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Income Taxes | 12 Months Ended
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Dec. 31, 2019
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Substantially all of the Company’s pre-tax earnings are derived from domestic operations in all periods presented. The income tax provision (benefit) for continuing operations was as follows for the years ended December 31:
(In millions) | 2019 |  | 2018 |  | 2017
Components of income tax provision (benefit): |  |  |  |  |
Current: |  |  |  |  |
Federal | $ | 25 |  |  | $ | 189 |  |  | $ | 342 |
State | 69 |  |  | 39 |  |  | 44 |
Foreign | 57 |  |  | 17 |  |  | 19 |
| 151 |  |  | 245 |  |  | 405 |
Deferred: |  |  |  |  |
Federal | 118 |  |  | 110 |  |  | (250 | )
State | (18 | ) |  | 24 |  |  | 3 |
Foreign | (53 | ) |  | (1 | ) |  | — |
| 47 |  |  | 133 |  |  | (247 | )
Income tax provision (benefit) | $ | 198 |  |  | $ | 378 |  |  | $ | 158 |
A reconciliation of the statutory federal income tax rate to the Company’s effective income tax rate for continuing operations is as follows for the years ended December 31:
| 2019 |  | 2018 |  | 2017
Statutory federal income tax rate | 21.0 | % |  | 21.0 | % |  | 35.0 | %
State income taxes, net of federal effect | 3.7 | % |  | 3.2 | % |  | 2.3 | %
Unconsolidated affiliates tax | 0.6 | % |  | 0.1 | % |  | 0.9 | %
Tax expense (benefit) due to federal tax reform | — | % |  | 1.2 | % |  | (20.3 | )%
Excess tax benefit from share-based awards | (5.1 | )% |  | (2.2 | )% |  | (3.6 | )%
Sale of businesses | (2.6 | )% |  | 1.3 | % |  | — | %
Domestic production activities deduction | — | % |  | — | % |  | (2.0 | )%
Other, net | 0.7 | % |  | (0.3 | )% |  | (0.7 | )%
Effective income tax rate | 18.3 | % |  | 24.3 | % |  | 11.6 | %
Significant components of deferred tax assets and liabilities consisted of the following at December 31:
(In millions) | 2019 |  | 2018
Accrued expenses | $ | 303 |  |  | $ | 74 |
Interest rate hedge contracts | 34 |  |  | 5 |
Share-based compensation | 216 |  |  | 43 |
Net operating loss and credit carry-forwards | 1,444 |  |  | 131 |
Foreign tax credits on undistributed earnings | 289 |  |  | — |
Leasing liabilities | 219 |  |  | — |
Other | 31 |  |  | 25 |
Subtotal | 2,536 |  |  | 278 |
Valuation allowance | (1,145 | ) |  | (101 | )
Total deferred tax assets | 1,391 |  |  | 177 |
Capitalized software development costs | (622 | ) |  | (129 | )
Intangible assets | (3,297 | ) |  | (437 | )
Property and equipment | (143 | ) |  | (66 | )
Capitalized commissions | (86 | ) |  | (80 | )
Investments in joint ventures | (841 | ) |  | (78 | )
Leasing right-of-use assets | (205 | ) |  | — |
Other | (332 | ) |  | (112 | )
Total deferred tax liabilities | (5,526 | ) |  | (902 | )
Total | $ | (4,135 | ) |  | $ | (725 | )
In connection with the acquisition of First Data (see Note 4), the Company recorded, on a preliminary basis, $3.5 billion of deferred tax liabilities for the deferred tax effects associated with the fair value of assets acquired and liabilities assumed using the applicable tax rates, with a corresponding adjustment to goodwill. The Company recorded a valuation allowance of $1.1 billion and $101 million at December 31, 2019 and 2018, respectively, against its deferred tax assets. The increase in the valuation allowance in 2019 is primarily a result of the Company's acquisition of First Data. Substantially all of the acquired First Data valuation allowance relates to certain foreign and state net operating loss carryforwards. Deferred tax assets and liabilities are reported in the consolidated balance sheets as follows at December 31:
(In millions) | 2019 |  | 2018
Noncurrent assets | $ | 112 |  |  | $ | 20 |
Noncurrent liabilities | (4,247 | ) |  | (745 | )
Total | $ | (4,135 | ) |  | $ | (725 | )
Noncurrent deferred tax assets are included in other long-term assets at December 31, 2019 and 2018. The tax effects described above, as well as other changes in deferred tax assets and liabilities as a result of the acquisition of First Data, may be adjusted as additional information becomes available during the measurement period. The following table presents the amounts of federal, state and foreign net operating loss carryforwards and general business credit carryforwards at December 31:
