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	%



(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.

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		—

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.



(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