Entity information:
INCOME TAXES
The domestic and foreign components of income before income taxes were as follows (in millions).
 
 
Year Ended December 31,
 
 
2017
 
2016
 
2015
Domestic
 
$
815

 
$
1,414

 
$
1,281

Foreign
 
(952
)
 
257

 
278

Income before income taxes
 
$
(137
)
 
$
1,671

 
$
1,559


The components of the provision for income taxes were as follows (in millions).
 
 
Year Ended December 31,
 
 
2017
 
2016
 
2015
Current:
 
 
 
 
 
 
Federal
 
$
177

 
$
384

 
$
306

State and local
 
45

 
(56
)
 
57

Foreign
 
153

 
152

 
146

 
 
375

 
480

 
509

Deferred:
 
 
 
 
 
 
Federal
 
(124
)
 
45

 
59

State and local
 
(7
)
 
—

 
(10
)
Foreign
 
(68
)
 
(72
)
 
(47
)
 
 
(199
)
 
(27
)
 
2

Income taxes
 
$
176

 
$
453

 
$
511



On December 22, 2017, new federal tax reform legislation was enacted in the United States, resulting in significant changes from previous tax law. The TCJA revised the U.S. corporate income tax by among other things, lowering the statutory corporate tax rate from 35% to 21% and reinstating bonus depreciation that will allow for full expensing of qualified property, for property placed in service before 2023, including qualified film. The TCJA also eliminated or significantly amended certain deductions (interest, domestic production activities deduction and executive compensation). The TCJA fundamentally changed taxation of multinational entities by moving from a system of worldwide taxation with deferral to a hybrid territorial system, featuring a participation exemption regime with current taxation of certain foreign income. Included in the international provisions was the enactment of a minimum tax on low-taxed foreign earnings, and new measures to deter base erosion and promote U.S. production. In addition, the TCJA imposed a mandatory repatriation toll tax on unremitted foreign earnings. Notwithstanding the U.S. taxation of these amounts, we intend to continue to invest most or all of these earnings, as well as our capital in these subsidiaries, indefinitely outside of the U.S. and do not expect to incur any significant, additional taxes related to such amounts.
To the extent that a company’s accounting for certain income tax effects of the TCJA is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements and the TCJA provides a measurement period that should not extend beyond one year from the TCJA enactment date. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply the tax laws that were in effect immediately before the enactment of the TCJA. Although not effective until January 1, 2018, the Company has calculated its best estimate of the TCJA impact in its year end income tax provision and as a result has recorded $44 million as an income tax benefit. Our federal income tax expense for periods beginning in 2018 will be based on the new rate. The mandatory repatriation toll charge resulted in a tax expense which was mostly offset by available foreign tax credits. We have recorded provisional amounts for several of the impacts of the new tax law including: the deemed repatriation tax on post-1986 accumulated earnings and profits, the deferred tax rate change effect of the new law, gross foreign tax credit carryforwards and related valuation allowances to offset foreign tax credit carryforwards. Certain items or estimates that result in impacts of the TCJA being provisional include: detailed foreign earnings calculations for the most recent period, projected foreign cash balances for certain foreign subsidiaries and finalized computations of foreign tax credit availability. In addition, our 2017 US federal income tax return will not be finalized until later in 2018, and while historically this process has resulted in offsetting changes in estimates in current and deferred taxes for items which are timing related, the reduction of the US tax rate will result in adjustments to our income tax provision when recorded. Finally, we consider it likely that further technical guidance regarding certain of the new provisions included in the TCJA, as well as clarity regarding state income tax conformity to current federal tax code, may be issued. We have reported provisional amounts for the income tax effects of the TCJA for which the accounting is incomplete but a reasonable estimate could be determined. Based on a continued analysis of the estimates and further guidance and interpretations on the application of the law, additional revisions may occur throughout the allowable measurement period.

The following table reconciles the Company's effective income tax rate to the U.S. federal statutory income tax rate of 35%.    
 
