Income Taxes

6 Months Ended

Jun. 30, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company’s income tax (provision) benefit and effective income tax rate were as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
(In millions)	2020			2019			2020			2019
Income tax (provision) benefit	$	27		$	(60	)	$	(52	)	$	(91	)
Effective income tax rate	337.5		%	20.6		%	11.5		%	16.6		%

The income tax (provision) benefit as a percentage of income (loss) before income taxes and loss from investments in unconsolidated affiliates was 337.5% and 20.6% for the three months ended June 30, 2020 and 2019, respectively, and was 11.5% and 16.6% for the six months ended June 30, 2020 and 2019, respectively. The income tax benefit of $27 million on an $8 million loss before income taxes and loss from investments in unconsolidated affiliates for the three months ended June 30, 2020 includes equity compensation related tax benefits, changes in uncertain tax positions and other discrete tax items.

The effective income tax rate for the six months ended June 30, 2020 reflects the impact of equity compensation related tax benefits on a lower level of pre-tax income and changes in uncertain tax positions, partially offset by $112 million of income tax expense associated with the $428 million gain on the sale of a 60% interest of the Company’s Investment Services business (see Note 4). The effective income tax rate in the six months ended June 30, 2019 included discrete tax benefits due to a loss from subsidiary restructuring.

The Company’s potential liability for unrecognized tax benefits before interest and penalties was approximately $187 million at June 30, 2020. The Company believes it is reasonably possible that the liability for unrecognized tax benefits may decrease by up to $25 million over the next twelve months as a result of possible closure of federal tax audits, potential settlements with certain states and foreign countries, and the lapse of the statutes of limitations in various state and foreign jurisdictions.

As of June 30, 2020, the Company’s U.S. federal income tax returns for 2016 through 2019, and tax returns in certain states and foreign jurisdictions for 2005 through 2019, remain subject to examination by taxing authorities. In connection with the acquisition of First Data, the Company is subject to income tax examination from 2008 forward in relation to First Data’s U.S. federal income tax return. State and local examinations are substantially complete through 2010 in relation to First Data’s state and local tax filings. Foreign jurisdictions generally remain subject to examination by their respective authorities from 2006 forward, none of which are considered significant jurisdictions.

In July 2020, the U.S. Department of Treasury released certain proposed and final regulations which were originally enacted under the 2017 Tax Act. The Company is currently evaluating these regulations however does not expect them to have a material impact on its consolidated financial statements.