
Year ended December 31, ($ in millions)	2020		2019		2018
Current income tax (benefit) expense
U.S. federal	$	—	$	(2)	$	(12)
Foreign	6		4		5
State and local	80		65		35
Total current expense	86		67		28
Deferred income tax expense (benefit)
U.S. federal	280		178		328
Foreign	1		2		—
State and local	(39)		(1)		3
Total deferred expense	242		179		331
Total income tax expense from continuing operations	$	328	$	246	$	359


Year ended December 31, ($ in millions)	2020		2019		2018
Statutory U.S. federal tax expense	$	297	$	413	$	340
Change in tax resulting from
Nondeductible expenses	37		29		28
State and local income taxes, net of federal income tax benefit	36		50		26
Tax credits, excluding expirations	(29)		(27)		(20)
Changes in unrecognized tax benefits	4		5		22
Valuation allowance change, excluding expirations	(3)		(219)		(8)
Tax law enactment	—		(1)		(23)
Other, net	(14)		(4)		(6)
Total income tax expense from continuing operations	$	328	$	246	$	359

For the year ended December 31, 2020, consolidated income tax expense from continuing operations was largely driven by tax attributable to pretax earnings for the year. For the year ended December 31, 2019, consolidated income tax expense from continuing operations was driven by tax attributable to pretax earnings for the year, partially offset by the release of valuation allowance on foreign tax credit carryforwards during the second quarter of 2019. The valuation allowance release was primarily driven by our capacity to engage in certain foreign securitization transactions and the market demand from investors related to these transactions, coupled with the anticipated timing of the forecasted expiration of certain foreign tax credit carryforwards. For the year ended December 31, 2018, consolidated income tax expense from continuing operations was largely driven by tax attributable to pretax earnings for the year.

As of each reporting date, we consider existing evidence, both positive and negative, that could impact our view with regard to future realization of deferred tax assets. We continue to believe it is more likely than not that the benefit for certain foreign tax credit carryforwards and state net operating loss carryforwards will not be realized. In recognition of this risk, we continue to provide a partial valuation allowance on the deferred tax assets relating to these carryforwards and it is reasonably possible that the valuation allowance may change in the next 12 months.


December 31, ($ in millions)	2020		2019
Deferred tax assets
Tax credit carryforwards	$	1,786	$	1,784
Adjustments to loan value	923		448
State and local taxes	191		153
Other	366		312
Gross deferred tax assets	3,266		2,697
Valuation allowance	(835)		(837)
Deferred tax assets, net of valuation allowance	2,431		1,860
Deferred tax liabilities
Lease transactions	1,809		1,325
Deferred acquisition costs	391		366
Other	229		178
Gross deferred tax liabilities	2,429		1,869
Net deferred tax assets (liabilities) (a)	$	2	$	(9)

(a)Amounts include $94 million and $58 million of net deferred tax assets included in other assets on our Consolidated Balance Sheet for tax jurisdictions in a total net deferred tax asset position at December 31, 2020, and 2019, respectively, and $92 million and $67 million included in accrued expenses and other liabilities on our Consolidated Balance Sheet for tax jurisdictions in a total net deferred tax liability position.


($ in millions)	Deferred tax asset (liability)			Valuation allowance		Net deferred tax asset (liability)		Years of expiration
Tax credit carryforwards
Foreign tax credits	$	1,340		$	(734)	$	606	2022–2030
General business credits	446			—		446		2025–2040
Total tax credit carryforwards	1,786			(734)		1,052
Tax loss carryforwards
Net operating losses — federal	7		(a)	—		7		2027–2036
Net operating losses — state	171		(b)	(101)		70		2021–2040
Total federal and state tax loss carryforwards	178			(101)		77
Other net deferred tax liabilities	(1,127)			—		(1,127)		n/a
Net deferred tax assets (liabilities)	$	837		$	(835)	$	2

As of December 31, 2020, we continue to not assert that foreign earnings are indefinitely reinvested outside of the United States. Deferred tax liabilities for incremental U.S. tax that stem from temporary differences related to investment in foreign subsidiaries or corporate joint ventures are negligible and have been recognized as of December 31, 2020.


($ in millions)	2020		2019		2018
Balance at January 1,	$	48	$	44	$	15
Additions based on tax positions related to the current year	—		—		—
Additions for tax positions of prior years	5		11		29
Reductions for tax positions of prior years	—		(5)		—
Settlements	—		(2)		—
Expiration of statute of limitations	—		—		—
Balance at December 31,	$	53	$	48	$	44

Included in the unrecognized tax benefits balances are some items, the recognition of which would not affect the effective tax rate, such as the tax effect of certain temporary differences and the portion of gross state unrecognized tax benefits that would be offset by the tax benefit of the associated federal deduction. At December 31, 2020, 2019, and 2018, the balance of unrecognized tax benefits that, if recognized, would affect our effective tax rate were $42 million, $38 million, and $34 million, respectively.

We recognize accrued interest and penalties related to uncertain income tax positions in interest expense and other operating expenses, respectively. For the years ended December 31, 2020, 2019, and 2018, the cumulative accrued balance for interest and penalties was less than $1 million and interest and penalties of $1 million or less were accrued each year.

It is reasonably possible that the unrecognized tax benefits will decrease by up to $51 million over the next 12 months if certain tax matters ultimately settle with the applicable taxing jurisdictions.

We file tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. Our most significant operations are in the United States and Canada. The oldest tax years that remain subject to examination for those jurisdictions are 2017 and 2011, respectively.