On December 22, 2017, the Tax Cuts and Jobs Act. (the "Tax Act") was enacted and in 2017 we recorded a one-time non-cash net tax benefit of $315.9 million, which represents our provisional estimate of the impact of the Tax Act. This amount includes a net benefit of $371.4 million associated with the re-measurement of our net deferred tax liability utilizing the lower U.S. tax rate. The Tax Act also imposed a one-time transitional repatriation tax of $57.2 million on certain undistributed earnings of our non-U.S. subsidiaries and affiliates. The Tax Act made broad and complex changes to the U.S. tax laws. In particular, the U.S. corporation income tax rate was reduced to 21% from 35%, and a new territorial tax system was implemented that will affect the future U.S. taxation of earnings repatriated from our foreign subsidiaries and affiliates. Other provisions included an immediate deduction for qualified investments and limitations on the deductibility of interest expense and executive compensation. Due to our current net operating loss position, these adjustments had no cash impact on our tax positions. We will continue to evaluate the provisions of the Tax Act, and the ultimate impact may differ from this provisional estimate, due to, among other things, changes in interpretations and assumptions made by us, additional guidance that may be issued by the Internal Revenue Service and the U.S. Department of the Treasury, and actions that we may take. In addition, these estimates may change due to guidance provided by state taxing authorities and the completion of our 2017 U.S. and state income tax returns.

Deferred income taxes are the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. We expect to continue to reinvest foreign earnings outside the U.S. indefinitely. Consequently, our tax provision does not include any amount for incremental taxes that may result from the future repatriation of remaining undistributed earnings of non-U.S. subsidiaries and affiliates. If, future earnings are repatriated to the U.S., or if we expect such earnings to be repatriated, a provision for additional taxes may be required. The Tax Act generally provides an exemption from U.S. income tax on the future repatriation of earnings from our foreign subsidiaries and affiliates; however, incremental income tax may occur from withholding taxes, foreign exchange gains, or other taxable gains recognized in connection with tax basis differences in our investments in these foreign investments. The ultimate tax cost of repatriating these earnings will depend on tax laws in effect and other circumstances at the time of distribution.

The following table shows the significant components of our deferred tax liabilities and assets as of December 31 (in millions):



	2017			2016
Deferred Tax Liabilities
Book/tax basis difference due to depreciation	$	872.8		$	1,119.1
Investments in affiliated companies	43.6			69.5
Lease accounting	9.0			11.1
Other	6.3			1.0
Total deferred tax liabilities	931.7			1,200.7
Deferred Tax Assets
Federal net operating loss	4.1			—
Alternative minimum tax credit	8.0			8.0
State net operating loss	29.5			25.4
Valuation allowance on state net operating loss	(10.3		)	(12.9		)
Foreign net operating loss	2.1			2.9
Valuation allowance on foreign net operating loss	(0.4		)	(0.3		)
Accruals not currently deductible for tax purposes	21.7			26.7
Allowance for losses	1.1			1.5
Pension and post-retirement benefits	19.6			30.9
Other	2.6			29.1
Total deferred tax assets	78.0			111.3
Net deferred tax liabilities	$	853.7		$	1,089.4

At December 31, 2017, we have a U.S. federal tax net operating loss carryforward of $4.1 million that will expire in 2037. We also have an alternative minimum tax credit of $8.0 million which may be utilized or refunded over the next four years.

At December 31, 2017, we have state net operating losses of $29.5 million, net of federal benefits that are scheduled to expire at various times beginning in 2018. We have recorded a $10.3 million valuation allowance related to state net operating losses, as we believe it is more likely than not that we will be unable to use all of these losses. Our use of future operating losses depends on a number of variables, including the amount of taxable income, and state apportionment factors. Additionally, we have foreign net operating losses, net of valuation allowances, of $1.7 million which have an unlimited carryforward period.

At December 31, 2017, all uncertainties for unrecognized tax benefits have been resolved. During the year ended December 31, 2017, based upon the status of our current state income tax audits and our expectations of the ultimate resolution, we reversed the remaining balance of our unrecognized tax benefits and recognized an income tax benefit of $4.3 million ($2.8 million, net of federal tax). During the year ended December 31, 2016, we reduced our unrecognized tax benefit by $1.4 million based on a final determination ruling for a disputed state tax filing position.

