INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2018

Income before income taxes included the following (dollars in millions):



	Years ended December 31,
	2018		2017		2016
U.S. income	$	755	$	491	$	309
Foreign income	50		36		32
Total	$	805	$	527	$	341

Provision for Income Tax Expense

The provision for income tax expense was estimated as follows (dollars in millions):



	Years ended December 31,
	2018		2017			2016
Estimated current income taxes:
U.S. federal	$	94	$	61		$	2
Foreign	9		7			8
U.S. state and local	11		5			2
Total Current	114		73			12
Deferred income tax expense (credit), net:
U.S. federal	45		(44		)	107
Foreign	—		1			—
U.S. state and local	7		(7		)	7
Total Deferred	52		(50		)	114
Total income tax expense	$	166	$	23		$	126

Reconciliation of Provision for Income Tax Expense

A reconciliation of the provision for income tax expense compared with the amounts at the U.S. federal statutory rate is as follows (dollars in millions):



	Years ended December 31,
	2018			2017			2016
Tax at U.S. statutory income tax rate	$	169		$	185		$	120
State tax expense	15			10			6
Non-deductible expenses	(9		)	7			5
Foreign rate differential	(4		)	(5		)	(5		)
Effect of tax rate changes	(4		)	—			—
Tax credits	(3		)	(21		)	—
Valuation allowance	2			3			1
Impact related to U.S. Tax Cuts and Jobs Act	—			(155		)	—
Other adjustments	—			(1		)	(1		)
Total income tax expense	$	166		$	23		$	126

Deferred Tax Assets and Liabilities

Temporary differences and carryforwards that gave rise to deferred tax assets and liabilities included the following (dollars in millions):



	As of December 31, 2018			As of December 31, 2017
Deferred tax assets:
Intangibles	$	29		$	35
Deferred revenue	24			25
Other accrued liabilities	20			18
Warranty accrual	14			11
Operating loss carryforwards	10			12
Sales allowances and rebates	8			6
Stock-based compensation	5			6
Technology-related investments	5			4
Inventories	4			5
Capital loss carryforwards	3			3
Environmental remediation	3			3
Unrealized loss on interest rate derivatives	1			1
Tax credits	1			—
Other	2			4
Total Deferred tax assets	129			133
Valuation allowances	(10		)	(9		)
Deferred tax liabilities:
Goodwill	(311		)	(287		)
Trade name	(114		)	(96		)
Property, plant and equipment	(10		)	(7		)
Post-retirement	(9		)	(4		)
Other	(2		)	(3		)
Total Deferred tax liabilities	(446		)	(397		)
Net Deferred tax liability	$	(327	)	$	(273	)

Liability for Unrecognized Tax Benefit




December 31, 2016	$	2

Increases in unrecognized tax benefits as a result of current year activity	—

December 31, 2017	$	2

Increases in unrecognized tax benefits as a result of current year activity	—

December 31, 2018	$	2