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Income taxes

The liabilities for income taxes reflected in our Consolidated Balance Sheets are as follows (in millions).


	December 31,
	2016		2015
Currently payable (receivable)	$	500	$	(643	)
Deferred		76,959		63,199
Other		485		570

	$	77,944	$	63,126

The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities are shown below (in millions).


	December 31,
	2016			2015
Deferred tax liabilities:
Investments—unrealized appreciation and cost basis differences	$	27,669		$	25,117
Deferred charges reinsurance assumed		2,876			2,798
Property, plant and equipment		39,345			36,770
Goodwill and other intangible assets		11,344			2,770
Other		5,550			4,555

		86,784			72,010

Deferred tax assets:
Unpaid losses and loss adjustment expenses		(861	)		(887	)
Unearned premiums		(1,021	)		(927	)
Accrued liabilities		(3,821	)		(3,487	)
Other		(4,122	)		(3,510	)

		(9,825	)		(8,811	)

Net deferred tax liability	$	76,959		$	63,199

We have not established deferred income taxes on accumulated undistributed earnings of certain foreign subsidiaries. Such earnings were approximately $12.4 billion as of December 31, 2016 and are expected to remain reinvested indefinitely. Upon distribution as dividends or otherwise, such amounts would be subject to taxation in the U.S. and potentially in other countries. However, U.S. income tax liabilities would be offset, in whole or in part, by allowable tax credits deriving from income taxes previously paid to foreign jurisdictions. Further, repatriation of all accumulated earnings of foreign subsidiaries would be impracticable to the extent that such earnings represent capital needed to support normal business operations. As a result, we currently believe that any incremental U.S. income tax liabilities arising from the repatriation of distributable earnings of foreign subsidiaries would not be material.

Income tax expense reflected in our Consolidated Statements of Earnings for each of the three years ending December 31, 2016 is as follows (in millions).


	2016		2015		2014
Federal	$	7,796	$	9,253	$	6,447
State		556		578		560
Foreign		888		701		928

	$	9,240	$	10,532	$	7,935

Current	$	6,565	$	5,426	$	3,302
Deferred		2,675		5,106		4,633

	$	9,240	$	10,532	$	7,935

Income tax expense is reconciled to hypothetical amounts computed at the U.S. federal statutory rate for each of the three years ending December 31, 2016 in the table below (in millions).


	2016			2015			2014
Earnings before income taxes	$	33,667		$	34,946		$	28,105

Hypothetical income tax expense computed at the U.S. federal statutory rate	$	11,783		$	12,231		$	9,837
Dividends received deduction and tax exempt interest		(789	)		(1,146	)		(820	)
State income taxes, less U.S. federal income tax benefit		361			374			364
Foreign tax rate differences		(421	)		(459	)		(252	)
U.S. income tax credits		(518	)		(461	)		(333	)
Non-taxable exchange of investments		(1,143	)		—			(679	)
Other differences, net		(33	)		(7	)		(182	)

	$	9,240		$	10,532		$	7,935

We file income tax returns in the United States and in state, local and foreign jurisdictions. We are under examination by the taxing authorities in many of these jurisdictions. We have settled income tax liabilities with U.S. federal taxing authorities for years before 2010. The IRS continues to audit Berkshire’s consolidated U.S. federal income tax returns for the 2010 through 2013 tax years. We are also under audit or subject to audit with respect to income taxes in many state and foreign jurisdictions. It is reasonably possible that certain income tax examinations will be settled within the next twelve months. We currently do not believe that the outcome of unresolved issues or claims will be material to our Consolidated Financial Statements.

At December 31, 2016 and 2015, net unrecognized tax benefits were $485 million and $570 million, respectively. Included in the balance at December 31, 2016, were $369 million of tax positions that, if recognized, would impact the effective tax rate. The remaining balance in net unrecognized tax benefits principally relates to tax positions where the ultimate recognition is highly certain but there is uncertainty about the timing of such recognition. Because of the impact of deferred tax accounting, the differences in recognition periods would not affect the annual effective tax rate but would accelerate the payment of cash to the taxing authority to an earlier period. As of December 31, 2016, we do not expect any material changes to the estimated amount of unrecognized tax benefits in the next twelve months.