Income Taxes

3 Months Ended

Mar. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Effective Tax Rate

The effective income tax rate is influenced by a variety of factors including the geographic and functional sources of income and the relative magnitude of these sources of income. The difference between the total provision and the sum of the amounts allocated to segments is reported in the “Not Allocated to Segments” column of the tables in Note 6.

For the three months ended March 31, 2020 and 2019, our effective income tax rates were as follows:

	Three Months Ended March 31,
	2020		2019
Effective income tax rate(a)	6	%	(544	)%

^(a)  In all periods presented, we maintained our valuation allowance on our net federal deferred tax assets in the U.S.

The following items caused the effective income tax rates to be different from our U.S. statutory tax rate of 21% for 2020 and 2019:

• Income taxes for the first quarter of 2020 were impacted by the income mix within E.G. between equity method investees and subsidiaries, which reduces the annual effective tax rate below the statutory tax rate.

• Income taxes for the three months ended March 31, 2019 were impacted by the settlement of the 2010-2011 U.S. Federal Tax Audit (“IRS Audit”) in the first quarter of 2019, resulting in a tax benefit of $126 million. Additionally, in the first quarter of 2019, we recorded a non-cash deferred tax benefit of $18 million in the U.K. related to an internal restructuring. These two items are discrete to the first quarter of 2019. Excluding these discrete adjustments, the effective income tax rate for the first quarter of 2019 was an expense of 8%.

On March 27, 2020, the U.S. enacted the Coronavirus Aid, Relief, and Economic Security Act, commonly referred to as the CARES Act.  This legislation included certain provisions which accelerate income tax refunds, and as a result, in the first quarter of 2020, long term receivable balances related to alternative minimum tax credits have been reclassified as short term. We expect to receive cash tax refunds of $86 million related to alternative minimum tax credits in 2020.