Income Taxes (Tables)

12 Months Ended

Dec. 31, 2017

Components of Income from Continuing Operations Before Income Taxes

The components of income from continuing operations before income taxes were as follows:



	2017			2016		2015
United States	$	500		$	84	$	124
Foreign	(30		)	330		59
	$	470		$	414	$	183

Schedule of Provision for Income Taxes on Income from Continuing Operations

The provision for income taxes consisted of the following:



	2017			2016			2015
Current:
Federal*	$	—		$	—		$	—
Foreign	98			133			115
State and local	(2		)	1			(1		)
	96			134			114
Deferred:
Federal*	489			1,208			196
Foreign	37			136			29
State and local	(78		)	(2		)	—
	448			1,342			225
Total	$	544		$	1,476		$	339

* Includes U.S. taxes related to foreign income

Reconciliation of U.S. Federal Statutory Rate to Arconic's Effective Tax Rate

A reconciliation of the U.S. federal statutory rate to Arconic’s effective tax rate was as follows (the effective tax rate for all periods was a provision on income):



	2017		2016		2015
U.S. federal statutory rate	35.0	%	35.0	%	35.0	%
Taxes on foreign operations	(7.5	)	(10.2	)	2.5
Federal benefit of state tax	3.1		0.4		0.3
Permanent differences on restructuring and other charges and asset disposals⁽¹⁾	(167.4	)	(107.8	)	3.6
Non-deductible acquisition costs	0.3		8.4		7.1
Statutory tax rate and law changes⁽²⁾	52.5		(15.7	)	(1.0	)
Tax holidays	(3.0	)	(0.8	)	(3.9	)
Tax credits	(0.7	)	(1.2	)	(2.8	)
Changes in valuation allowances	137.9		426.8		145.8
Impairment of goodwill	53.5		—		4.8
Company-owned life insurance/split-dollar net premiums	—		23.0		(3.0	)
Changes in uncertain tax positions	10.1		2.1		(2.2	)
Other	1.9		(3.5	)	(1.0	)
Effective tax rate	115.7	%	356.5	%	185.2	%


⁽¹⁾	Additional losses were reported in Spain's 2017 tax return related to the Separation Transaction which are offset by an increased valuation allowance.


⁽²⁾	On December 22, 2017, the United States enacted the Tax Cuts and Jobs Act of 2017 ("the 2017 Act”) resulting in significant changes to the Internal Revenue Code (see below). In December 2016, Spain and the United States enacted tax law changes which resulted in the remeasurement of certain deferred tax liabilities recorded by Arconic.

Schedule of Components of Net Deferred Tax Assets and Liabilities

The components of net deferred tax assets and liabilities were as follows:



	2017					2016
December 31,	Deferred tax assets			Deferred tax liabilities		Deferred tax assets			Deferred tax liabilities
Depreciation	$	31		$	693	$	15		$	817
Employee benefits	936			23		1,382			8
Loss provisions	134			14		181			1
Deferred income/expense	19			1,144		20			74
Tax loss carryforwards	3,305			—		1,540			—
Tax credit carryforwards	638			—		652			—
Other	24			33		164			19
	5,087			1,907		3,954			919
Valuation allowance	(2,584		)	—		(1,940		)	—
	$	2,503		$	1,907	$	2,014		$	919

Schedule of Expiration Periods of Deferred Tax Assets

The following table details the expiration periods of the deferred tax assets presented above:



December 31, 2017	Expires within 10 years			Expires within 11-20 years			No expiration*			Other*			Total
Tax loss carryforwards	$	81		$	781		$	2,443		$	—		$	3,305
Tax credit carryforwards	531			97			10			—			638
Other	—			—			84			1,060			1,144
Valuation allowance	(467		)	(646		)	(1,376		)	(95		)	(2,584		)
	$	145		$	232		$	1,161		$	965		$	2,503

Deferred tax assets with no expiration may still have annual limitations on utilization. Other represents deferred tax assets whose expiration is dependent upon the reversal of the underlying temporary difference. A substantial amount of Other relates to employee benefits that will become deductible for tax purposes over an extended period of time as contributions are made to employee benefit plans and payments are made to retirees.

Schedule of Changes in Valuation Allowance

The following table details the changes in the valuation allowance:



December 31,	2017			2016			2015
Balance at beginning of year	$	1,940		$	1,291		$	1,151
Increase to allowance	831			772			180
Release of allowance	(246		)	(209		)	(42		)
Acquisitions and divestitures (F)	(1		)	(1		)	29
Tax apportionment, tax rate and tax law changes	(24		)	106			(15		)
Foreign currency translation	84			(19		)	(12		)
Balance at end of year	$	2,584		$	1,940		$	1,291

Reconciliation of Unrecognized Tax Benefits (Excluding Interest and Penalties)

A reconciliation of the beginning and ending amount of unrecognized tax benefits (excluding interest and penalties) was as follows:



December 31,	2017			2016			2015
Balance at beginning of year	$	28		$	18		$	7
Additions for tax positions of the current year	23			12			—
Additions for tax positions of prior years	27			—			14
Reductions for tax positions of prior years	—			—			(2		)
Settlements with tax authorities	—			(1		)	—
Expiration of the statute of limitations	(5		)	(1		)	(1		)
Foreign currency translation	—			—			—
Balance at end of year	$	73		$	28		$	18