Income Taxes (Tables)

12 Months Ended

Dec. 31, 2017

Schedule of income from continuing operations before income taxes

Income from continuing operations before income taxes consisted of the following:



(millions)	2017		2016		2015
U.S.	$	272	$	201	$	152
Foreign	63		73		84
Total	$	335	$	274	$	236

Schedule of income tax expense (benefit) on continuing operations

Income tax expense (benefit) on continuing operations consisted of the following:



(millions)	2017			2016		2015
Current:
Federal	$	(21	)	$	—	$	—
Foreign	2			5		12
State	2			1		1
Total current	$	(17	)	$	6	$	13
Deferred:
Federal	$	243		$	41	$	(631	)
Foreign	—			2		(4		)
State	12			14		(118		)
Total deferred	$	255		$	57	$	(753	)
Total	$	238		$	63	$	(740	)

Schedule of differences between actual provisions for income taxes and provisions for income taxes at the U.S. federal statutory rate

For our continuing operations, differences between actual provisions for income taxes and provisions for income taxes at the U.S. federal statutory rate (35%), prior to changes under the 2017 Tax Act, were as follows:



(millions)	2017			2016			2015
Taxes on income from continuing operations at U.S. federal statutory rate	$	117		$	96		$	82
Foreign earnings subject to different tax rates ^(a)	3			(3		)	(3		)
State income tax, net of federal benefit	9			10			8
Change in valuation allowance	—			—			(827		)
Income from equity method investments^(b)	(21		)	(17		)	(16		)
Law changes ^(c)	145			—			—
Prior year return adjustments	(7		)	—			—
Benefits from unrecognized tax positions	—			—			(6		)
Foreign tax credits	—			(21		)	—
Tax expense on distribution of foreign earnings	—			—			20
Other, net	(8		)	(2		)	2
Provision for income tax expense (benefit)	$	238		$	63		$	(740	)
Effective income tax rate	71.0		%	22.9		%	(313.6		)%


(a)	Foreign earnings subject to different tax rates includes amounts related to impairments and other charges associated with our former shipping operations.


(b)	Included in income from equity method investments are taxes associated with that income in the respective jurisdictions. These taxes, which are predominately foreign statutory rates, are at rates that are lower than the U.S. federal statutory rate.

(c)

The impact of the 2017 Tax Act included the transition tax on deferred foreign earnings, net of foreign tax credits, of $9 million, an increase in the valuation allowance related to foreign tax credits of $106 million, an increase in the valuation allowance of our state NOLs due to the change in federal benefit related to those assets of $18 million, anticipated sequestration of our AMT credits of $3 million and the impact of the corporate rate change on deferred tax assets and liabilities of $9 million.

Schedule of components of deferred tax assets and liabilities

Significant components of deferred tax assets and liabilities were as follows:



	As of December 31,
(millions)	2017			2016
Deferred Tax Assets:
Net operating loss and tax credit carryforwards	$	477		$	599
Pension and postretirement benefits	86			112
Reserves not deductible until paid	14			20
Self insurance	2			2
Capitalized interest	7			13
Inventories	4			6
Share-based compensation	14			28
Other	7			4
Deferred tax assets before valuation allowance	611			784
Valuation allowance	(175		)	(51		)
Total deferred tax assets	$	436		$	733
Deferred Tax Liabilities:
Property, plant and equipment	153			245
Other	—			—
Total deferred tax liabilities	$	153		$	245
Net deferred tax assets	$	283		$	488

Reconciliation of the beginning and ending amount of unrecognized tax benefits

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



(millions)	2017			2016			2015
Balance as of January 1	$	15		$	18		$	22
Tax positions related to the current period:
Gross increase	—			—			4
Gross decrease	—			—			—
Tax positions related to prior periods:
Gross increase	—			—			—
Gross decrease	(1		)	(3		)	(1		)
Settlements	—			—			(6		)
Lapse of statutes of limitations	(2		)	—			(1		)
Balance as of December 31	$	12		$	15		$	18