

	Year Ended December 31
	2019			2018			2017
U.S. income earnings (loss) before income taxes	$	(599	)	$	(138	)	$	(28	)
Foreign earnings (loss) before income taxes	398			312			364
Earnings (loss) before income taxes and noncontrolling interests	$	(201	)	$	174		$	336



	Year Ended December 31
	2019			2018			2017
Current —
U.S. federal	$	8		$	8		$	(23	)
State and local	1			1			1
Foreign	161			119			101
	170			128			79
Deferred —
U.S. federal	(101		)	(35		)	16
State and local	(13		)	(5		)	(3		)
Foreign	(37		)	(25		)	(21		)
	(151		)	(65		)	(8		)
Income tax expense (benefit)	$	19		$	63		$	71

The following table is a reconciliation of income taxes computed at the statutory U.S. federal income tax rate (21% for 2019 and 2018 and 35% for 2017) to the income tax expense (benefit) reflected in the consolidated statements of income (loss):



	Year Ended December 31
	2019			2018			2017
Income tax expense (benefit) computed at the statutory U.S. federal income tax rate	$	(42	)	$	37		$	117
Increases (reductions) in income tax expense resulting from:
Foreign income taxed at different rates	8			19			(48		)
Transition tax under Tax Cuts and Jobs Act ("TCJA")	—			11			43
Remeasurement of worldwide deferred taxes	—			—			53
State and local taxes on income, net of U.S. federal income tax benefit	(14		)	(6		)	(2		)
Changes in valuation allowance for tax loss carryforwards and credits	36			—			(1		)
Investment and R&D tax credits	(19		)	(12		)	(6		)
Foreign earnings subject to U.S. federal income tax	12			13			(74		)
Non-deductible expenses	16			3			3
Goodwill impairment	22			—			—
Tax contingencies	(7		)	1			(1		)
Gains on transfers of subsidiaries	21			—			—
Nonconsolidated affiliates	(8		)	(4		)	—
Other	(6		)	1			(13		)
Income tax expense (benefit)	$	19		$	63		$	71

The Company reported income tax expense of $19 million, $63 million, and $71 million for the years ended December 31, 2019, 2018, and 2017. The tax expense recorded for the year ended December 31, 2019 included tax benefits of $33 million relating to a valuation allowance release for an entity in Spain. In addition, the Company recorded $22 million of tax expense relating to a goodwill impairment discussed in Note 7, Goodwill and Other Intangible Assets and $21 million of tax expense relating to gains on transfers of subsidiaries for entities in China and Luxembourg for the year ended December 31, 2019. The tax expense recorded for the year ended December 31, 2018 included tax benefits of $10 million relating to a valuation allowance release for entities in Australia and $11 million of tax expense for changes in the toll tax. The tax expense recorded for the year ended December 31, 2017 included a net tax benefit of $74 million primarily relating to the recognition of a U.S. tax benefit for foreign taxes.

On December 22, 2017, the TCJA was enacted into U.S. law, which, among other provisions, lowered the corporate income tax rate effective January 1, 2018 from 35% to 21%, and implemented significant changes with respect to U.S. tax treatment of earnings originating from outside the U.S. Many of the provisions of TCJA are subject to regulatory interpretation and U.S. state conforming enactments. The Internal Revenue Service (IRS) issued Notice 2018-26 on April 2, 2018 and issued proposed regulations under Section 965 on August 1, 2018, which provided additional guidance to assist taxpayers in computing the toll tax. Based on the new guidance, an $11 million discrete charge was recorded in income tax expense for the year ended December 31, 2018. The Company has completed its accounting for the tax effects of the enactment at December 31, 2018.



	December 31
	2019			2018
Deferred tax assets —
Tax loss carryforwards:
State	$	18		$	18
Foreign ^(a)	559			404
Tax credits	179			159
Postretirement benefits other than pensions	20			21
Pensions	158			158
Payroll accruals	23			24
Book over tax depreciation	91			68
Research expense capitalized for tax	72			30
Other accruals	167			133
Valuation allowance ^(a)	(762		)	(554		)
Total deferred tax assets	525			461
Deferred tax liabilities —
Amortization of intangibles	24			82
Total deferred tax liabilities	24			82
Net deferred tax assets	$	501		$	379

State tax loss carryforwards have been presented net of uncertain tax positions that, if realized, would reduce tax loss carryforwards in both 2019 and 2018 by $2 million. Additionally, foreign tax loss carryforwards, have been presented net of uncertain tax positions that, if realized, would reduce tax loss carryforwards in 2019 and 2018 by $14 million and $68 million.



	At December 31
	2019			2018
Consolidated Balance Sheets:
Non-current portion — deferred tax asset	$	607		$	467
Non-current portion — deferred tax liability	(106		)	(88		)
Net deferred tax assets	$	501		$	379

The Company evaluates its deferred income taxes quarterly to determine if valuation allowances are required or should be adjusted. This assessment considers, among other matters, the nature, frequency and amount of recent losses, the duration of statutory carryforward periods, and tax planning strategies. In making such judgments, significant weight is given to evidence that can be objectively verified. If (i) recent operational improvements continue in foreign subsidiaries or (ii) certain restructuring steps are completed as part of the future spin of DRiV, the Company believes it is reasonably possible that sufficient positive evidence may be available to release all, or a portion, of its valuation allowance in the next twelve months.

As a result of the valuation allowances recorded of $762 million and $554 million at December 31, 2019 and 2018, the Company has potential tax assets that were not recognized on its consolidated balance sheets. These unrecognized tax assets resulted primarily from foreign tax loss carryforwards, foreign investment tax credits, foreign research and development credits, and U.S. state net operating losses ("NOLs") that are available to reduce future tax liabilities.

The Company's state NOLs expire in various tax years through 2040 or have unlimited carryforward potential. The Company's non-U.S. NOLs expire in various tax years through 2039 or have unlimited carryforward potential.

The Company does not provide for U.S. income taxes on unremitted earnings of foreign subsidiaries, except for the earnings of three of its China operations, two of its Korea operations, two of its India operations, and one of its Spain operations as its present intention is to reinvest the unremitted earnings in the Company's foreign operations. Unremitted earnings of foreign subsidiaries were approximately $2.2 billion at December 31, 2019 and the Company estimated the amount of U.S. and foreign

A tax benefit from an uncertain tax position may be recognized when it is “more likely than not” that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits.



	2019			2018			2017
Uncertain tax positions —
Balance at beginning of period	$	224		$	112		$	111
Gross increases in tax positions due to acquisition	—			110			—
Gross increases in tax positions in current period	12			8			6
Gross increases in tax positions in prior period	4			7			2
Gross decreases in tax positions in prior period	(5		)	(1		)	(2		)
Gross decreases — settlements	(12		)	(2		)	—
Gross decreases — statute of limitations expired	(8		)	(10		)	(5		)
Balance at end of period	$	215		$	224		$	112

The Company's liability for penalties and interest were as follows:



	At December 31
	2019		2018
Accrued liability for penalties on uncertain tax positions	$	4	$	12
Accrued liability for interest on uncertain tax positions	$	12	$	11

The Company's uncertain tax position at December 31, 2019 and 2018 included exposures relating to the disallowance of deductions, global transfer pricing, and various other issues. The Company believes it is reasonably possible that a decrease of up to $32 million in unrecognized tax benefits related to the expiration of U.S. and foreign statute of limitations and the conclusion of income tax examinations may occur within the next twelve months.