation of deferred tax balances (1)	$	1	$	(746	)
One-time transition tax (2)	5		57
Total provision (benefit) for income taxes impact	$	6	$	(689	)

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(1) Reflects the revaluation of our net deferred tax liability based on a U.S. federal tax rate of 21 percent.

(2) Reflects a one-time transition tax on our unremitted foreign earnings and profits. See below for further discussion addressing our unremitted foreign earnings and profits.

The substantial 2017 impact of the enactment of the Tax Act discussed above is reflected in the tables below. The components of the provision (benefit) for income taxes for each of the three years in the period ended December 31, 2018 are

as follows:

	Year ended December 31,
	2018		2017			2016
Current
Federal	$	47	$	190		$	186
Foreign	18		15			10
State and local	58		30			24
	123		235			220
Deferred
Federal	243		(580		)	119
Foreign	3		(2		)	(1		)
State and local	11		49			5
	257		(533		)	123
Total	$	380	$	(298	)	$	343

A reconciliation of the provision (benefit) for income taxes and the amount computed by applying the statutory federal income tax rates (21 percent for the year ended December 31, 2018 and 35 percent for the years ended December 31, 2017 and 2016) to the income before provision (benefit) for income taxes for each of the three years in the period ended December 31, 2018 is as follows:

	Year ended December 31,
	2018		2017			2016
Computed tax at statutory tax rate	$	310	$	367		$	318
State income taxes, net of federal tax benefit	54		34			21
Non-deductible expenses and other	6		(3		)	9
Enactment of the Tax Act	6		(689		)	—
Foreign taxes	4		(7		)	(5		)
Total	$	380	$	(298	)	$	343

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

	December 31, 2018			December 31, 2017
Reserves and allowances	$	126		$	87
Debt cancellation and other	11			13
Net operating loss and credit carryforwards	435			192
Total deferred tax assets	572			292
Property and equipment	(1,976		)	(1,498		)
Intangibles	(237		)	(174		)
Valuation allowance	(46		)	(39		)
Total deferred tax liability	(2,259		)	(1,711		)
Total deferred income tax liability	$	(1,687	)	$	(1,419	)

We file income tax returns in the U.S., Canada and Europe. Without exception, 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 2010.

For financial reporting purposes, income before provision for income taxes for our foreign subsidiaries was $71, $48 and $29 for the years ended December 31, 2018, 2017 and 2016, respectively.

We have historically considered the undistributed earnings of our foreign subsidiaries to be indefinitely reinvested, and, accordingly, no taxes have been provided on such earnings. We continue to evaluate our plans for reinvestment or repatriation of unremitted foreign earnings and have not changed our previous indefinite reinvestment determination following the

enactment of the Tax Act. We have not repatriated funds to the U.S. to satisfy domestic liquidity needs, nor do we anticipate the need to do so. The Tax Act requires a one-time transition tax for deemed repatriation of accumulated undistributed earnings of certain foreign investments (as reflected above, as of December 31, 2018, we have computed a transition tax amount payable of $62). If we determine that all or a portion of our foreign earnings are no longer indefinitely reinvested, we may be subject to additional foreign withholding taxes and U.S. state income taxes, beyond the Tax Act's one-time transition tax. At December 31, 2018, unremitted earnings of foreign subsidiaries of $651 have been included in our computation of the Tax Act transition tax.

We have net operating loss carryforwards (“NOLs”) of $1.468 billion for federal income tax purposes that expire from 2022 through 2038, $29 for foreign income tax purposes that expire from 2024 through 2037 and $1.180 billion for state income tax purposes that expire from 2018 through 2038. We have recorded valuation allowances against these deferred assets of $46 and $39 as of December 31, 2018 and 2017, respectively. The valuation allowance balances as of December 31, 2018 and 2017 include full valuation allowances associated with foreign tax credits of $32 and $26, respectively. In 2018, the Company utilized $386 of existing NOLs to offset federal and state tax liabilities.