XML 32 R11.htm IDEA: XBRL DOCUMENT v3.7.0.1
Income Taxes
3 Months Ended
Mar. 31, 2017
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes

The effective income tax rate was 29.5% and 31.5% for the three months ended March 31, 2017 and March 31, 2016, respectively. The decrease in 2017 was due to the recognition of excess tax benefits associated with share-based payments in the statement of income as well as a benefit from an acquisition-related adjustment.

At the end of each interim period, we estimate the annual effective tax rate and apply that rate to our ordinary quarterly earnings. The tax expense or benefit related to significant, unusual or extraordinary items that will be separately reported or reported net of their related tax effect, and are individually computed, is recognized in the interim period in which those items occur. In addition, the effect of changes in enacted tax laws or rates or tax status is recognized in the interim period in which the change occurs.

As of March 31, 2017 and December 31, 2016, the total amount of federal, state and local, and foreign unrecognized tax benefits was $156 million and $161 million, respectively, exclusive of interest and penalties. We recognize accrued interest and penalties related to unrecognized tax benefits in interest expense and operating-related expense, respectively. In addition, as of March 31, 2017 and December 31, 2016, we had $46 million and $44 million, respectively, of accrued interest and penalties associated with unrecognized tax benefits.

It is possible that tax examinations will be settled in the next twelve months. If any of these tax audit settlements do occur within that period, we would make any necessary adjustments to the accrual for unrecognized tax benefits. Until formal resolutions are reached between us and the tax authorities, the determination of a possible audit settlement range with respect to the impact on unrecognized tax benefits is not practicable.

In November of 2015, the FInancial Accounting Standards Board ("FASB") issued guidance to simplify the presentation of deferred income taxes. The guidance requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. This guidance is effective for reporting periods beginning after December 15, 2016; however, early adoption was permitted. We early adopted this guidance in the fourth quarter of 2016, prospectively, and accordingly prior year amounts have not been reclassified.