Entity information:
Income Taxes
Substantially all of the Company’s pre-tax earnings are derived from domestic operations in all periods presented. A reconciliation of the statutory federal income tax rate to the Company’s effective income tax rate for continuing operations is as follows:
 
2017

2016

2015
Statutory federal income tax rate
35.0
 %
 
35.0
 %
 
35.0
 %
State income taxes, net of federal effect
2.3
 %
 
2.9
 %
 
1.8
 %
Unconsolidated affiliate tax
0.9
 %
 
4.2
 %
 
1.1
 %
Tax benefit due to federal tax reform
(20.3
)%
 
—
 %
 
—
 %
Excess tax benefit from share-based awards
(3.6
)%
 
—
 %
 
—
 %
Domestic production activities deduction
(2.0
)%
 
(3.0
)%
 
(2.1
)%
Other, net
(0.7
)%
 
(0.5
)%
 
(0.1
)%
Effective income tax rate
11.6
 %
 
38.6
 %
 
35.7
 %

The income tax provision (benefit) for continuing operations was as follows:
(In millions)
2017
 
2016
 
2015
Current:
 
 
 
 
 
Federal
$
342

 
$
402

 
$
315

State
44

 
53

 
31

Foreign
19

 
16

 
11

 
405

 
471

 
357

Deferred:
 
 
 
 
 
Federal
(250
)
 
21

 
22

State
3

 
5

 
(2
)
Foreign
—

 
(5
)
 
—

 
(247
)
 
21

 
20

Income tax provision
$
158

 
$
492

 
$
377


Significant components of deferred tax assets and liabilities consisted of the following at December 31:
(In millions)
2017

2016
Accrued expenses
$
39

 
$
48

Interest rate hedge contracts
9

 
16

Share-based compensation
40

 
57

Net operating loss and credit carry-forwards
131

 
85

Deferred revenue
17

 
26

Other
7

 
15

Subtotal
243

 
247

Valuation allowance
(103
)
 
(35
)
Total deferred tax assets
140

 
212

 
 
 
 
Capitalized software development costs
(117
)
 
(156
)
Intangible assets
(455
)
 
(681
)
Property and equipment
(49
)
 
(67
)
Other
(48
)
 
(44
)
Total deferred tax liabilities
(669
)
 
(948
)
Total
$
(529
)
 
$
(736
)

The valuation allowance increased by $68 million, from $35 million at December 31, 2016 to $103 million at December 31, 2017. Of the increase in 2017, $54 million related to net operating losses of newly acquired companies which had no impact on the income tax provision, and $14 million was recorded to the income tax provision.
Deferred tax assets and liabilities are reported in the consolidated balance sheets as follows at December 31:
(In millions)
2017
 
2016
Noncurrent assets
$
23

 
$
26

Noncurrent liabilities
(552
)
 
(762
)
Total
$
(529
)
 
$
(736
)

Noncurrent deferred tax assets are included in other long-term assets at December 31, 2017 and 2016.
On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act significantly revised the U.S. corporate income tax code by, among other things, lowering the U.S. federal corporate tax rate from 35 percent to 21 percent beginning in 2018 and requiring companies to pay a one-time transition tax on certain un-repatriated earnings of foreign subsidiaries. The Company has recorded a net tax benefit of $275 million as a result of the Tax Act; however, the Company’s accounting for certain elements of the Tax Act continues to be evaluated. The Company was able to make reasonable estimates of certain effects and has recorded provisional adjustments as follows:
Reduction of U.S. Federal Corporate Tax Rate and Other Provisions – The Tax Act reduces the U.S. federal corporate tax rate to 21 percent, effective January 1, 2018. The Company has recorded a provisional decrease of $270 million to the net deferred tax liability, with a corresponding adjustment to deferred income tax benefit, for the year ended December 31, 2017. While the Company was able to make a reasonable estimate of the impact of the corporate rate reduction, it may be affected by other analyses related to the Tax Act, including, but not limited to, the Company’s calculation of deemed repatriation of deferred foreign income and the state tax effect of adjustments made to federal temporary differences. The Company has also recorded a provisional current income tax benefit of $5 million for the year ended December 31, 2017 related to other provisions of the Tax Act.
Deemed Repatriation Transition Tax – The Deemed Repatriation Transition Tax (“Transition Tax”) is a tax on previously untaxed accumulated and current earnings and profits of certain of our foreign subsidiaries. The Company was able to make a reasonable estimate of the Transition Tax and has recorded zero as its provisional Transition Tax obligation. The Company is continuing to gather additional information to more precisely compute the amount of expense related to the Transition Tax enactment.
The Company was not able to make reasonable estimates, and has not recorded provisional adjustments, for the following elements of the Tax Act. However, the potential impacts would not be material to the Company’s annual income from continuing operations or financial position.
Global Intangible Low-Taxed Income (“GILTI”) – The Tax Act creates a new requirement that certain income, such as GILTI, earned by a controlled foreign corporation must be included in the gross income of its U.S. shareholder.  Because of the complexity of the new GILTI tax rules, the Company is not yet able to reasonably estimate the effect of this provision of the Tax Act and is continuing to evaluate this provision of the Tax Act and the application of applicable accounting guidance. Therefore, the Company has not made any adjustments in its consolidated financial statements and has not determined whether to record deferred taxes on GILTI.
Repatriation Intentions and Impacts – The Company is currently analyzing its global working capital and cash requirements and the potential tax liabilities attributable to a repatriation, but has yet to determine whether it plans to change its prior assertion. Accordingly, the Company has not recorded any deferred taxes attributable to investments in foreign subsidiaries for which it is permanently reinvested. The Company will record the tax effects of any change in its prior assertion in the period that it completes its analysis and is able to make a reasonable estimate.
Unrecognized tax benefits were as follows:
(In millions)
2017
 
2016
 
2015
Unrecognized tax benefits - Beginning of year
$
45

 
$
54

 
$
55

Increases for tax positions taken during the current year
11

 
9

 
10

Increases for tax positions taken in prior years
2

 
1

 
—

Decreases for tax positions taken in prior years
(15
)
 
(15
)
 
(10
)
Decreases for settlements
(1
)
 
(2
)
 
(1
)
Lapse of the statute of limitations
—

 
(2
)
 
—

Unrecognized tax benefits - End of year
$
42

 
$
45

 
$
54


At December 31, 2017, unrecognized tax benefits of $37 million, net of federal and state benefits, would affect the effective income tax rate from continuing operations if recognized. In 2018, reductions to unrecognized tax benefits for decreases in tax positions taken in prior years, settlements and the lapse of statutes of limitations are estimated to total approximately $10 million. The Company classifies interest expense and penalties related to income taxes as components of its income tax provision. The income tax provision from continuing operations included interest expense and penalties on unrecognized tax benefits of less than $1 million in each of 2017, 2016 and 2015. Accrued interest expense and penalties related to unrecognized tax benefits totaled $3 million and $2 million at December 31, 2017 and 2016, respectively.
The Company’s federal tax returns for 2016 and 2017, and tax returns in certain states and foreign jurisdictions for 2008 through 2017 remain subject to examination by taxing authorities. At December 31, 2017, the Company had federal net operating loss carry-forwards of $36 million, which expire in 2018 through 2037, state net operating loss carry-forwards of $579 million, which expire in 2018 through 2037, and foreign net operating loss carry-forwards of $486 million, $47 million of which expire in 2021 through 2037, and the remainder of which do not expire.