
	2020		2019
Deferred income tax assets:

Accrued expenses	$	588	$	331

Bad debt reserves	143		89
Insurance reserves	187		139


Lease liabilities	204		180
Retirement liabilities	205		216
Deferred compensation	31		28
Federal and state operating loss carryforwards	274		124
Other	113		71
Subtotal	1,745		1,178
Less: valuation allowance	(84)		(45)
Total deferred income tax assets	1,661		1,133
Deferred income tax liabilities:
Federal and state intangible assets	2,073		1,999
Capitalized software	670		554
Depreciation and amortization	37		62
Investment basis	407		230






Retirement assets	260		249

Lease right-of-use asset	131		164
Prepaid expenses	102		102

Total deferred income tax liabilities	3,680		3,360
Net deferred income tax liabilities	$	2,019	$	2,227

In the table above, certain amounts for the year ended December 31, 2019 have been reclassified from a net to gross presentation to more fully reflect the federal and state tax effects by type of temporary difference. This reclassification does not impact amounts presented in the financial statements.

As of December 31, 2020, the Company’s undistributed earnings from non-U.S. subsidiaries are intended to be indefinitely reinvested in non-U.S. operations, and therefore no U.S. deferred taxes have been recorded.


	2020		2019		2018
Current tax expense:
Federal	$	1,731	$	1,019	$	1,128
State and local	461		84		78
Total current tax expense	2,192		1,103		1,206
Deferred tax (benefit) expense	(526)		75		112
Total income tax expense	$	1,666	$	1,178	$	1,318

State and local current tax expense is reported gross of federal benefit, and includes amounts related to audit settlements, uncertain tax positions, state tax credits and true up of prior years’ tax. Such items are included in multiple lines in the following rate reconciliation table on a net of federal tax basis.

A reconciliation of income tax expense recorded in the consolidated statements of income and amounts computed at the statutory federal income tax rate for the years ended December 31, 2020, 2019 and 2018 is as follows:


	2020				2019				2018
	Amount		Percent		Amount		Percent		Amount		Percent
Amount at statutory rate	$	1,310	21.0	%	$	1,257	21.0	%	$	1,064	21.0	%
State and local income taxes net of federal tax expense/benefit	235		3.8		138		2.3		63		1.2
Tax exempt interest and dividends received deduction	(22)		(0.4)		(24)		(0.4)		(27)		(0.5)
HIP fee	330		5.3		—		—		324		6.4
Basis adjustments from recent acquisitions	(110)		(1.8)		—		—		(28)		(0.6)
Tax Cuts and Jobs Act	—		—		—		—		(28)		(0.6)
Other, net	(77)		(1.2)		(193)		(3.2)		(50)		(0.9)
Total income tax expense	$	1,666	26.7	%	$	1,178	19.7	%	$	1,318	26.0	%

During the year ended December 31, 2020, we recognized income tax expense of $1,666, or $6.55 per diluted share, which included income tax expense of $330, or $1.30 per diluted share as a result of the non-tax deductibility of the HIP Fee payment, which was reinstated for 2020.

During the year ended December 31, 2018, we recognized income tax expense of $324, or $1.23 per diluted share, as a result of the non-tax deductibility of the HIP Fee payment.

On December 22, 2017, the federal government enacted the Tax Cuts and Jobs Act, which contains significant changes to corporate taxation, including, but not limited to, reducing the U.S. federal corporate income tax rate from 35% to 21% and modifying or limiting many business deductions. At December 31, 2018, we completed our accounting for the tax effects of enactment of the Tax Cuts and Jobs Act and there was no material change to our 2017 provisional amount. In addition we reclassified, for our interim and annual reporting periods beginning on January 1, 2018, $91 of stranded tax effects from accumulated other comprehensive loss to retained earnings on our consolidated balance sheets.


	2020		2019
Balance at January 1	$	146	$	241
Additions based on:
Tax positions related to current year	76		1
Tax positions related to prior years	40		—
Reductions based on:

Tax positions related to prior years	(13)		(63)
Settlements with taxing authorities	—		(33)
Balance at December 31	$	249	$	146

The table above excludes interest, net of related tax benefits, which is treated as income tax expense (benefit) under our accounting policy. The interest is included in the amounts described in the following paragraph.

The amount of unrecognized tax benefits that would impact our effective tax rate in future periods, if recognized, was $227 and $140 at December 31, 2020 and 2019, respectively. Also included in the table above, at December 31, 2020, is $2 that would be recognized as an adjustment to additional paid-in capital, which would not affect our effective tax rate. In addition to the contingent liabilities included in the table above, during 2017 we filed protective state income tax refund claims of approximately $310. There were no equivalent protective state income tax refund claims filed in 2020, 2019, or 2018.

For the year ended December 31, 2020, we recognized a net interest expense of $7. For the years ended December 31, 2019 and 2018, we recognized a net interest (benefit) expense of $(11) and $15, respectively. We had accrued approximately $33 and $26 for the payment of interest at December 31, 2020 and 2019, respectively.

As of December 31, 2020, as further described below, certain tax years remain open to examination by the Internal Revenue Service (“IRS”) and various state and local authorities. As a result of these examinations and discussions with taxing agencies, we have recorded amounts for uncertain tax positions. It is anticipated that the amount of unrecognized tax benefits will change in the next twelve months due to possible settlements of audits and changes in temporary items. However, the ultimate resolution of these items is dependent on the completion of negotiations with various taxing authorities. While it is difficult to determine when other tax settlements will actually occur, it is reasonably possible that one could occur in the next twelve months and our unrecognized tax benefits could change within a range of approximately ($15) to ($147).

We are a member of the IRS Compliance Assurance Process (“CAP”). The objective of CAP is to reduce taxpayer burden and uncertainty while assuring the IRS of the accuracy of tax returns prior to filing, thereby reducing or eliminating the need for post-filing examinations.

At December 31, 2020, we had federal net operating loss carryforwards of $40 that will expire beginning 2033 through 2037 and $7 that have an indefinite carryforward period; state net operating loss carryforwards expire beginning 2022 through 2040, with some having an indefinite carryforward period.