The Tax Cuts and Jobs Act (the “Act”) was enacted on December 22, 2017. The Act reduced the U.S. federal corporate tax rate from 35% to 21%, effective January 1, 2018. We recognized an income tax benefit of $242 million in the year ended December 31, 2017 associated with the revaluation of our net deferred tax liability. The one-time Transition Tax, Global Intangible Low Taxed Income (“GILTI”), Foreign Derived Intangible Income (“FDII”), Base Erosion and Anti-Abuse Tax (“BEAT”) and IRC Section 163(j) interest limitation do not impact our cash taxes or total tax expense for the years ended December 31, 2018 and 2017, respectively.

The accounting for the initial impact of the Act is complete. SAB 118 provided for a one-year period to complete the accounting for this expansive new law. Final accounting did not have a material impact to cash tax or total tax expense, but the finalization of the transition tax inclusions in our 2017 and 2018 tax returns, along with recording the impact of tax regulations released in 2018, impacted our foreign tax credit carryforward position. However, our excess foreign tax credits carry a full valuation allowance as we currently estimate that they will expire unutilized. Accordingly, the true-ups only impact the total foreign tax credits recorded and related valuation allowance and do not impact the income tax provision on a net basis. The movement in the valuation allowance during 2018 included the impact of our foreign tax credit carryover position in response to new treasury regulations and finalization of our transition tax calculations.

The domestic and foreign components of income (loss) before income taxes were as follows (in millions):

	Years Ended December 31,
	2018			2017			2016
Domestic	$	(168	)	$	(470	)	$	(2,095	)
Foreign		209			78			(528	)
	$	41		$	(392	)	$	(2,623	)

	Years Ended December 31,
	2018			2017			2016
Current:
Federal	$	(5	)	$	23		$	(79	)
State		(3	)		1			(4	)
Foreign		134			161			74
Total current income tax provision		126			185			(9	)
Deferred:
Federal		11			(332	)		(132	)
State		-			(2	)		(7	)
Foreign		(74	)		(7	)		(59	)
Total deferred income tax provision		(63	)		(341	)		(198	)
Total income tax provision	$	63		$	(156	)	$	(207	)

The difference between the effective tax rate reflected in the provision for income taxes and the U.S. federal statutory rate was as follows (in millions):

	Years Ended December 31,
	2018			2017			2016
Federal income tax at U.S. statutory rate	$	9		$	(137	)	$	(918	)
Foreign income tax rate differential		(3	)		(21	)		32
Goodwill impairment		—			—			271
Nondeductible expenses		20			38			30
Foreign dividends, net of foreign tax credits		27			(132	)		(25	)
Tax rate change on timing differences		(7	)		(245	)		(8	)
Change in uncertain tax positions		(5	)		81			11
Prior years taxes		(13	)		(26	)		(29	)
Tax impact on foreign exchange		(3	)		5			(4	)
Change in deferred tax valuation allowance		49			280			476
State income taxes - net of federal benefit		(3	)		(1	)		(10	)
Tax exempt income		(5	)		-			(7	)
Income tax credits		(3	)		(4	)		-
Other		—			6			(26	)
Total income tax provision	$	63		$	(156	)	$	(207	)

The effective tax rate for the year ended December 31, 2018 was 153.7%, compared to 39.8% for 2017. For the year ended December 31, 2018, valuation allowances established on deferred tax assets and tax due on foreign income not offset by foreign tax credits resulted in a higher effective tax rate than the U.S. statutory rate. For the year ended December 31, 2017, the revaluation of net deferred tax liabilities in the U.S. partially offset by valuation allowances established on foreign tax credits generated during the year, when applied to losses resulted in a higher effective tax rate than the U.S. statutory rate.

