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Income Taxes (Tables) | 12 Months Ended
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Dec. 31, 2016
Income Tax Disclosure [Abstract] |
Income from continuing operations before income tax | Income before income tax and the provision for income tax consist of the following (in millions):
Years ended December 31 | 2016 |  | 2015 |  | 2014
Income before income taxes: |  |  |  |  |
U.K. | $ | (202 | ) |  | $ | 149 |  |  | $ | 347 |
U.S. | (104 | ) |  | (51 | ) |  | (55 | )
Other | 1,975 |  |  | 1,591 |  |  | 1,473 |
Total | $ | 1,669 |  |  | $ | 1,689 |  |  | $ | 1,765 |
Income tax expense (benefit): |  |  |  |  |
Current: |  |  |  |  |
U.K. | $ | (54 | ) |  | $ | 43 |  |  | $ | 1 |
U.S. federal | 94 |  |  | 137 |  |  | 156 |
U.S. state and local | — |  |  | 54 |  |  | 75 |
Other | 223 |  |  | 256 |  |  | 236 |
Total current tax expense | $ | 263 |  |  | $ | 490 |  |  | $ | 468 |
Deferred tax expense (benefit): |  |  |  |  |
U.K. | $ | 59 |  |  | $ | (39 | ) |  | $ | 38 |
U.S. federal | (47 | ) |  | (140 | ) |  | (133 | )
U.S. state and local | 6 |  |  | (14 | ) |  | (24 | )
Other | (42 | ) |  | (30 | ) |  | (15 | )
Total deferred tax benefit | $ | (24 | ) |  | $ | (223 | ) |  | $ | (134 | )
Total income tax expense | $ | 239 |  |  | $ | 267 |  |  | $ | 334 |
Reconciliation of the income tax provisions based on the U.S. statutory corporate tax rate to the provisions reflected in the Consolidated Financial Statements | The reconciliation to the provisions reflected in the Consolidated Financial Statements is as follows:
Years ended December 31 | 2016 |  | 2015 |  | 2014
Statutory tax rate | 20.0% |  | 20.3% |  | 21.5%
U.S. state income taxes, net of U.S. federal benefit | 0.7 |  | 0.5 |  | 1.5
Taxes on international operations (1) | (8.5) |  | (6.0) |  | (8.9)
Nondeductible expenses | 1.2 |  | 2.2 |  | 1.7
Adjustments to prior year tax requirements | (1.0) |  | (1.3) |  | 0.9
Adjustments to valuation allowances | (1.8) |  | (1.2) |  | 0.6
Change in uncertain tax positions | 3.0 |  | 1.4 |  | 1.7
Other — net | 0.7 |  | (0.1) |  | (0.1)
Effective tax rate | 14.3% |  | 15.8% |  | 18.9%
(1) | The Company determines the adjustment for taxes on international operations based on the difference between the statutory tax rate applicable to earnings in each foreign jurisdiction and the enacted rate of 20.0%, 20.3% and 21.5% at December 31, 2016, 2015, and 2014, respectively. The benefit to the Company’s effective income tax rate from taxes on international operations relates to benefits from lower-taxed global operations, primarily due to the use of global funding structures.
Components of Aon's deferred tax assets and liabilities | The components of the Company’s deferred tax assets and liabilities are as follows (in millions):
As of December 31 | 2016 |  | 2015
Deferred tax assets: |  |  |
Employee benefit plans | $ | 661 |  |  | $ | 635 |
Net operating/capital loss and tax credit carryforwards | 399 |  |  | 336 |
Accrued interest | 166 |  |  | 293 |
Other accrued expenses | 102 |  |  | 98 |
Brokerage fee arrangements (1) | 66 |  |  | 66 |
Deferred revenue | 57 |  |  | 65 |
Investment basis differences | 48 |  |  | 56 |
Other | 60 |  |  | 57 |
Total | 1,559 |  |  | 1,606 |
Valuation allowance on deferred tax assets | (130 | ) |  | (162 | )
Total | $ | 1,429 |  |  | $ | 1,444 |
Deferred tax liabilities: |  |  |
Intangibles and property, plant and equipment | $ | (982 | ) |  | $ | (961 | )
Other accrued expenses | (101 | ) |  | (99 | )
Deferred costs | (20 | ) |  | (30 | )
Unrealized foreign exchange gains | (26 | ) |  | (29 | )
Unremitted earnings | (29 | ) |  | (18 | )
Other | (50 | ) |  | (44 | )
Total | $ | (1,208 | ) |  | $ | (1,181 | )
Net deferred tax asset | $ | 221 |  |  | $ | 263 |
(1) Refer to Note 1 “Basis of Presentation” for details regarding the Revision of Previously Issued Financial Statements.
