Income Taxes.

The difference between the book basis and the tax basis of our net assets, not directly subject to income taxes, is as follows:



	Icahn Enterprises					Icahn Enterprises Holdings
	December 31,					December 31,
	2017			2016		2017			2016
	(in millions)					(in millions)
Book basis of net assets	$	5,106		$	2,154	$	5,133		$	2,179
Book/tax basis difference	(450		)	1,888		(450		)	1,888
Tax basis of net assets	$	4,656		$	4,042	$	4,683		$	4,067

Income (loss) from continuing operations before income tax expense (benefit) is as follows:



	Year Ended December 31,
	2017		2016			2015
	(in millions)
Domestic	$	1,933	$	(2,370	)	$	(1,870	)
International	220		186			(189		)
	$	2,153	$	(2,184	)	$	(2,059	)

Income tax benefit (expense) attributable to continuing operations is as follows:



	Year Ended December 31,
	2017			2016			2015
	(in millions)
Current:
Domestic	$	(21	)	$	(40	)	$	(17	)
International	(52		)	(101		)	(55		)
Total current	(73		)	(141		)	(72		)
Deferred:
Domestic	525			73			(15		)
International	(14		)	32			19
Total deferred	511			105			4
	$	438		$	(36	)	$	(68	)

A reconciliation of the income tax benefit (expense) calculated at the federal statutory rate to income tax benefit (expense) on continuing operations as shown in the consolidated statements of operations is as follows:



	Year Ended December 31,
	2017			2016			2015
	(in millions)
Income tax benefit (expense) at U.S. statutory rate	$	(754	)	$	764		$	721
Tax effect from:
Foreign operations	42			39			29
Valuation allowance	490			(46		)	(113		)
Non-controlling interest	(7		)	(7		)	41
Goodwill	—			(225		)	(196		)
Uncertain tax positions and assessments	23			(9		)	4
Income not subject to taxation	172			(511		)	(523		)
Enactment of U.S. tax legislation, net of valuation allowance	498			—			—
Other	(26		)	(41		)	(31		)
Income tax benefit (expense)	$	438		$	(36	)	$	(68	)

The tax effect of significant differences representing deferred tax assets (liabilities) (the difference between financial statement carrying value and the tax basis of assets and liabilities) is as follows:



	December 31,
	2017			2016
	(in millions)
Deferred tax assets:
Property, plant and equipment	$	261		$	312
Net operating loss	1,158			1,981
Tax credits	141			139
Post-employment benefits, including pensions	263			334
Reorganization costs	3			7
Other	398			430
Total deferred tax assets	2,224			3,203
Less: Valuation allowance	(1,293		)	(1,821		)
Net deferred tax assets	$	931		$	1,382

Deferred tax liabilities:
Property, plant and equipment	$	(467	)	$	(592	)
Intangible assets	(157		)	(195		)
Investment in partnerships	(775		)	(1,495		)
Investment in U.S. subsidiaries	(184		)	(307		)
Other	(138		)	(101		)
Total deferred tax liabilities	(1,721		)	(2,690		)
	$	(790	)	$	(1,308	)

We recorded deferred tax assets and deferred tax liabilities of $134 million and $924 million, respectively, as of December 31, 2017 and $305 million and $1,613 million, respectively, as of December 31, 2016. Deferred tax assets are included in other assets in our consolidated balance sheets.

We analyze all positive and negative evidence to consider whether it is more likely than not that all of the deferred tax assets will be realized. Projected future income, tax planning strategies and the expected reversal of deferred tax liabilities are considered in making this assessment. As of December 31, 2017 we had a valuation allowance of approximately $1.3 billion primarily related to tax loss and credit carryforwards, post-retirement benefits and other deferred tax assets. The current and future provisions for income taxes may be significantly impacted by changes to valuation allowances. These allowances will be maintained until it is more likely than not that the deferred tax assets will be realized. For the year ended December 31, 2017, the valuation allowance on deferred tax assets decreased by $528 million. The decrease was primarily attributable to a $491 million release of valuation allowance on all of the Federal-Mogul federal net operating loss carryforward and a portion of state loss carryforwards and other deferred tax assets. The remaining decrease was attributable to a $77 million decrease in the valuation allowance of our Gaming segment and a $13 million decrease in our Mining segment, offset in part by increases of $53 million recorded by the Automotive segment and Holding Company.

At December 31, 2017, American Entertainment Properties Corp., a wholly owned corporate subsidiary of Icahn Enterprises and Icahn Enterprises Holdings, which includes all or parts of our Automotive, Energy, Railcar, Metals, Gaming, Home Fashion and Real Estate segments had a deferred tax asset before valuation allowance of approximately $1.0 billion related to tax loss carryforwards including: $684 million in the U.S. with expiration dates from 2027 through 2037; $47 million in the United Kingdom with no expiration dates; and $287 million in other jurisdictions with various expiration dates.

At December 31, 2017, CVR Energy had Kansas state income tax credits of $9 million, which are available to reduce future Kansas state income taxes. These credits, if not used, will expire beginning in 2032. Additionally, CVR Energy has Oklahoma state income tax credits of $30 million which are available to reduce future Oklahoma state regular income taxes. These credits have an indefinite life.

At December 31, 2017, Viskase had U.S. federal net operating loss carryforwards of $86 million which will begin expiring in the year 2024 and forward, and foreign net operating loss carryforwards of $13 million with unlimited carryforward period and $9 million with a five-year carryforward period.

At December 31, 2017, ARI had a federal net operating loss of $54 million that will be carried back to tax years 2015 and 2016 and will be fully absorbed. In addition, ARI had state net operating carryforwards of $31 million, which have varying expiration dates that extend into 2037.

