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Income Taxes
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The consolidated income tax expense consists of the following ($ in millions):
Year Ended December 31,
 202220212020
Current provision
Federal$1,144 $507 $959 
State and local261 114 152 
International4 7 4 
Total current provision1,409 628 1,115 
Deferred provision(649)(151)(136)
Total income tax expense$760 $477 $979 
The reconciliation of the tax provision at the U.S. federal statutory rate to income tax expense is as follows ($ in millions):
Year Ended December 31,
 202220212020
Earnings before income tax expense$1,962 $1,813 $2,773 
Loss (earnings) attributable to flow through noncontrolling interest (6)2 9 
Earnings less noncontrolling interest before income tax expense1,956 1,815 2,782 
Tax provision at the U.S. federal statutory rate411 381 584 
State income taxes, net of federal income tax benefit50 63 106 
Nondeductible compensation49 40 54 
Nondeductible PBM legal settlement(5)78 — 
Nontaxable divestiture (gains) losses111 (95)— 
Deferred taxes for investments in subsidiaries84 — — 
ACA health insurer fee— — 316 
Audit settlement— — (71)
Valuation allowance(17)29 (11)
Nondeductible goodwill69 — 16 
Other, net8 (19)(15)
Income tax expense$760 $477 $979 

The Company is required to recognize deferred tax assets and liabilities for consolidated subsidiaries that are determined to be held for sale as of December 31, 2022. The Company established a net deferred tax liability of $84 million for these investments in subsidiaries.

The tax effects of temporary differences which give rise to deferred tax assets and liabilities are presented below ($ in millions):
 December 31, 2022December 31, 2021
Deferred tax assets:
Medical claims liability$132 $120 
Nondeductible liabilities202 215 
Net operating loss and tax credit carryforwards341 357 
Compensation accruals96 205 
Premium and trade receivables91 143 
Operating lease liability397 445 
Unrealized loss320 — 
Software development costs209 — 
Other85 112 
Deferred tax assets1,873 1,597 
Valuation allowance(205)(212)
Net deferred tax assets$1,668 $1,385 
Deferred tax liabilities:
Goodwill and intangible assets$1,724 $1,794 
Prepaid assets— 46 
Fixed assets111 409 
Right-of-use asset285 444 
Unrealized gain— 29 
Other163 70 
Deferred tax liabilities2,283 2,792 
Net deferred tax liabilities$(615)$(1,407)
The Company had not historically provided for deferred income taxes on the undistributed earnings of foreign subsidiaries as they were considered indefinitely reinvested outside the U.S. During the fourth quarter of 2022, as part of the Company's review of strategic alternatives for its international portfolio, the Company evaluated its assertion regarding its ability and intent to indefinitely reinvest undistributed earnings of the foreign subsidiaries. Upon evaluating the assertion, the Company determined that any historical or future undistributed earnings of foreign subsidiaries are no longer considered to be indefinitely reinvested. There is no deferred tax liability associated with these earnings.

The increase to the unrealized loss deferred tax asset reflects the change in the fair market value of the Company's investment portfolio. Decreases to the fixed assets and ROU asset deferred tax liabilities are primarily related to the impairments recorded as part of the Company's real estate optimization initiative.

Valuation allowances are provided when it is considered more likely than not that deferred tax assets will not be realized. The valuation allowances primarily relate to future tax benefits on certain federal, state, and foreign net operating loss, federal and state capital loss, and tax credit carryforwards.

Federal net operating loss and credit carryforwards of $69 million expire beginning in 2023 through 2043. State net operating loss and tax credit carryforwards of $51 million expire beginning in 2023 through 2042, while the remaining $15 million have indefinite carryforward periods. Substantially all the non-U.S. tax loss carryforwards of $206 million have indefinite carryforward periods.

The Company maintains a reserve for uncertain tax positions that may be challenged by a tax authority. A rollforward of the beginning and ending amount of uncertain tax positions, exclusive of related interest and penalties, is as follows:
Year Ended December 31,
 20222021
Gross unrecognized tax benefits, January 1$355 $354 
Gross increases:
Current year tax positions52 9 
Acquired reserves7 — 
Prior year tax positions20 12 
Gross decreases:
Settlements(17)(13)
Prior year tax positions(3)(4)
Statute of limitation lapses(4)(3)
Gross unrecognized tax benefits, December 31$410 $355 

As of December 31, 2022, $303 million of unrecognized tax benefits would impact the Company's effective tax rate in future periods, if recognized.

The table above excludes interest and penalties, net of related tax benefits, which are treated as income tax expense (benefit) under the Company's accounting policy. The Company recognized net interest expense and penalties related to uncertain positions of $23 million and $1 million expense for the years ended December 31, 2022 and 2021, respectively. The Company had $66 million and $43 million of accrued interest and penalties for uncertain tax positions as of December 31, 2022 and 2021, respectively.

The Company files federal tax returns as well as returns for numerous state and international tax jurisdictions and is engaged in multiple audit proceedings for its state and foreign filings. Generally, no further state or foreign audit activity is expected for years prior to 2015. As of December 31, 2022, the Company's tax returns are under federal examination for the tax years 2014 through 2017, only with respect to Internal Revenue Service (IRS) proposed adjustments relating to the Company's claims to the Domestic Production Activities Deduction for these years. The Company has appealed the IRS adjustments and the appeals process is expected to be conducted within the next 12 months. The Company believes it is reasonably possible that its liability for unrecognized tax benefits will decrease by approximately $124 million within the next 12 months if the Company reaches a satisfactory agreement with the IRS during the appeals process and an additional $3 million decrease as a result of the expiration of statutes of limitations and projected audit settlements in certain jurisdictions.