INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2019

The income tax expense (benefit) for the year ended December 31, 2019 is as follows (in millions):



	Current		Deferred			Total
International	$	915	$	(12	)	$	903
U.S. Federal	22		166			188
U.S. State	34		(32		)	2
Total	$	971	$	122		$	1,093

The income tax expense (benefit) for the year ended December 31, 2018 is as follows (in millions):



	Current		Deferred			Total
International	$	887	$	(3	)	$	884
U.S. Federal	45		(107		)	(62		)
U.S. State	55		(40		)	15
Total	$	987	$	(150	)	$	837

The income tax expense (benefit) for the year ended December 31, 2017 is as follows (in millions):



	Current		Deferred			Total
International	$	756	$	(10	)	$	746
U.S. Federal	1,327		(57		)	1,270
U.S. State	7		35			42
Total	$	2,090	$	(32	)	$	2,058

Tax effects of temporary differences that give rise to significant portions of deterred tax assets and liabilities

The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities at December 31, 2019 and 2018 are as follows (in millions):



	2019			2018
Deferred tax assets/(liabilities):
Net operating loss carryforward — U.S.	$	37		$	59
Net operating loss carryforward — International	15			20
Accrued expenses	35			50
Stock-based compensation and other stock based payments	49			51
Foreign currency translation adjustment	36			27
Tax credits	14			46
Euro-denominated debt	—			5
Operating lease liabilities	38			—
Property and equipment	31			6
Subtotal - deferred tax assets	255			264

Discount on convertible notes	(10		)	(22		)
Intangible assets and other	(133		)	(482		)
Euro-denominated debt	(14		)	—
State income tax on accumulated unremitted international earnings	(8		)	(25		)
Unrealized gains on investments	(191		)	(2		)
Operating lease assets	(35		)	—
Installment sale liability	(284		)	—
Other	(11		)	(15		)
Subtotal - deferred tax liabilities	(686		)	(546		)
Valuation allowance on deferred tax assets	(45		)	(36		)
Net deferred tax liabilities⁽¹⁾	$	(476	)	$	(318	)

(1) Includes deferred tax assets of $400 million and $51 million at December 31, 2019 and 2018, respectively, reported in "Other assets" in the Consolidated Balance Sheets.

Schedule of effective income tax rate reconciliation

The effective income tax rate of the Company is different from the amount computed using the expected U.S. statutory federal rate of 21% in 2019 and 2018 and 35% in 2017 as a result of the following items (in millions):



	2019			2018			2017
Income tax expense at U.S. federal statutory rate	$	1,251		$	1,015		$	1,539
Adjustment due to:
Foreign rate differential	210			210			(458		)
Innovation Box Tax benefit	(443		)	(435		)	(397		)
Tax Act - Remeasurement of deferred tax balances	—			(2		)	(217		)
Tax Act - U.S. transition tax and other transition impacts	(17		)	(46		)	1,563
Other	92			95			28
Income tax expense	$	1,093		$	837		$	2,058

Reconciliation of unrecognized tax benefits

The following is a reconciliation of the total beginning and ending amount of unrecognized tax benefits (in millions):



	2019			2018			2017
Unrecognized tax benefit — January 1	$	45		$	32		$	33
Gross increases — tax positions in current period	3			1			5
Gross increases — tax positions in prior periods	11			19			5
Gross decreases — tax positions in prior periods	(3		)	(3		)	(9		)
Reduction due to lapse in statute of limitations	—			(2		)	(1		)
Reduction due to settlements during the current period	—			(2		)	(1		)
Unrecognized tax benefit — December 31	$	56		$	45		$	32