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Income Taxes | 12 Months Ended
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Dec. 31, 2017
Income Taxes | NOTE 7 - INCOME TAXES The income tax provision (benefit) differed from amounts computed at the statutory federal income tax rate and consisted of the following significant components, as follows (in millions):
UAL |  | 2017 |  |  | 2016 |  |  | 2015 |
Income tax provision at statutory rate |  | $ | 1,050 |  |  | $ | 1,337 |  |  | $ | 1,477 |
State income taxes, net of federal income tax benefit |  |  | 29 |  |  |  | 38 |  |  |  | 38 |
Foreign tax rate differential |  |  | (43) |  |  |  | — |  |  |  | — |
Foreign income taxes |  |  | 3 |  |  |  | 3 |  |  |  | 4 |
Nondeductible employee meals |  |  | 17 |  |  |  | 16 |  |  |  | 15 |
Impact of Tax Act |  |  | (192) |  |  |  | — |  |  |  | — |
Income tax adjustment from AOCI |  |  | — |  |  |  | 180 |  |  |  | — |
State rate change |  |  | 12 |  |  |  | (12) |  |  |  | — |
Valuation allowance |  |  | (16) |  |  |  | 20 |  |  |  | (4,662) |
Other, net |  |  | 8 |  |  |  | (26) |  |  |  | 7 |
|  | $ | 868 |  |  | $ | 1,556 |  |  | $ | (3,121) |
Current |  | $ | (77) |  |  | $ | (92) |  |  | $ | 56 |
Deferred |  |  | 945 |  |  |  | 1,648 |  |  |  | (3,177) |
|  | $ | 868 |  |  | $ | 1,556 |  |  | $ | (3,121) |
United |  | 2017 |  |  | 2016 |  |  | 2015 |
Income tax provision at statutory rate |  | $ | 1,051 |  |  | $ | 1,338 |  |  | $ | 1,477 |
State income taxes, net of federal income tax |  |  | 29 |  |  |  | 38 |  |  |  | 38 |
Foreign tax rate differential |  |  | (43) |  |  |  | — |  |  |  | — |
Foreign income taxes |  |  | 3 |  |  |  | 3 |  |  |  | 4 |
Nondeductible employee meals |  |  | 17 |  |  |  | 16 |  |  |  | 15 |
Impact of Tax Act |  |  | (209) |  |  |  | — |  |  |  | — |
Income tax adjustment from AOCI |  |  | — |  |  |  | 180 |  |  |  | — |
State rate change |  |  | 12 |  |  |  | (12) |  |  |  | — |
Valuation allowance |  |  | (16) |  |  |  | 20 |  |  |  | (4,621) |
Other, net |  |  | 8 |  |  |  | (25) |  |  |  | 7 |
|  | $ | 852 |  |  | $ | 1,558 |  |  | $ | (3,080) |
Current |  | $ | (77) |  |  | $ | (92) |  |  | $ | 56 |
Deferred |  |  | 929 |  |  |  | 1,650 |  |  |  | (3,136) |
|  | $ | 852 |  |  | $ | 1,558 |  |  | $ | (3,080) |
The Company’s effective tax rate for the year ended December 31, 2017 differed from the federal statutory rate of 35% primarily because of the provisional one-timeincome tax benefit of $192 million as a result of the enactment of the Tax Act. This provisional benefit is the result of the remeasurement of deferred tax assets and liabilities, partially offset by a write-down of the employee benefit deferred tax asset for future non-deductible compensation, and a one-time transition tax on foreign earnings and profits. The Company’s effective tax rate for the year ended December 31, 2016 differed from the federal statutory rate of 35% primarily because of the non-cash income tax expense of $180 million that was related to losses on fuel derivatives designated for hedge accounting. Subsequent to the release of the valuation allowance in 2015, this deferred income tax expense of $180 million remained in AOCI until all fuel derivatives were settled in December 2016. Total income tax expense in 2017 includes the provisional one-time transition tax of $19 million on previously deferred foreign earnings. The undistributed cumulative earnings of foreign subsidiaries contributing to the one-time transition tax were $122 million. The Company expects to repatriate these earnings in 2018. As of December 31, 2017, we had not completed our analysis of all aspects of the Tax Act. However, we have made a provisional estimate for its effect on our existing deferred tax balances and the one-time transition tax. We remeasured certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%. We are still analyzing certain aspects of the Tax Act and refining our calculations, which could potentially affect the measurement of these balances or potentially give rise to new deferred tax amounts. Temporary differences and carryforwards that give rise to deferred tax assets and liabilities at December 31, 2017 and 2016 were as follows (in millions):
|  | UAL |  |  | United |
|  | 2017 |  |  | 2016 |  |  | 2017 |  |  | 2016 |
Deferred income tax asset (liability): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Federal and state net operating loss (“NOL”) carryforwards |  | $ | 601 |  |  | $ | 1,613 |  |  | $ | 574 |  |  | $ | 1,571 |
Deferred revenue |  |  | 1,069 |  |  |  | 2,096 |  |  |  | 1,069 |  |  |  | 2,096 |
Employee benefits, including pension, postretirement and medical |  |  | 1,051 |  |  |  | 1,662 |  |  |  | 1,051 |  |  |  | 1,662 |
Alternative minimum tax credit carryforwards |  |  | — |  |  |  | 116 |  |  |  | — |  |  |  | 116 |