Enactment of U.S. Tax Legislation

On December 22, 2017, The Tax Cuts and Jobs Act (the "Tax Legislation") was enacted in the United States, significantly revising certain U.S. corporate income tax provisions; including, among other items, a reduction of the U.S. corporate rate from 35% to 21%, effective for tax year beginning after December 31, 2017; the transition of U.S. international taxation from a worldwide tax system to a territorial system; and a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017, (or, if greater, November 2, 2017) of a “specified foreign corporation” which includes controlled foreign corporations and other foreign corporations which have at least one U.S. corporate shareholder that owns 10% or more of the value or voting power of such foreign corporation. We estimated the impact of the Tax Legislation on our income tax provision for the year ended December 31, 2017 in accordance with our understanding of the Tax Legislation and guidance available at the date of this filing and as a result have recorded adjustments to the various tax balances, current, long-term and deferred tax assets and liabilities, all during the fourth quarter of 2017, the period in which the Tax Legislation was enacted. The provisional amount related to the remeasurement of certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future was $496 million, representing an income tax benefit recorded during the current period. The provisional amount related to the one-time transition tax on the mandatory deemed repatriation of foreign earnings was $2 million.

On December 22, 2017, Staff Accounting Bulletin No. 118 ("SAB 118") was issued to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Legislation. In accordance with SAB 118, we have determined that the $496 million of income tax benefit recorded in connection with the remeasurement of certain deferred tax assets and liabilities and the $2 million of current tax expense recorded in connection with the transition tax on mandatory deemed repatriation of foreign earnings were each a provisional amount and a reasonable estimate as of the date of this filing. The accounting for these provisional amounts may be adjusted as we gain a better understanding of the new tax laws due to additional guidance and analysis of these estimates, including but not limited to, guidance on application of the one-time transition tax to 10% U.S. shareholders of a specified foreign corporation, state tax treatments and finalizing our foreign affiliate analysis. Any subsequent adjustment to these amounts will be recorded to tax expense in the quarter of 2018 when the analysis is complete and additional guidance and Internal Revenue Service interpretations are issued.

The Tax Legislation requires a U.S. shareholder of a foreign corporation to include in income its global intangible low-taxed income ("GILTI"). The computation for the GILTI is still subject to interpretation and additional clarifying guidance is expected in 2018. We are continuing to evaluate this requirement and its application under FASB ASC Topic 740, Income Taxes. Accordingly, we have not made any adjustments in our current year financial statements and have not made a policy decision regarding whether to record deferred taxes on GILTI or to record it as a period cost adjustment.

Under the Tax Legislation, an entity must pay a Base Erosion Anti-Abuse Tax ("BEAT") if the BEAT is greater than its regular tax liability. Based upon the FASB’s guidance in this area, any incremental effect of BEAT tax should be recognized in the year the BEAT is incurred. This tax applies to future years and therefore there are no impacts or estimates in the current year financial statements.

As of December 31, 2017, Federal Mogul, Viskase and ARI have not provided taxes on $784 million, $46 million and $6 million, respectively, of undistributed earnings in foreign subsidiaries which are deemed to be indefinitely reinvested. If at some future date these earnings cease to be permanently reinvested, we may be subject to foreign income and withholding taxes upon repatriation of such amounts.

Accounting for Uncertainty in Income Taxes

A summary of the changes in the gross amounts of unrecognized tax benefits for the years ended December 31, 2017, 2016 and 2015 are as follows:



	Years Ended December 31,
	2017			2016			2015
	(in millions)
Balance at January 1	$	101		$	94		$	113
Addition based on tax positions related to the current year	7			7			19
Increase for tax positions of prior years	59			8			6
Decrease for tax positions of prior years	(15		)	(1		)	(10		)
Decrease for statute of limitation expiration	(16		)	(6		)	(21		)
Settlements	(11		)	—			(8		)
Impact of currency translation and other	4			(1		)	(5		)
Balance at December 31	$	129		$	101		$	94

At December 31, 2017, 2016 and 2015, we had unrecognized tax benefits of $129 million, $101 million and $94 million, respectively. Of these totals, $29 million, $68 million and $76 million represents the amount of unrecognized tax benefits that if recognized, would affect the annual effective tax rate in the respective periods. The total unrecognized tax benefits differ from the amount which would affect the effective tax rate primarily due to the impact of valuation allowances.

During the next 12 months, Federal-Mogul believes that it is reasonably possible that unrecognized tax benefits of Federal-Mogul may decrease by approximately $5 million due to audit settlements or statute expirations, of which approximately $2 million, if recognized, could impact the effective tax rate. We do not anticipate any significant changes to the amount of our unrecognized tax benefits in our other business segments during the next 12 months.

We recognize interest and penalties accrued related to unrecognized tax benefits as a component of income tax expense. We recorded $6 million, $15 million and $19 million as of December 31, 2017, 2016 and 2015, respectively, in liabilities for tax related net interest and penalties in our consolidated balance sheets. Income tax (benefit) related to interest and penalties were $(9) million, $(4) million and $(11) million for the years December 31, 2017, 2016 and 2015, respectively. We or certain of our subsidiaries file income tax returns in the U.S. federal jurisdiction, various state jurisdictions and various non-U.S. jurisdictions. We and our subsidiaries are no longer subject to U.S. federal tax examinations for years before 2013 or state and local examinations for years before 2009, with limited exceptions. We, or our subsidiaries, are currently under various income tax examinations in several states and foreign jurisdictions, but are no longer subject to income tax examinations in major foreign jurisdictions for years prior to 2005.