Deferred income taxes (assets and liabilities netted by jurisdiction) as classified in the Consolidated Statements of Financial Position | Deferred income taxes (assets and liabilities have been netted by jurisdiction) have been classified in the Consolidated Statements of Financial Position as follows (in millions):
As of December 31 | 2016 |  | 2015
Deferred tax assets — non-current (2) | $ | 322 |  |  | $ | 300 |
Deferred tax liabilities — non-current (2) | (101 | ) |  | (37 | )
Net deferred tax asset | $ | 221 |  |  | $ | 263 |
(2) For the year ended December 31, 2015, Aon reclassified its current deferred tax positions to non-current and netted the new balances by jurisdiction. Refer to Note 2 “Summary of Significant Accounting Principles and Practices” for additional details.
Summary of operating and capital loss carryforwards | The Company had the following operating and capital loss carryforwards (in millions):
As of December 31 | 2016 |  | 2015
UK |  |  |
Operating loss carryforwards | $ | 325 |  |  | $ | 449 |
Capital loss carryforwards | 294 |  |  | 360 |
US |  |  |
Federal operating loss carryforwards | $ | 196 |  |  | $ | 8 |
State operating loss carryforwards | 474 |  |  | 443 |
Other Non-US |  |  |
Operating loss carryforwards | $ | 350 |  |  | $ | 245 |
Capital loss carryforwards | 218 |  |  | 206 |
Reconciliation of the beginning and ending amount of unrecognized tax benefits | The following is a reconciliation of the Company’s beginning and ending amount of uncertain tax positions (in millions):
| 2016 |  | 2015
Balance at January 1 | $ | 238 |  |  | $ | 211 |
Additions based on tax positions related to the current year | 36 |  |  | 31 |
Additions for tax positions of prior years | 20 |  |  | 53 |
Reductions for tax positions of prior years | (12 | ) |  | (18 | )
Settlements | — |  |  | (32 | )
Business combinations | 2 |  |  | — |
Lapse of statute of limitations | (5 | ) |  | (5 | )
Foreign currency translation | (1 | ) |  | (2 | )
Balance at December 31 | $ | 278 |  |  | $ | 238 |

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- Definition Tabular disclosure of the components of income tax expense attributable to continuing operations for each year presented including, but not limited to: current tax expense (benefit), deferred tax expense (benefit), investment tax credits, government grants, the benefits of operating loss carryforwards, tax expense that results from allocating certain tax benefits either directly to contributed capital or to reduce goodwill or other noncurrent intangible assets of an acquired entity, adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates or a change in the tax status of the entity, and adjustments of the beginning-of-the-year balances of a valuation allowance because of a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32639-109319 + Details
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- Definition Tabular disclosure for tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities and other income tax contingencies. Includes, but is not limited to, interest and penalties, reconciliation of unrecognized tax benefits, unrecognized tax benefits that would affect the effective tax rate, tax years that remain subject to examination by tax jurisdictions, and information about positions for which it is reasonably possible that amounts unrecognized will significantly change within 12 months. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15A -URI http://asc.fasb.org/extlink&oid=65882285&loc=SL6600010-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32718-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 19 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32840-109319 + Details
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