Income Taxes

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 4 — INCOME TAXES

The provision for income taxes consists of the following (dollars in millions):

	2020			2019			2018
Current:
Federal	$	1,021		$	670		$	759
State		126			134			149
Foreign		5			17			23
Deferred:
Federal		(73	)		254			9
State		(39	)		29			13
Foreign		3			(5	)		(7	)
	$	1,043		$	1,099		$	946

The 2017 Tax Cuts and Jobs Act (“Tax Act”) significantly revised U.S. corporate income taxes, including lowering the statutory corporate tax rate from 35% to 21% beginning in 2018. We completed our analysis of the impact of the Tax Act during 2018, reducing our provision for income taxes for the year ended December 31, 2018 by $67 million related to a remeasurement of certain deferred tax assets and liabilities for which we were unable to make reasonable estimates in 2017.

Our provision for income taxes for the years ended December 31, 2020, 2019 and 2018 included tax benefits of $92 million, $65 million and $124 million, respectively, related to the settlement of employee equity awards. During 2018, we recorded a reduction to our provision for income taxes of $28 million for tax credits related to certain 2017 hurricane-related expenses. Our foreign pretax income was $9 million, $50 million and $86 million for the years ended December 31, 2020, 2019 and 2018, respectively.

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

	2020			2019			2018
Federal statutory rate		21.0	%		21.0	%		21.0	%
State income taxes, net of federal tax benefit		1.9			2.7			2.9
Change in liability for uncertain tax positions		(0.2	)		0.4			(0.1	)
Tax benefit from settlements of employee equity awards		(1.8	)		(1.3	)		(2.4	)
Impact of Tax Act on deferred tax balances		—			—			(1.6	)
Other items, net		0.8			1.1			0.2
Effective income tax rate on income attributable to HCA Healthcare, Inc.		21.7			23.9			20.0
Income attributable to noncontrolling interests from consolidated partnerships		(2.5	)		(2.9	)		(2.3	)
Effective income tax rate on income before income taxes		19.2	%		21.0	%		17.7	%

A summary of the items comprising the deferred tax assets and liabilities at December 31 follows (dollars in millions):

	2020				2019
	Assets		Liabilities		Assets		Liabilities
Depreciation and fixed asset basis differences	$	—	$	678	$	—	$	601
Allowances for professional liability and other risks		407		—		376		—
Accounts receivable		283		—		307		—
Compensation		487		—		292		—
Right-of-use lease assets and obligations		416		409		369		366
Other		485		606		461		538
	$	2,078	$	1,693	$	1,805	$	1,505

At December 31, 2020, federal and state net operating loss carryforwards (expiring in years 2023 through 2039) available to offset future taxable income approximated $56 million and $127 million, respectively. Utilization of net operating loss carryforwards in any one year may be limited.

The following table summarizes the activity related to our unrecognized tax benefits (dollars in millions):

	2020			2019
Balance at January 1	$	522		$	390
Additions (reductions) based on tax positions related to the current year		(3	)		29
Additions for tax positions of prior years		13			119
Reductions for tax positions of prior years		(30	)		(3	)
Settlements		(22	)		—
Lapse of applicable statutes of limitations		(11	)		(13	)
Balance at December 31	$	469		$	522

Our liability for unrecognized tax benefits was $508 million, including accrued interest of $73 million and excluding $34 million that was recorded as reductions of the related deferred tax assets, as of December 31, 2020 ($550 million, $62 million and $34 million, respectively, as of December 31, 2019). Unrecognized tax benefits of $157 million as of December 31, 2020 ($160 million as of December 31, 2019) would affect the effective rate, if recognized.

The Internal Revenue Service (“IRS”) was conducting an examination of the Company’s 2016, 2017 and 2018 federal income tax returns at December 31, 2020. We are also subject to examination by state and foreign taxing authorities. Depending on the resolution of any federal, state and foreign tax disputes, the completion of examinations by federal, state or foreign taxing authorities, or the expiration of statutes of limitation for specific taxing jurisdictions, we believe it is reasonably possible that our liability for unrecognized tax benefits may significantly increase or decrease within the next 12 months. However, we are currently unable to estimate the range of any possible change.