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TAXES ON INCOME | 12 Months Ended
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Dec. 31, 2017
Income Tax Disclosure [Abstract] |
TAXES ON INCOME | TAXES ON INCOME The Company's pre-tax income before equity in earnings of equity method investees consisted of approximately $1.0 billion, $1.1 billion and $1.1 billion from U.S. operations and a pre-tax (loss) income of $(7) million, $4 million and $11 million from foreign operations for the years ended December 31, 2017, 2016 and 2015, respectively. The Company recognized the income tax effects of the Tax Cuts and Jobs Act ("TCJA") in its 2017 consolidated financial statements in accordance with Staff Accounting Bulletin No. 118, which provides Securities and Exchange Commission staff guidance for the application of ASC Topic 740, Income Taxes, in the reporting period in which the TCJA was signed into law. As such, the Company’s financial results reflect the provisional estimate of the income tax effects of the TCJA. The estimate of the impact of TCJA is based on certain assumptions and the Company's current interpretation, and may change, as the Company receives additional clarification and implementation guidance and as the interpretation of the TCJA evolves over time. During the year ended December 31, 2017, the Company recorded a provisional estimated income tax benefit of $106 million associated with the TCJA, including a deferred income tax benefit of $115 million primarily due to the remeasurement of net deferred tax liabilities and reserves at the new combined federal and state tax rate, partially offset by $9 million of current tax expense primarily due to the mandatory repatriation toll charge on undistributed foreign earnings and profits. The Company did not identify items for which the income tax effects of the TCJA have not been completed and a reasonable estimate could not be determined as of December 31, 2017. As a result of the TCJA, the Company changed its assertion that it intends to indefinitely reinvest undistributed earnings from certain non-U.S. subsidiaries outside the U.S. The Company is indefinitely reinvested in the remaining basis difference and it is not practicable to determine the associated amount of unrecognized deferred tax liability. During the year ended December 31, 2016, the Company recorded $84 million of income tax expense, consisting of $91 million of current income tax expense and a deferred income tax benefit of $7 million, associated with the sale of Focus Diagnostics (see Note 6). In addition, the Company recognized a non-taxable gain on an escrow recovery associated with an acquisition. During the year ended December 31, 2015, the Company recognized $145 million of deferred income tax expense associated with the financial reporting and tax basis difference resulting from the contribution of the Clinical Trials business to the Q 2 Solutions joint venture and $58 million of deferred income tax benefit resulting from the future tax effects of winding down a subsidiary. The components of income tax expense (benefit) for 2017, 2016 and 2015 were as follows:
| 2017 |  | 2016 |  | 2015
Current: |  |  |  |  |
Federal | $ | 226 |  |  | $ | 346 |  |  | $ | 231 |
State and local | 5 |  |  | 45 |  |  | 27 |
Foreign | 1 |  |  | 1 |  |  | 3 |
Deferred: |  |  |  |  |
Federal | (20 | ) |  | 33 |  |  | 104 |
State and local | 27 |  |  | 4 |  |  | 7 |
Foreign | 2 |  |  | — |  |  | 1 |
Total | $ | 241 |  |  | $ | 429 |  |  | $ | 373 |
A reconciliation of the federal statutory rate to the Company's effective tax rate for 2017, 2016 and 2015 was as follows:
| 2017 |  | 2016 |  | 2015
Tax provision at statutory rate | 35.0 | % |  | 35.0 | % |  | 35.0 | %
State and local income taxes, net of federal benefit | 3.8 |  |  | 3.3 |  |  | 2.6 |
Gains and losses on book and tax basis difference | (0.1 | ) |  | 3.3 |  |  | (2.7 | )
Impact of noncontrolling interests | (1.9 | ) |  | (1.8 | ) |  | (1.6 | )
Impact of equity earnings | 1.1 |  |  | 1.0 |  |  | 0.7 |
Excess tax benefits on stock-based compensation arrangements | (3.6 | ) |  | (0.8 | ) |  | — |
Return to provision true-ups | (2.0 | ) |  | (0.8 | ) |  | (0.2 | )
Impact of TCJA enactment | (10.4 | ) |  | — |  |  | — |
Other, net | 1.5 |  |  | 0.3 |  |  | — |
Effective tax rate | 23.4 | % |  | 39.5 | % |  | 33.8 | %
In 2016, the sale of Focus Diagnostics and the non-taxable gain on an escrow recovery associated with an acquisition resulted in the gains and losses on book and tax basis difference as discussed above. In 2015, the contribution of the Clinical Trials business to the Q 2 Solutions joint venture and winding down a subsidiary resulted in the gains and losses on book and tax basis difference as discussed above. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets (liabilities) as of December 31, 2017 and 2016 were as follows:
| 2017 |  | 2016
Non-current deferred tax assets (liabilities): |  |  |
Accounts receivable reserves | $ | 63 |  |  | $ | 94 |
Liabilities not currently deductible | 129 |  |  | 189 |
Stock-based compensation | 41 |  |  | 58 |
Basis differences in investments, joint ventures and subsidiaries | (79 | ) |  | (87 | )
Net operating loss carryforwards, net of valuation allowance | 83 |  |  | 120 |
Depreciation and amortization | (403 | ) |  | (533 | )
