Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Schedule of Components of Income Tax Expense (Benefit)

The components of income tax expense for the years ended December 31, 2019, 2018 and 2017 were as follows (dollars in millions):

	Year Ended December 31,
	2019		2018		2017
Current income tax expense (benefit):
Federal	$	63	$	—	$	—
State	26		13		(11		)
Total current	89		13		(11		)
Deferred income tax expense (benefit):
Federal	181		266		399
State	64		73		51
Total deferred	245		339		450
Non-current income tax expense(1)	30		14		11
Income tax expense	$	364	$	366	$	450

(1)

Non-current income tax expense primarily relates to amortization for investments in qualified affordable housing projects recognized under the proportional amortization method and uncertain tax positions.

Schedule of Unrecognized Tax Benefits Roll Forward

The following table provides a reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31, 2019, 2018, and 2017 (dollars in millions):

	Year Ended December 31,
	2019			2018			2017
Unrecognized tax benefits, beginning of period	$	31		$	25		$	28
Additions based on tax positions related to prior years	2			3			1
Additions based on tax positions related to current year	11			9			11
Reductions based on tax positions related to prior years	(2		)	—			(3		)
Settlements with taxing authorities	—			(2		)	(6		)
Statute of limitations lapses	(3		)	(4		)	(6		)
Unrecognized tax benefits, end of period	$	39		$	31		$	25

Summary of Income Tax Contingencies

The following table summarizes the tax years that are either currently under examination or remain open to assessment under the statute of limitations and subject to examination by the major tax jurisdictions in which the Company operates:

Jurisdiction	Open Tax Years
Hong Kong	2013-2018
Philippines	2016-2019
United Kingdom	2017
United States	2016-2019
Various states(1)	2013-2019

(1)

Major state tax jurisdictions include California, Georgia, Illinois, New York and Virginia.

Schedule of Deferred Tax Assets and Liabilities

The temporary differences and tax carryforwards that created deferred tax assets and deferred tax liabilities at December 31, 2019 and 2018 are summarized in the following table (dollars in millions):

	December 31,
	2019			2018
Deferred tax assets:
Net operating losses	$	96		$	162
Reserves and allowances, net	70			105
Leasing liability	58			—
Deferred compensation	20			34
Financial instrument valuations	1			54
Tax credits	2			69
Other	—			1
Total deferred tax assets	247			425
Valuation allowance	(20		)	(20		)
Total deferred tax assets, net of valuation allowance	227			405
Deferred tax liabilities:
Depreciation and amortization	(506		)	(413		)
Leasing asset	(52		)	—
Other	(6		)	(2		)
Total deferred tax liabilities	(564		)	(415		)
Deferred tax liabilities, net	$	(337	)	$	(10	)

Summary of Valuation Allowance

The following table provides a reconciliation of the beginning and ending amount of valuation allowance for the years ended December 31, 2019, 2018, and 2017 (dollars in millions):

	Year Ended December 31,
	2019			2018			2017
Valuation allowance, beginning of period	$	(20	)	$	(23	)	$	(35	)
Additions related to reduced federal benefit	—			—			(4		)
Reductions related to the wind-down of foreign operations	1			2			14
(Additions) reductions related to state valuation allowance	(1		)	1			2
Valuation allowance, end of period	$	(20	)	$	(20	)	$	(23	)

Schedule of Effective Income Tax Rate Reconciliation

The effective tax rate differed from the federal statutory rate as summarized in the following table for the years ended December 31, 2019, 2018 and 2017:

	Year Ended December 31,
	2019		2018		2017
Federal statutory tax rate	21.0	%	21.0	%	35.0	%
State income taxes, net of federal tax benefit	5.0		5.1		4.2
Disallowed executive compensation	0.3		0.2		0.1
Change in valuation allowances	—		—		(0.1	)
Tax credits	(0.1	)	(0.1	)	(0.3	)
Estimated reserve for uncertain tax positions	0.7		0.2		(0.3	)
Deferred tax adjustments	0.5		(0.5	)	(0.3	)
Tax reform adjustments	—		—		5.5
Excess tax benefit on share-based compensation	(0.2	)	(0.6	)	(0.7	)
Other	0.4		0.5		(0.9	)
Effective tax rate	27.6	%	25.8	%	42.2	%