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Income Taxes | 12 Months Ended
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Dec. 31, 2016
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Income tax expense (benefit) attributable to continuing operations for the years ended December 31, 2016, 2015 and 2014 consists of the following (in millions):
| 2016 |  | 2015 |  | 2014
Current provision: |  |  |  |  |  |  |  |
Federal | $ | 308 |  |  | $ | 248 |  |  | $ | 248 |
State | 54 |  |  | 33 |  |  | 32 |
Foreign | 131 |  |  | 52 |  |  | 64 |
Total current provision | $ | 493 |  |  | $ | 333 |  |  | $ | 344 |
Deferred provision (benefit): |  |  |  |  |  |  |  |
Federal | $ | (147 | ) |  | $ | 50 |  |  | $ | (4 | )
State | (12 | ) |  | 5 |  |  | (2 | )
Foreign | (17 | ) |  | (9 | ) |  | (3 | )
Total deferred provision | (176 | ) |  | 46 |  |  | (9 | )
Total provision for income taxes | $ | 317 |  |  | $ | 379 |  |  | $ | 335 |
The provision for income taxes is based on pre-tax income from continuing operations, which is as follows for the years ended December 31, 2016, 2015 and 2014 (in millions):
| 2016 |  | 2015 |  | 2014
United States | $ | 571 |  |  | $ | 864 |  |  | $ | 789 |
Foreign | 335 |  |  | 173 |  |  | 264 |
Total | $ | 906 |  |  | $ | 1,037 |  |  | $ | 1,053 |
Total income tax expense for the years ended December 31, 2016, 2015 and 2014 is allocated as follows (in millions):
| 2016 |  | 2015 |  | 2014
Tax expense per statements of earnings | $ | 317 |  |  | $ | 379 |  |  | $ | 335 |
Tax expense attributable to discontinued operations | 1 |  |  | (2 | ) |  | (3 | )
Unrealized (loss) gain on foreign currency translation | 30 |  |  | — |  |  | (5 | )
Other components of other comprehensive income | 1 |  |  | (5 | ) |  | (2 | )
Total income tax expense (benefit) allocated to other comprehensive income | 31 |  |  | (5 | ) |  | (7 | )
Tax benefit from exercise of stock options | (32 | ) |  | (29 | ) |  | (40 | )
Total income tax expense | $ | 317 |  |  | $ | 343 |  |  | $ | 285 |
A reconciliation of the federal statutory income tax rate to the Company’s effective income tax rate for the years ended December 31, 2016, 2015 and 2014 is as follows:
| 2016 |  | 2015 |  | 2014
Federal statutory income tax rate | 35.0 | % |  | 35.0 | % |  | 35.0 | %
State income taxes | 3.0 |  |  | 4.6 |  |  | 4.6 |
Federal benefit of state taxes | (1.0 | ) |  | (1.6 | ) |  | (1.6 | )
Foreign rate differential | (3.0 | ) |  | (2.6 | ) |  | (2.6 | )
Other | 1.0 |  |  | 1.1 |  |  | (3.6 | )
Effective income tax rate | 35.0 | % |  | 36.5 | % |  | 31.8 | %
The significant components of deferred income tax assets and liabilities as of December 31, 2016 and 2015 consist of the following (in millions):
| 2016 |  | 2015
Deferred income tax assets: |  |  |  |  |
Net operating loss carryforwards | $ | 223 |  |  | $ | 228 |
Employee benefit accruals | 111 |  |  | 98 |
Other deferred tax assets | 151 |  |  | 112 |
Total gross deferred income tax assets | 485 |  |  | 438 |
Less valuation allowance | (177 | ) |  | (167 | )
Total deferred income tax assets | 308 |  |  | 271 |
Deferred income tax liabilities: |  |  |  |  |
Amortization of goodwill and intangible assets | 2,464 |  |  | 2,606 |
Deferred contract costs | 131 |  |  | 103 |
Other deferred tax liabilities | 75 |  |  | 100 |
Total deferred income tax liabilities | 2,670 |  |  | 2,809 |
Net deferred income tax liability | $ | 2,362 |  |  | $ | 2,538 |
Deferred income taxes have been classified in the Consolidated Balance Sheets as of December 31, 2016 and 2015 as follows (in millions):
| 2016 |  | 2015
Current assets | $ | 101 |  |  | $ | 100 |
Noncurrent assets (included in other noncurrent assets) | 25 |  |  | 22 |
Total deferred income tax assets | 126 |  |  | 122 |
Current liabilities (included in accounts payable and accrued liabilities) | (4 | ) |  | (2 | )
Noncurrent liabilities | (2,484 | ) |  | (2,658 | )
Total deferred income tax liabilities | (2,488 | ) |  | (2,660 | )
Net deferred income tax liability | $ | (2,362 | ) |  | $ | (2,538 | )
We believe that based on our historical pattern of taxable income, projections of future income, tax planning strategies and other relevant evidence, the Company will produce sufficient income in the future to realize its deferred income tax assets. A valuation allowance is established for any portion of a deferred income tax asset for which we believe it is more likely than not that the Company will not be able to realize the benefits of all or a portion of that deferred income tax asset. We also receive periodic assessments from taxing authorities challenging our positions that must be taken into consideration in determining our tax accruals. Resolving these assessments, which may or may not result in additional taxes due, may require an extended period of time. Adjustments to the valuation