(In millions) | 2019 |  | 2018
Net operating loss carryforwards: (1) |  |  |
Federal | $ | 1,674 |  |  | $ | 27 |
State | 4,636 |  |  | 479 |
Foreign | 3,201 |  |  | 465 |
General business credit carryforwards (2) | 57 |  |  | — |
(1) | At December 31, 2019, the Company had federal net operating loss carryforwards of $1.7 billion, which expire in 2020 through 2037, state net operating loss carryforwards of $4.6 billion, which expire in 2021 through 2039, and foreign net operating loss carryforwards of $3.2 billion, of which $209 million expire in 2020 through 2039, and the remainder of which do not expire.
(2) | At December 31, 2019, the Company had general business credit carryforwards of $57 million which expire in 2027 through 2039.
The Company asserts that its investment in its foreign subsidiaries is intended to be indefinitely reinvested with limited exceptions for select foreign subsidiaries. In addition, undistributed historical and future earnings of its foreign subsidiaries are not considered to be indefinitely reinvested. Should these earnings be distributed in the future in the form of dividends or otherwise, the Company may be subject to foreign taxes. The Company has the ability and intent to limit distributions so as to not make a distribution in excess of its investment in those subsidiaries. The Company will continue to monitor its global cash requirements and the need to recognize a deferred tax liability. Unrecognized tax benefits were as follows at December 31:
(In millions) | 2019 |  | 2018 |  | 2017
Unrecognized tax benefits - Beginning of year | $ | 49 |  |  | $ | 42 |  |  | $ | 45 |
Increases for assumed tax positions related to First Data | 82 |  |  | — |  |  | — |
Increases for tax positions taken during the current year | 8 |  |  | 3 |  |  | 11 |
Increases for tax positions taken in prior years | 16 |  |  | 20 |  |  | 2 |
Decreases for tax positions taken in prior years | (2 | ) |  | (8 | ) |  | (15 | )
Decreases for settlements | (1 | ) |  | — |  |  | (1 | )
Lapse of the statute of limitations | (7 | ) |  | (8 | ) |  | — |
Unrecognized tax benefits - End of year | $ | 145 |  |  | $ | 49 |  |  | $ | 42 |
At December 31, 2019, unrecognized tax benefits of $113 million, net of federal and state benefits, would affect the effective income tax rate from continuing operations if recognized. The Company believes it is reasonably possible that the liability for unrecognized tax benefits may decrease by up to $32 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 statute of limitations in various state and foreign jurisdictions. The Company classifies interest expense and penalties related to income taxes as components of its income tax provision. The income tax provision included interest expense and penalties on unrecognized tax benefits of $2 million in 2019, $1 million in 2018 and less than $1 million in 2017. Accrued interest expense and penalties related to unrecognized tax benefits totaled $19 million and $4 million at December 31, 2019 and 2018, respectively. 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 2010 through 2015, 2018 and 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. The Company accounts for research and development costs in accordance with ASC subtopic 730-10, Research and Development (“ASC 730-10”). Under ASC 730-10, all research and development costs must be charged to expense as incurred. Company-sponsored research and development costs related to both present and future products are expensed in the period incurred. In September 2017, the Internal Revenue Service issued Directive LB&I-04-0917-005 pertaining to the allowance of the credit for increasing research activities under Internal Revenue Code section 41 allowing a safe harbor for LB&I taxpayers reporting research and development costs under ASC 730-10. During the year ended December 31, 2019, the Company incurred $63 million of research and development costs related to First Data since the date of acquisition.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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