
In millions	2020		2019		2018
Current:
Federal	$	2,615	$	2,450	$	1,480
State	518		565		499
	3,133		3,015		1,979
Deferred:
Federal	(450)		(535)		22
State	(114)		(114)		1
	(564)		(649)		23
Total	$	2,569	$	2,366	$	2,002

The TCJA was enacted on December 22, 2017. Among numerous changes to existing tax laws, the TCJA permanently reduced the federal corporate income tax rate from 35% to 21% effective on January 1, 2018. The effects of changes in tax rates on deferred tax balances are required to be taken into consideration in the period in which the changes are enacted, regardless of when they are effective. As a result of the reduction of the corporate income tax rate under the TCJA, the Company estimated the revaluation of its net deferred tax liabilities and recorded a provisional income tax benefit of approximately $1.5 billion for

year ended December 31, 2017. In 2018, the Company completed its process of determining the TCJA’s final impact and recorded an additional income tax benefit of $100 million.

The following table is a reconciliation of the statutory income tax rate to the Company’s effective income tax rate for continuing operations for the years ended December 31, 2020, 2019 and 2018:


	2020		2019		2018
Statutory income tax rate	21.0	%	21.0	%	21.0	%
State income taxes, net of federal tax benefit	3.2		4.0		27.7
Effect of the Tax Cuts and Jobs Act	—		—		(7.1)
Health insurer fee	2.2		—		2.2
Goodwill impairments	—		—		89.5
Basis difference upon disposition of subsidiary	(1.2)		—		5.0
Other	1.1		1.3		4.1
Effective income tax rate	26.3	%	26.3	%	142.4	%


In millions	2020		2019
Deferred income tax assets:
Lease and rents	$	5,742	$	5,731
Inventory	80		23
Employee benefits	238		191
Bad debts and other allowances	395		294
Retirement benefits	—		47
Net operating loss and capital loss carryforwards	568		480
Deferred income	43		36
Insurance reserves	489		430
Payroll tax deferral	173		—
Other	500		451
Valuation allowance	(454)		(374)
Total deferred income tax assets	7,774		7,309
Deferred income tax liabilities:
Retirement benefits	(29)		—
Investments	(421)		(289)
Lease and rents	(5,368)		(5,464)
Depreciation and amortization	(8,750)		(8,850)
Total deferred income tax liabilities	(14,568)		(14,603)
Net deferred income tax liabilities	$	(6,794)	$	(7,294)

As of December 31, 2020, the Company had net operating and capital loss carryovers of $568 million, which expire between 2021 and 2040. The Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and the Company’s recent operating results. The Company established a valuation allowance of $454 million because it does not consider it more likely than not that these deferred tax assets will be recovered.


In millions	2020		2019		2018
Beginning balance	$	655	$	661	$	344
Additions based on tax positions related to the current year	3		4		1
Additions based on tax positions related to prior years	182		115		324
Reductions for tax positions of prior years	(56)		(111)		(5)
Expiration of statutes of limitation	(2)		(7)		(2)
Settlements	(14)		(7)		(1)
Ending balance	$	768	$	655	$	661

The Company and most of its subsidiaries are subject to U.S. federal income tax as well as income tax of numerous state and local jurisdictions. The Company participated in the Compliance Assurance Process through 2019, which is a program made available by the U.S. Internal Revenue Service (“IRS”) to certain qualifying large taxpayers, under which participants work collaboratively with the IRS to identify and resolve potential tax issues through open, cooperative and transparent interaction prior to the annual filing of their federal income tax returns. The IRS has completed its examinations of the Company’s consolidated U.S. federal income tax returns for tax years 2013 and 2018. The IRS has substantially completed its examinations of the Company’s consolidated U.S. federal income tax returns for tax years 2014 through 2017 and 2019.

The Company and its subsidiaries are also currently under income tax examinations by a number of state and local tax authorities. As of December 31, 2020, no examination has resulted in any proposed adjustments that would result in a material change to the Company’s operating results, financial condition or liquidity.

Substantially all material state and local income tax matters have been concluded for fiscal years through 2014. Certain state exams are likely to be concluded and certain state statutes of limitations will lapse in 2021, but the change in the balance of the Company’s uncertain tax positions is projected to be immaterial. In addition, it is reasonably possible that the Company’s unrecognized tax benefits could change within the next twelve months due to the anticipated conclusion of various examinations with the IRS for various years. An estimate of the range of the possible change cannot be made at this time.

The Company records interest expense related to unrecognized tax benefits and penalties in the income tax provision. The Company accrued interest expense of approximately $34 million, $49 million and $19 million in 2020, 2019 and 2018, respectively. The Company had approximately $121 million and $173 million accrued for interest and penalties as of December 31, 2020 and 2019, respectively.

As of December 31, 2020, the total amount of unrecognized tax benefits that, if recognized, would affect the Company’s effective income tax rate is approximately $651 million, after considering the federal benefit of state income taxes.