Total non-current deferred tax liabilities, net | $ | (166 | ) |  | $ | (159 | )
As of December 31, 2017 and 2016, non-current deferred tax assets of $4 million and $32 million, respectively, are recorded in other assets. As of December 31, 2017 and 2016, non-current deferred tax liabilities of $170 million and $191 million, respectively, are included in other liabilities. As of December 31, 2017, the Company had estimated net operating loss carryforwards for federal and state income tax purposes of $184 million and $1.3 billion, respectively, which expire at various dates through 2037. Estimated net operating loss carryforwards for foreign income tax purposes are $68 million as of December 31, 2017, some of which can be carried forward indefinitely while others expire at various dates through 2027. As of December 31, 2017, 2016 and 2015, deferred tax assets associated with net operating loss carryforwards of $155 million, $204 million and $222 million, respectively, have each been reduced by valuation allowances of $57 million, $56 million and $54 million, respectively. Income taxes payable, including those classified as long-term in other liabilities as of December 31, 2017 and 2016, were $82 million and $62 million, respectively. Prepaid income taxes were $37 million and $14 million as of December 31, 2017 and 2016, respectively, and were recorded in prepaid expenses and other current assets. The total amount of unrecognized tax benefits as of and for the years ended December 31, 2017, 2016 and 2015 consisted of the following:
| 2017 |  | 2016 |  | 2015
Balance, beginning of year | $ | 98 |  |  | $ | 91 |  |  | $ | 122 |
Additions: |  |  |  |  |
For tax positions of current year | 5 |  |  | 3 |  |  | 5 |
For tax positions of prior years | 23 |  |  | 12 |  |  | 5 |
Reductions: |  |  |  |  |
Changes in judgment | (2 | ) |  | (1 | ) |  | (11 | )
Expirations of statutes of limitations | (6 | ) |  | (7 | ) |  | (3 | )
Settlements | (3 | ) |  | — |  |  | (27 | )
Balance, end of year | $ | 115 |  |  | $ | 98 |  |  | $ | 91 |
The contingent liabilities for tax positions primarily relate to uncertainties associated with the realization of tax benefits derived from the allocation of income and expense among state jurisdictions, the characterization and timing of certain tax deductions associated with business combinations, income and expenses associated with certain intercompany licensing arrangements, certain tax credits and the deductibility of certain settlement payments. The total amount of unrecognized tax benefits as of December 31, 2017, that, if recognized, would affect the effective income tax rate is $64 million. Based upon the expiration of statutes of limitations, settlements and/or the conclusion of tax examinations, the Company believes it is reasonably possible that the total amount of unrecognized tax benefits may decrease by up to $35 million within the next twelve months. Accruals for interest expense on contingent tax liabilities are classified in income tax expense in the consolidated statements of operations. Accruals for penalties have historically been immaterial. Interest expense included in income tax expense in each of the years ended December 31, 2017, 2016 and 2015 was approximately $1 million, $2 million and $0 million, respectively. As of December 31, 2017 and 2016, the Company has approximately $13 million and $12 million, respectively, accrued, net of the benefit of a federal and state deduction, for the payment of interest on uncertain tax positions. The recognition and measurement of certain tax benefits includes estimates and judgment by management and inherently involves subjectivity. Changes in estimates may create volatility in the Company's effective tax rate in future periods and may be due to settlements with various tax authorities (either favorable or unfavorable), the expiration of the statute of limitations on some tax positions and obtaining new information about particular tax positions that may cause management to change its estimates. In the regular course of business, various federal, state, local and foreign tax authorities conduct examinations of the Company's income tax filings and the Company generally remains subject to examination until the statute of limitations expires for the respective jurisdiction. The Internal Revenue Service has either completed its examinations of the Company's consolidated federal income tax returns or the statute of limitations has expired up through and including the 2012 tax year pending Joint Committee of Congress approval of refund for settlement of certain tax adjustments related to the 2009 tax year. At this time, the Company does not believe that there will be any material additional payments beyond its recorded contingent liability reserves that may be required as a result of these tax audits. As of December 31, 2017, a summary of the tax years that remain subject to examination, awaiting approval, are under appeal, or are otherwise unresolved for the Company's major jurisdictions are: United States - federal 2009, 2013 - 2017 United States - various states 2006 - 2017

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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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