Ford Motor Credit Company LLC is a disregarded entity for United States income tax purposes. Ford’s consolidated United States federal and state income tax returns include certain of our domestic subsidiaries. In accordance with our intercompany tax sharing agreement with Ford, United States income tax liabilities or foreign tax credits are generally allocated to us on a separate return basis calculated as if we were a taxable corporation. The amount allocated to us for certain minimum taxes, such as global intangible low-taxed income tax, will not exceed the net liability as determined on a consolidated basis.


	2018		2019		2020
Income before income taxes (in millions)
United States	$	1,717	$	2,160	$	2,085
Non-United States	910		838		523
Total	$	2,627	$	2,998	$	2,608


	2018		2019		2020
Current
Federal	$	72	$	396	$	53
Non-United States	153		168		98
State and local	(81)		169		154
Total current	144		733		305
Deferred
Federal	283		(12)		372
Non-United States	(125)		104		61
State and local	101		(55)		(54)
Total deferred	259		37		379
Provision for / (Benefit from) income taxes	$	403	$	770	$	684

A reconciliation of the Provision for / (Benefit from) income taxes with the United States statutory tax rate as a percentage of Income before income taxes for the years ended December 31 is as follows:


	2018		2019		2020
United States statutory tax rate	21.0	%	21.0	%	21.0	%
Effect of (in percentage points):
Non-United States tax rates under United States rate	1.7		1.3		1.1
State and local income taxes	0.6		2.7		3.0
Dispositions and restructurings	(8.9)		—		—
United States tax on non-United States earnings	0.4		(0.1)		0.7
Other	0.5		0.8		0.4
Effective tax rate	15.3	%	25.7	%	26.2	%

At December 31, 2020, $3.9 billion of non-United States earnings are considered indefinitely reinvested in operations outside the United States, for which deferred taxes have not been provided. Quantification of the deferred tax liability, if any, associated with indefinitely reinvested basis differences is not practicable.

Deferred tax assets and liabilities are recognized based on the future tax consequences attributable to temporary differences that exist between the financial statement carrying value of assets and liabilities and their respective tax bases, and net operating loss and tax credit carryforwards on a taxing jurisdiction basis. We measure deferred tax assets and liabilities using enacted tax rates that will apply in the years in which we expect the temporary differences to be recovered or paid.

Our accounting for deferred tax consequences represents our best estimate of the likely future tax consequences of events that have been recognized in our financial statements or tax returns and their future probability. In assessing the need for a valuation allowance, we consider both positive and negative evidence related to the likelihood of realization of the deferred tax assets. If, based on the weight of available evidence, it is more likely than not that the deferred tax assets will not be realized, we record a valuation allowance.


	2019		2020
Deferred tax assets
Net operating loss carryforwards	$	378	$	281
Provision for credit losses	141		318
Other foreign	190		217
Employee benefit plans	24		25
Foreign tax credits	669		682
Other	46		57
Total gross deferred tax assets	1,448		1,580
Less: Valuation allowance	(43)		(65)
Total net deferred tax assets	1,405		1,515
Deferred tax liabilities
Leasing transactions	2,674		3,265
Finance receivables	584		574
Other foreign	568		418
Other	1		—
Total deferred tax liabilities	3,827		4,257
Net deferred tax liability	$	2,422	$	2,742

In accordance with our intercompany tax sharing agreement with Ford, United States income tax liabilities or credits are generally allocated to us on a separate return basis calculated as if we were a taxable corporation. In this regard, the deferred tax assets related to foreign tax credit carryforwards represent amounts primarily due from Ford. We reflect a deferred asset for foreign tax credits within our balance sheets due to our tax sharing agreement which provides for full reimbursement for the use of these credits. Under our tax sharing agreement with Ford, we are generally paid for foreign tax credits at the earlier of our use on a separate return basis or their expiration.

Net operating loss carryforwards for tax purposes were $851 million at December 31, 2020, resulting in a deferred tax asset of $281 million. A substantial portion of these losses will begin to expire beyond 2036. Tax benefits of net operating loss and tax credit carryforwards are evaluated on an ongoing basis, including a review of historical and projected future operating results, the eligible carryforward period, and other circumstances.

In accordance with our intercompany tax sharing agreement with Ford, we earn interest on net tax assets and pay interest on certain tax liabilities. Interest earned is included in Other income, net while interest expense is included in Interest expense and the amounts were immaterial in 2019 and 2020.


	2019		2020
Beginning balance	$	115	$	109
Increase - tax positions in prior periods	40		5
Increase - tax positions in current period	—		2
Decrease - tax positions in prior periods	(8)		(8)
Settlements	(36)		—
Lapse of statute of limitations	—		—
Foreign currency translation adjustments	(2)		1
Ending balance	$	109	$	109

The amount of unrecognized tax benefits at December 31, 2019 and 2020 that would impact the effective tax rate if recognized was $106 million and $105 million, respectively.

Examinations by tax authorities have been completed through 2012 in Germany, 2014 in Canada and the United States, and 2018 in the United Kingdom. We have settled our United States federal income tax matters related to tax years prior to 2015 in accordance with our intercompany tax sharing agreement with Ford.

We recognize income tax-related penalties in Provision for / (Benefit from) income taxes on our consolidated income statements. We recognize accrued interest expense related to unrecognized tax benefits in jurisdictions where we file tax returns separate from Ford in Other income, net on our consolidated income statements. For the years ended December 31, 2018, 2019, and 2020, we recorded net tax related interest expense of $7 million, $3 million, and net tax related interest income of $3 million, respectively, in our consolidated income statements. At December 31, 2019 and 2020, we recorded a net payable of $8 million and $6 million, respectively, for tax related interest in Other liabilities and deferred income.