allowance will be made if there is a change in our assessment of the amount of deferred income tax asset that is realizable. Deferred tax assets and liabilities associated with assets held for sale are presented as a component of Assets held for sale in the Consolidated Balance Sheet. As of December 31, 2016, the Company has deferred tax assets of $2 million and deferred tax liabilities of $157 million included as a component of Assets held for sale. As of December 31, 2016 and 2015, the Company had income taxes receivable of $13 million and $139 million, respectively. These amounts are included in Other receivables in the Consolidated Balance Sheets. As of December 31, 2016 and 2015, the Company has federal, state and foreign net operating loss carryforwards resulting in deferred tax assets of $223 million and $228 million, respectively. The federal and state net operating losses result in deferred tax assets as of December 31, 2016 and 2015 of $49 million and $53 million, respectively, which expire between 2020 and 2036. The Company has a valuation allowance related to these deferred tax assets for net operating loss carryforwards in the amounts of $34 million and $35 million as of December 31, 2016 and 2015. The Company has foreign net operating loss carryforwards resulting in deferred tax assets as of December 31, 2016 and 2015 of $174 million and $175 million, respectively. The Company has valuation allowances related to these net operating losses as of December 31, 2016 and 2015 of $143 million and $132 million, respectively. As of December 31, 2016 and 2015, the Company had foreign tax credit carryforwards of $1 million and $14 million, respectively, which expire between 2020 and 2025. The Company participates in the IRS' Compliance Assurance Process (CAP), which is a real-time continuous audit. The IRS has completed its review for years through 2014. Currently, we believe the ultimate resolution of the IRS examinations will not result in a material adverse effect to the Company's financial position or results of operations. Substantially all material foreign income tax return matters have been concluded through 2009. Substantially all state income tax returns have been concluded through 2011. The Company provides for United States income taxes on earnings of foreign subsidiaries unless they are considered permanently reinvested outside the United States. As of December 31, 2016 and 2015 U.S. income taxes have not been provided on a cumulative total of $813 million and $674 million of such earnings. At this time, a determination of the amount of unrecognized deferred tax liability is not practicable. As of December 31, 2016 and 2015, the Company had gross unrecognized tax benefits of $87 million and $98 million of which $67 million and $75 million would favorably impact our income tax rate in the event that the unrecognized tax benefits are recognized. The following table reconciles the gross amounts of unrecognized tax benefits at the beginning and end of the period (in millions):
| Gross Amount
Amounts of unrecognized tax benefits as of January 1, 2015 | $ | 18 |
Amount of decreases due to lapse of the applicable statute of limitations | (5 | )
Assumed in SunGard acquisition | 82 |
Increases as a result of tax positions taken in the current period | 1 |
Increases as a result of tax positions taken in a prior period | 2 |
Amount of unrecognized tax benefit as of December 31, 2015 | 98 |
Amount of decreases due to lapse of the applicable statute of limitations | (4 | )
Amount of decreases due to settlements | (23 | )
Increases as a result of tax positions taken in the current period | 2 |
Increases as a result of tax positions taken in a prior period | 14 |
Amount of unrecognized tax benefit as of December 31, 2016 | $ | 87 |
The total amount of interest expense recognized in the Consolidated Statements of Earnings for unpaid taxes is $6 million, $2 million and $2 million for the years ended December 31, 2016, 2015 and 2014, respectively. The total amount of interest and penalties included in the Consolidated Balance Sheets is $25 million and $27 million as of December 31, 2016 and 2015, respectively. Interest and penalties are recorded as a component of income tax expense in the Consolidated Statements of Earnings. Due to the expiration of various statutes of limitation in the next twelve months, an estimated $5 million of gross unrecognized tax benefits may be recognized during that twelve-month period.

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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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32718-109319 Reference 4: 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 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32537-109319 + Details
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