We file one consolidated federal income tax return with our domestic subsidiaries in the U.S. jurisdiction, as well as tax returns in various state and foreign jurisdictions. As of December 31, 2017, all audits or statute of limitations with respect to our federal tax returns for years prior to 2014 have been closed or expired. Additionally, we currently have five ongoing state income tax audits.

The following table shows the components of income before income taxes and share of affiliates' earnings for the years ending December 31 (in millions):



	2017		2016		2015
Domestic	$	124.5	$	211.0	$	174.7
Foreign	89.9		94.4		95.6
Total	$	214.4	$	305.4	$	270.3

The following table shows income taxes for the years ending December 31 (in millions):



	2017			2016		2015
Current
Domestic:
Federal	$	(1.1	)	$	6.0	$	5.6
State and local	(0.1		)	—		(0.2		)
	(1.2		)	6.0		5.4
Foreign	18.0			16.9		15.3
	16.8			22.9		20.7
Deferred
Domestic:
Federal	(270.0		)	55.8		44.7
State and local	1.2			10.5		33.7
	(268.8		)	66.3		78.4
Foreign	8.3			6.5		11.8
	(260.5		)	72.8		90.2
Income taxes	$	(243.7	)	$	95.7	$	110.9

The following table shows the differences between our effective income tax rate and the federal statutory income tax rate for the years ending December 31 (in millions):



	2017			2016			2015
Income taxes at federal statutory rate	$	75.0		$	106.9		$	94.6
Adjust for effect of:
Foreign tax credits	—			(7.8		)	—
Foreign earnings taxed at lower rates	(5.5		)	(9.7		)	(6.2		)
Corporate owned life insurance	(0.9		)	(1.7		)	(0.9		)
State income taxes	(0.5		)	6.8			7.6
State tax rate change impact	5.0			—			14.1
Other	(0.9		)	1.2			1.7
Tax Cuts and Jobs Act
Revaluation of deferred tax liabilities	(371.4		)	—			—
Transition tax on non-U.S. earnings and profits	57.2			—			—
Other	(1.7		)	—			—
Total Tax Act Impact	(315.9		)	—			—
Income taxes	$	(243.7	)	$	95.7		$	110.9
Effective income tax rate	(113.7		)%	31.3		%	41.0		%

In 2017, our effective tax rate was (113.7)% compared to 31.3% in 2016 and 41.0% in 2015. The current year effective tax rate reflects the provisional net benefit recorded attributable to the Tax Act. Excluding the impact of the Tax Act adjustment, our effective tax rate was 33.7% in 2017. The reduction of the U.S. corporate tax rate to 21.0% has caused us to adjust our U.S. deferred tax assets and liabilities from a combined effective tax rate of 38.3% to 25.1%, resulting in a one-time non-cash tax benefit of $371.4 million. The Tax Act also implements a new territorial tax system which resulted in a one-time transitional repatriation tax of $57.2 million on certain undistributed earnings of our non-U.S. subsidiaries and affiliates. The 2017 effective tax rate also reflects incremental deferred state income taxes of $5.0 million associated with a change in our consolidated effective state tax rate, primarily due to an increase in the state of Illinois corporate tax rate. The 2016 effective tax rate reflected the utilization of $7.8 million in foreign tax credits. The 2015 effective tax rate reflected incremental deferred state income taxes of $14.1 million associated with a change in our consolidated effective state tax rate. Specifically, the sale of certain marine assets in our Portfolio Management segment negatively impacted our future state apportionment factors, increasing our overall effective state income tax rate. Additionally, the 2015 rate reflected a higher contribution from domestic source income, which is taxed at a higher rate, as well as the impact of an increase in the statutory tax rate in Alberta, Canada.

The adjustment for foreign earnings in each year reflects the impact of lower tax rates on income earned at our foreign subsidiaries. State income taxes are recognized on domestic pre-tax income or loss. The amount of our domestic income subject to state taxes relative to our total worldwide income impacts the effect state income tax has on our overall income tax rate.

Separately, our affiliates incurred income taxes of $12.0 million and $5.7 million, respectively, in 2017 and 2016, and an income tax benefit of $0.5 million in 2015. The 2016 and 2015 amounts were favorably impacted by deferred tax benefits of $3.9 million and $7.7 million, respectively, as a result of income tax rate reductions enacted in the United Kingdom.