Significant components of our deferred tax assets and liabilities were as follows (in millions):

	December 31,
	2018			2017
Deferred tax assets:
Allowances and operating liabilities	$	293		$	355
Net operating loss carryforwards		182			182
Postretirement benefits		30			31
Tax credit carryforwards		768			1,002
Other		95			78
Valuation allowance		(955	)		(1,202	)
Total deferred tax assets		413			446
Deferred tax liabilities:
Tax over book depreciation		139			174
Intangible assets		688			716
Deferred income		70			111
Accrued tax on unremitted earnings		17			17
Other		52			92
Total deferred tax liabilities		966			1,110
Net deferred tax liability	$	553		$	664

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in millions):

	2018			2017			2016
Unrecognized tax benefit at beginning of year	$	132		$	78		$	46
Gross increase for current period tax positions		15			10			3
Gross increase for tax positions in prior years		31			64			65
Gross decrease for tax positions in prior years		(10	)		(14	)		(21	)
Settlements		(69	)		—			(3	)
Lapse of statute of limitations		(1	)		(6	)		(12	)
Unrecognized tax benefit at end of year	$	98		$	132		$	78

The balance of unrecognized tax benefits at December 31, 2018, 2017 and 2016 was $98 million, $132 million and $78 million, respectively. For the year ended December 31, 2018, the settlement of a foreign jurisdiction audit resulted in a $69 million decrease in uncertain tax provisions. Accruals related to foreign jurisdiction audits of prior years resulted in uncertain tax position increases of $64 million and $65 million in 2017 and 2016.

Substantially all of the unrecognized tax benefits, if ultimately realized, would be recorded as a benefit to the effective tax rate. The Company anticipates that it is reasonably possible that the amount of unrecognized tax benefits may decrease by up to $7 million in the next twelve months due to settlements and conclusions of tax examinations. To the extent penalties and interest would be assessed on any underpayment of income tax, such accrued amounts have been classified as a component of income tax expense in the financial statements consistent with the Company’s policy. For the years ended December 31, 2018, 2017 and 2016, we recorded income tax expense of nil, $17 million and $10 million, respectively, for interest and penalty related to unrecognized tax benefits. As of December 31, 2018 and 2017, the Company had accrued $12 million and $32 million, respectively, of interest and penalty relating to unrecognized tax benefits.

The Company is subject to taxation in the United States, various states and foreign jurisdictions. The Company has significant operations in the United States, Norway, Canada, the United Kingdom, the Netherlands, France and Denmark. Tax years that remain subject to examination by major tax jurisdictions vary by legal entity, but are generally open in the U.S. for tax years ending after 2013 and outside the U.S. for tax years ending after 2010.

Net operating loss carryforwards by jurisdiction and expiration as of December 31, 2018 were as follows (in millions):


	Federal			State			Foreign			Total
2019 - 2021 Expiration	$	6		$	2		$	51		$	59
2022 - 2033 Expiration		16			20			142			178
2034 - 2038 Expiration		12			122			94			228
Unlimited Expiration		—			—			428			428
Total Net Operating Loss (NOL)	$	34		$	144		$	715		$	893
Tax Effected NOL	$	7		$	8		$	167		$	182
Valuation Allowance (VA)		(6	)		(8	)		(140	)		(154	)
Tax Effected NOL Net of VA	$	1		$	—		$	27		$	28

The Company has $766 million of excess foreign tax credits in the United States as of December 31, 2018, of which $10 million, $141 million, $286 million, $142 million, and $187 million will expire in 2020, 2022, 2026, 2027, and 2028, respectively. As of December 31, 2018, the Company has remaining tax-deductible goodwill of $133 million, resulting from acquisitions. The amortization of this goodwill is deductible over various periods ranging up to 12 years.

Undistributed earnings of certain of the Company’s foreign subsidiaries amounted to $3,254 million at December 31, 2018. These earnings are considered to be indefinitely reinvested and no provision for U.S. federal and state income taxes has been made. Distribution of these earnings in the form of dividends or otherwise could result in incremental U.S. federal and state taxes at statutory rates and withholding taxes payable in various foreign countries.