JETBLUE AIRWAYS CORP

Income Taxes

Our income tax (benefit) expense consisted of the following for the years ended December 31 (in millions):



	2017			2016		2015
Deferred:
Federal	$	(361	)	$	245	$	351
State	25			25		26
Foreign	23			—		—
Deferred income tax (benefit) expense	(313		)	270		377
Current:
Federal	94			129		20
State	18			26		16
Foreign	(25		)	32		7
Current income tax expense	87			187		43
Total income tax (benefit) expense	$	(226	)	$	457	$	420

The Tax Cuts and Jobs Act, or The Act, was enacted on December 22, 2017. The Act made significant changes to the Federal tax code, including a reduction in the Federal corporate statutory tax rate from 35% to 21%. At December 31, 2017, the Company was able to make a reasonable estimate of the tax effects of enactment of The Act as written, on the existing deferred tax balances. As a result of these estimates, the Company recognized a provisional benefit in the amount of $570 million. During 2018, the Company will continue to refine the calculations as we gain a more thorough understanding of the Act, including those related to the deductibility of purchased assets, state tax treatment, amounts related to Crewmember compensation as well as changes in interpretations of The Act and additional regulatory guidance that may be issued.

The effective tax rate on income before income taxes differed from the federal income tax statutory rate for the years ended December 31 for the following reasons (in millions):



	2017			2016			2015
Income tax expense at statutory rate	$	322		$	425		$	384
State income tax, net of federal benefit	28			34			28
Adjustment of net deferred tax liability from enacted tax rate change	(570		)	—			—
Other, net	(6		)	(2		)	8
Total income tax (benefit) expense	$	(226	)	$	457		$	420

Cash payments for income taxes were $139 million in 2017, $173 million in 2016 and $42 million in 2015.

The components of our deferred tax assets and liabilities as of December 31 are as follows (in millions):



	2017			2016
Deferred tax assets:
Deferred revenue/gains	95			121
Terminal 5 lease	45			38
Employee benefits	32			41
Foreign tax credit	23			—
Rent expense	22			34
Other	6			8
Deferred tax assets, net	223			242
Deferred tax liabilities:
Accelerated depreciation	(1,256		)	(1,596		)
Deferred tax liabilities	(1,256		)	(1,596		)
Net deferred tax liability	$	(1,033	)	$	(1,354	)

In evaluating the realizability of the deferred tax assets, we assess whether it is more likely than not that some portion, or all, of the deferred tax assets, will be realized. We consider, among other things, the generation of future taxable income (including reversals of deferred tax liabilities) during the periods in which the related temporary differences will become deductible.

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



	2017			2016			2015
Unrecognized tax benefits at January 1,	$	26		$	21		$	16
Increases for tax positions taken during a prior period	2			10			—
Increases for tax positions taken during the period	6			5			6
Decreases for tax positions taken during a prior period	(3		)	(4		)	(1		)
Decreases for settlement with tax authorities during the period	—			(6		)	—
Unrecognized tax benefits December 31,	$	31		$	26		$	21

Interest and penalties accrued on unrecognized tax benefits were not significant. If recognized, $15 million of the unrecognized tax benefits as of December 31, 2017 would impact our effective tax rate. We do not expect any significant change in the amount of the unrecognized tax benefits within the next twelve months. As a result of net operating losses and statute of limitations in our major tax jurisdictions, years 2004 through 2016 remain subject to examination by the relevant tax authorities.