INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2020

The income tax expense (benefit) for the year ended December 31, 2020 is as follows (in millions):


	Current		Deferred		Total
International	$	320	$	(62)	$	258
U.S. Federal	(9)		296		287
U.S. State	(16)		(21)		(37)
Total	$	295	$	213	$	508

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

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, 2020 and 2019 are as follows (in millions):


	2020		2019
Deferred tax assets/(liabilities):
Net operating loss carryforward — U.S.	$	67	$	37
Net operating loss carryforward — International	81		15
Accrued expenses	47		35
Stock-based compensation and other stock based payments	40		49
Foreign currency translation adjustment	29		36
Tax credits	9		14
Euro-denominated debt	77		—
Operating lease liabilities	43		38
Property and equipment	11		31
Subtotal - deferred tax assets	404		255

Discount on convertible notes	(29)		(10)
Intangible assets and other	(119)		(133)
Euro-denominated debt	—		(14)

State income tax on accumulated unremitted international earnings	(5)		(8)
Unrealized gains on investments	(550)		(191)
Operating lease assets	(38)		(35)
Installment sale liability	(263)		(284)
Other	(14)		(11)
Subtotal - deferred tax liabilities	(1,018)		(686)
Valuation allowance on deferred tax assets	(58)		(45)
Net deferred tax liabilities (1)	$	(672)	$	(476)

(1) Includes deferred tax assets of $455 million and $400 million at December 31, 2020 and 2019, respectively, reported in "Other assets, net" 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% for the years ended December 31, 2020, 2019 and 2018 as a result of the following items (in millions):


	2020		2019		2018
Income tax expense at U.S. federal statutory rate	$	119	$	1,251	$	1,015
Adjustment due to:
Foreign rate differential	55		210		210
Innovation Box Tax benefit	(79)		(443)		(435)
Goodwill impairment	228		—		—
Stock-based compensation	32		23		12
Federal GILTI	73		36		35
State income tax (benefit) expense	(31)		9		1
Valuation allowance	36		1		(3)
Uncertain tax positions	64		11		(4)
Tax Act - Remeasurement of deferred tax balances	—		—		(2)
Tax Act - U.S. transition tax benefit and other transition impacts	(8)		(17)		(46)
Other	19		12		54
Income tax expense	$	508	$	1,093	$	837

Reconciliation of unrecognized tax benefits

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


	2020		2019		2018
Unrecognized tax benefit — January 1	$	56	$	45	$	32
Gross increases — tax positions in current period	2		3		1
Gross increases — tax positions in prior periods	48		11		19
Gross decreases — tax positions in prior periods	(11)		(3)		(3)
Reduction due to lapse in statute of limitations	—		—		(2)
Reduction due to settlements during the current period	(11)		—		(2)
Unrecognized tax benefit — December 31	$	84	$	56	$	45