Other |  |  | 351 |  |  |  | 523 |  |  |  | 351 |  |  |  | 522 |
Less: Valuation allowance |  |  | (63) |  |  |  | (68) |  |  |  | (63) |  |  |  | (68) |
Total deferred tax assets |  | $ | 3,009 |  |  | $ | 5,942 |  |  | $ | 2,982 |  |  | $ | 5,899 |
Depreciation |  | $ | (2,431) |  |  | $ | (3,961) |  |  | $ | (2,431) |  |  | $ | (3,961) |
Intangibles |  |  | (803) |  |  |  | (1,326) |  |  |  | (803) |  |  |  | (1,326) |
Total deferred tax liabilities |  | $ | (3,234) |  |  | $ | (5,287) |  |  | $ | (3,234) |  |  | $ | (5,287) |
Net deferred tax asset (liability) |  | $ | (225) |  |  | $ | 655 |  |  | $ | (252) |  |  | $ | 612 |
United and its domestic consolidated subsidiaries file a consolidated federal income tax return with UAL. Under an intercompany tax allocation policy, United and its subsidiaries compute, record and pay UAL for their own tax liability as if they were separate companies filing separate returns. In determining their own tax liabilities, United and each of its subsidiaries take into account all tax credits or benefits generated and utilized as separate companies and they are each compensated for the aforementioned tax benefits only if they would be able to use those benefits on a separate company basis. The Company’s federal and state NOL carryforwards relate to prior years’ NOLs, which may be used to reduce tax liabilities in future years. These tax benefits are mostly attributable to federal pre-tax NOL carryforwards of $2.4 billion for UAL. If not utilized these federal pre-tax NOLs will expire as follows (in billions): $0.2 in 2026, $0.5 in 2028 and $1.7 thereafter. In addition, for UAL the majority of tax benefits of the state NOLs of $49 million, net of a valuation allowance of $52 million, will expire over a five to 20-year period. The Company periodically assesses whether it is more likely than not that it will generate sufficient taxable income to realize its deferred income tax assets. The Company establishes valuation allowances if it is not more likely than not that it will realize its deferred income tax assets. In making this determination, the Company considers all available positive and negative evidence and makes certain assumptions. The Company considers, among other things, projected future taxable income, scheduled reversals of deferred tax liabilities, the overall business environment, the Company’s historical financial results and tax planning strategies. In evaluating the likelihood of utilizing the Company’s net deferred income tax assets, the significant factors that the Company considers include (1) the Company’s recent history and forecasted profitability; (2) growth in the U.S. and global economies; and (3) the future impact of taxable temporary differences. In 2015, the Company concluded that its deferred income tax assets were more likely than not to be realized and released almost all of its valuation allowance in 2015, resulting in a $3.1 billion benefit in its provision for income taxes. The Company has a valuation allowance of $63 million for certain state and local NOLs and credit carryforwards. The Company expects these NOLs and credits will expire unused due to limited carryforward periods. The ability to utilize these state NOLs and credits will be evaluated on a quarterly basis to determine if there are any significant events or any prudent and feasible tax planning strategies that would affect the Company’s ability to realize these deferred tax assets. The Company’s unrecognized tax benefits related to uncertain tax positions were $21 million, $74 million and $24 million at December 31, 2017, 2016 and 2015, respectively. Included in the ending balance at December 31, 2017 is $21 million that would affect the Company’s effective tax rate if recognized. The changes in unrecognized tax benefits relating to settlements with taxing authorities, unrecognized tax benefits as a result of tax positions taken during a prior period and unrecognized tax benefits relating from a lapse of the statute of limitations were immaterial during 2017, 2016 and 2015. The Company does not expect significant increases or decreases in their unrecognized tax benefits within the next 12 months. There are no material amounts included in the balance at December 31, 2017 for tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. The Company’s federal income tax returns for tax years after 2001 remain subject to examination by the Internal Revenue Service (“IRS”) and state taxing jurisdictions. Currently, there are no ongoing examinations of the Company’s prior year tax returns being conducted by the IRS.

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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 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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