Income Taxes (Tables)

12 Months Ended

Dec. 31, 2016

Income Taxes

Components of the provision (benefit) for income taxes

he components of our provision (benefit) for income taxes were as follows (in millions):

	Years ended December 31,
	2016		2015		2014
Current tax expense	$	39	$	254	$	286
Deferred tax expense (benefit)		68		(134)		(194)
Income tax expense	$	107	$	120	$	92

Reconciliation of the differences between income tax expense computed at the Swiss holding company statutory rate and the reported provision for income taxes

The following is a reconciliation of the differences between the income tax expense for our continuing operations computed at the Swiss holding company federal statutory rate and our reported provision for income taxes (in millions, except statutory tax rate):

	Years ended December 31,
	2016		2015		2014
Income tax expense, calculated at the Swiss federal statutory rate of 7.83 percent	$	72	$	80	$	(141)
Taxes on earnings subject to rates different than the Swiss federal statutory rate		34		36		91
Taxes on impairment losses subject to rates different than the Swiss federal statutory rate		5		(8)		174
Taxes on revaluation of Norwegian assets		18		14		5
Taxes on litigation matters subject to rates different than the Swiss federal statutory rate		(1)		(9)		5
Changes in unrecognized tax benefits, net		(31)		12		(112)
Change in valuation allowance		32		10		93
Benefit from foreign tax credits		(16)		(10)		(23)
Other, net		(6)		(5)		—
Income tax expense	$	107	$	120	$	92

Significant components of deferred tax assets and liabilities

The significant components of our deferred tax assets and liabilities were as follows (in millions):

	December 31,
	2016		2015
Deferred tax assets
Net operating loss carryforwards	$	383	$	365
Tax credit carryforwards		33		23
Accrued payroll expenses not currently deductible		110		128
Deferred income		122		138
Loss contingencies		68		72
Professional fees		3		2
United Kingdom charter limitation		33		69
Other		37		36
Valuation allowance		(412)		(380)
Total deferred tax assets		377		453
Deferred tax liabilities
Depreciation and amortization		(239)		(251)
Other		(18)		(20)
Total deferred tax liabilities		(257)		(271)
Net deferred tax assets	$	120	$	182

Reconciliation of unrecognized tax benefits, excluding interest and penalties

The changes to our liabilities related to unrecognized tax benefits, excluding interest and penalties that we recognize as a component of income tax expense, were as follows (in millions):

	Years ended December 31,
		2016		2015		2014
Balance, beginning of period	$	287	$	272	$	331
Additions for current year tax positions		42		36		27
Additions for prior year tax positions		13		17		3
Reductions for prior year tax positions		(34)		(27)		(19)
Settlements		(19)		(5)		(47)
Reductions related to statute of limitation expirations		(15)		(6)		(23)
Balance, end of period	$	274	$	287	$	272

Schedule of unrecognized tax benefits, including related interest and penalties

The liabilities related to our unrecognized tax benefits, including related interest and penalties that we recognize as a component of income tax expense, were as follows (in millions):

	December 31,
		2016		2015
Unrecognized tax benefits, excluding interest and penalties	$	274	$	287
Interest and penalties		96		118
Unrecognized tax benefits, including interest and penalties	$	370	$	405