 
Year Ended December 31,
 
 
2017
 
2016
 
2015
U.S. federal statutory income tax rate
 
35
 %
 
35
 %
 
35
 %
State and local income taxes, net of federal tax benefit
 
(18
)%
 
(2
)%
 
2
 %
Effect of foreign operations
 
25
 %
 
(1
)%
 
1
 %
Domestic production activity deductions
 
39
 %
 
(4
)%
 
(3
)%
Change in uncertain tax positions
 
(44
)%
 
—
 %
 
(1
)%
Preferred stock modification
 
(9
)%
 
—
 %
 
—
 %
Goodwill impairment
 
(334
)%
 
—
 %
 
—
 %
Renewable energy investments tax credits
 
142
 %
 
(1
)%
 
—
 %
Impact of Tax Reform Act
 
32
 %
 
—
 %
 
—
 %
Other, net
 
4
 %
 
—
 %
 
(1
)%
Effective income tax rate
 
(128
)%
 
27
 %
 
33
 %

Income tax expense was $176 million and $453 million and our effective tax rate was (128)% and 27% for 2017 and 2016, respectively. During 2017, the decrease in the effective tax rate was primarily attributable to the impact of a goodwill impairment charge that is non-deductible for tax purposes. Thereafter, the decrease in the effective tax rate was primarily due to investment tax credits that we receive related to our renewable energy investments, and to a lesser extent, the domestic production activity deduction benefit, the allocation and taxation of income among multiple foreign and domestic jurisdictions, and the impact of the TCJA. The benefits were partially offset by an increase in reserves for uncertain tax positions in 2017. In 2016, we favorably resolved multi-year state tax positions that resulted in a reduction of reserves related to uncertain tax positions that did not recur in 2017.
Components of deferred income tax assets and liabilities were as follows (in millions).
 
 
December 31,
 
 
2017
 
2016
Deferred income tax assets:
 
 
 
 
Accounts receivable
 
$
5

 
$
2

Tax attribute carry-forward
 
151

 
67

Accrued liabilities and other
 
190

 
174

Total deferred income tax assets
 
346

 
243

Valuation allowance
 
(105
)
 
(25
)
Net deferred income tax assets
 
241

 
218

Deferred income tax liabilities:
 
 
 
 
Intangible assets
 
(315
)
 
(384
)
Content rights
 
(82
)
 
(166
)
Equity method investments
 
(68
)
 
(76
)
Notes receivable
 
(3
)
 
(7
)
Other
 
(28
)
 
(32
)
Total deferred income tax liabilities
 
(496
)
 
(665
)
Net deferred income tax liabilities
 
$
(255
)
 
$
(447
)

The Company’s net deferred income tax assets and liabilities were reported on the consolidated balance sheets as follows (in millions).
 
 
December 31,
 
 
2017
 
2016
Noncurrent deferred income tax assets (included within other noncurrent assets)

 
$
64

 
$
20

Deferred income tax liabilities (classified on the balance sheet)
 
(319
)
 
(467
)
Net deferred income tax liabilities
 
$
(255
)
 
$
(447
)

The Company’s loss carry-forwards were reported on the consolidated balance sheets as follows (in millions).
 
 
State
 
Foreign
Loss carry-forwards
 
$
176

 
$
1,109

Deferred tax asset related to loss carry-forwards
 
12

 
61

Valuation allowance against loss carry-forwards
 
(11
)
 
(17
)
Earliest expiration date of loss carry-forwards
 
2018

 
2018


A reconciliation of the beginning and ending amounts of unrecognized tax benefits (without related interest and penalty amounts) is as follows (in millions).
 
 
Year Ended December 31,
 
 
2017
 
2016
 
2015
Beginning balance
 
$
117

 
$
173

 
$
176

Additions based on tax positions related to the current year
 
27

 
13

 
30

Additions for tax positions of prior years
 
57

 
19

 
17

Additions for tax positions acquired in business combinations
 
—

 
—

 
3

Reductions for tax positions of prior years
 
—

 
(60
)
 
(21
)
Settlements
 
(8
)
 
(16
)
 
(16
)
Reductions due to lapse of statutes of limitations
 
(6
)
 
(9
)
 
(13
)
Changes due to foreign currency exchange rates
 
2

 
(3
)
 
(3
)
Ending balance
 
$
189

 
$
117

 
$
173


The balances as of December 31, 2017, 2016 and 2015 included $189 million, $117 million and $173 million, respectively, of unrecognized tax benefits that, if recognized, would reduce the Company’s income tax expense and effective tax rate after giving effect to interest deductions and offsetting benefits from other tax jurisdictions. For the year ended December 31, 2017, increases in unrecognized tax benefits related to the uncertainty of allocation and taxation of income among multiple jurisdictions was offset by the movements of tax positions as a result of multiple audit resolutions and lapse of statutes of limitations.
The Company and its subsidiaries file income tax returns in the U.S. and various state and foreign jurisdictions. The Internal Revenue Service recently completed audit procedures for its 2008 to 2011 tax years, the results of which should be finalized in the coming year. The Company is currently under audit by the Internal Revenue Service for its 2012 to 2014 consolidated federal income tax returns. It is difficult to predict the final outcome or timing of resolution of any particular tax matter. Accordingly, an estimate of any related impact to the reserve for uncertain tax positions cannot currently be determined. With few exceptions, the Company is no longer subject to audit by any jurisdiction for years prior to 2006. Adjustments that arose from the completion of audits for certain tax years have been included in the change in uncertain tax positions in the table above.
It is reasonably possible that the total amount of unrecognized tax benefits related to certain of the Company's uncertain tax positions could decrease by as much as $53 million within the next twelve months as a result of ongoing audits, lapses of statutes of limitations or regulatory developments.
As of December 31, 2017, 2016 and 2015, the Company had accrued approximately $21 million, $11 million and $20 million, respectively, of total interest and penalties payable related to unrecognized tax benefits. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expense.