Taxes on Income

12 Months Ended

Dec. 31, 2020

The components of taxes on income are as follows:


Year Ended December 31,	2020		2019		2018
Current:
Federal	$	967	$	958	$	847
State	172		184		159
Total current	1,139		1,142		1,006
Deferred:
Federal	(113)		3		42
State	(25)		(1)		7
Total deferred	(138)		2		49
Taxes on income	$	1,001	$	1,144	$	1,055

The temporary differences that created deferred tax assets and liabilities are detailed below:


December 31,	2020		2019
Deferred tax assets:
Employee compensation, severance, and benefits	$	271	$	154
Operating lease liabilities	249		159
Reserves and allowances	70		14
Debt fair value remeasurement	67		—
State and local taxes	37		22
Net operating loss carryforwards	8		6

Total deferred tax assets	702		355
Valuation allowance	(8)		(3)
Deferred tax assets — net of valuation allowance	694		352
Deferred tax liabilities:
Amortization of acquired intangible assets	(1,954)		(51)
Net unrealized gain on available for sale securities	(1,686)		(28)
Operating lease ROU assets	(233)		(146)
Capitalized internal-use software development costs	(101)		(97)
Capitalized contract costs	(72)		(68)
Equipment, office facilities, and property	(69)		(62)
Other	(41)		(10)
Total deferred tax liabilities	(4,156)		(462)
Deferred tax asset/(liability) — net (1)	$	(3,462)	$	(110)

(1) Amounts are included in accrued expenses and other liabilities on the consolidated balance sheets at December 31, 2020 and 2019.

A reconciliation of the federal statutory income tax rate to the effective income tax rate is as follows:


Year Ended December 31,	2020		2019		2018
Federal statutory income tax rate	21.0	%	21.0	%	21.0	%
State income taxes, net of federal tax benefit	3.2		3.2		3.0
Equity compensation benefit	(0.3)		(0.5)		(1.0)
Other	(0.6)		(0.1)		0.1
Effective income tax rate	23.3	%	23.6	%	23.1	%

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:


December 31,	2020		2019
Balance at beginning of year	$	101	$	112
Additions for tax positions related to the current year	15		3
Additions for tax positions related to prior years	3		4
Additions for current year acquisitions	200		—
Reductions for tax positions related to prior years	(7)		(2)
Reductions due to lapse of statute of limitations	(24)		(14)
Reductions for settlements with tax authorities	(40)		(2)
Balance at end of year	$	248	$	101

Unrecognized tax benefits totaled $248 million and $101 million as of December 31, 2020 and 2019, respectively, $202 million and $97 million of which if recognized, would affect the annual effective tax rate.

Interest and penalties were accrued related to unrecognized tax benefits in tax expense. At December 31, 2020 and 2019, we had accrued approximately $58 million and $11 million, respectively, for the payment of interest and penalties.The Company and its subsidiaries are subject to routine examinations by the respective federal, state, and applicable local jurisdictions’ taxing authorities. Federal returns for 2017 through 2019 remain subject to examination. The years open to examination by state and local governments vary by jurisdiction.