INCOME TAXES

Income (loss) from continuing operations before income taxes included income from domestic operations of $2,115 million, $505 million and $924 million for the years ended December 31, 2017, 2016 and 2015, and income (losses) from foreign operations of $140 million, $117 million and $114 million for the years ended December 31, 2017, 2016 and 2015. Approximately $29 million, $31 million, and $28 million of the company's income tax expense is attributed to foreign jurisdictions for the years ended December 31, 2017, 2016 and 2015.

A summary of the income tax (expense) benefit in the consolidated statements of income (loss) follows:



	2017			2016			2015
	(in millions)
Income tax (expense) benefit:
Current (expense) benefit	$	(6	)	$	(274	)	$	(19	)
Deferred (expense) benefit	1,145			358			41
Total	$	1,139		$	84		$	22

The Federal income taxes attributable to consolidated operations are different from the amounts determined by multiplying the income before income taxes and noncontrolling interest by the expected Federal income tax rate of 35.0%. The sources of the difference and their tax effects are as follows:



	2017			2016			2015
	(in millions)
Expected income tax (expense) benefit	$	(789	)	$	(218	)	$	(363	)
Noncontrolling interest	175			162			118
Non-taxable investment income (loss)	250			175			189
Tax audit interest	(6		)	(22		)	1
State income taxes	(3		)	(8		)	1
Tax settlements/Uncertain Tax Position Release	221			—			77
Change in Tax Law	1,308			—			—
Other	(17		)	(5		)	(1		)
Income tax (expense) benefit	$	1,139		$	84		$	22

During the second quarter of 2017, the Company agreed to the Internal Revenue Service’s Revenue Agent’s Report for its consolidated 2008 and 2009 Federal corporate income tax returns. The impact on the Company’s financial statements and unrecognized tax benefits was a tax benefit of $221 million.

In second quarter 2015, the Company recognized a tax benefit of $77 million related to settlement with the IRS on the appeal of proposed adjustments to the Company’s 2004 and 2005 Federal corporate income tax returns.

The Tax Cuts and Jobs Act (the “Tax Reform Act”) was enacted on December 22, 2017. The SEC issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the application of U.S. GAAP in situations where a company does not have the necessary information available to complete its accounting for certain income tax effects of the Tax Reform Act. In accordance with SAB 118, the Company determined reasonable estimates for certain effects of the Tax Reform Act and recorded those estimates as provisional amounts in the 2017 financial statements due to the need for further analysis, collection and preparation of the relevant data necessary to complete the accounting. These amounts are subject to change as the information necessary to complete the calculations is obtained and as tax authorities issue further guidance.

The following provisional amounts related to the impact of the Tax Reform Act are included in the Company’s financial statements:


•	An income tax benefit of $1,331 million from the reduction of deferred tax liabilities due to lower corporate tax rates. The Company will recognize changes to this estimate as the calculation of cumulative temporary differences is refined.


•	An income tax expense of $23 million to account for the deemed repatriation of foreign earnings. The determination of this tax requires further analysis regarding the amount and composition of historical foreign earnings.

The components of the net deferred income taxes are as follows:



	December 31, 2017				December 31, 2016
	Assets		Liabilities		Assets		Liabilities
	(in millions)
Compensation and related benefits	$	47	$	—	$	88	$	—
Net operating loss	—		—		—		—
Reserves and reinsurance	—		83		—		534
DAC	—		821		—		1,463
Unrealized investment gains (losses)	—		298		—		23
Investments	—		997		—		1,062
Alternative minimum tax credits	387		—		394		—
Other	67		—		5		—
Total	$	501	$	2,199	$	487	$	3,082

As of December 31, 2017, the Company had $387 million of AMT credits which do not expire. While the Tax Reform Act repealed the corporate AMT and allows for the refund of a portion of accumulated minimum tax credits, the refundable credits may be subject to a sequestration fee. Included in the deferred tax revaluation is a $20 million charge related to the sequestration of refundable AMT credits.

In accordance with the recently enacted Tax Reform Act, the Company provided a $23 million provisional charge on the deemed repatriation of earnings associated with non-U.S. corporate subsidiaries. Therefore, the Company is no longer asserting permanent reinvestment of earnings overseas. Per SAB 118, the Company continues to evaluate the remaining income tax effects on the reversal of the indefinite reinvestment assertion as a result of the Tax Reform Act.

A reconciliation of unrecognized tax benefits (excluding interest and penalties) follows:



	2017			2016		2015
	(in millions)
Balance at January 1,	$	457		$	418	$	475
Additions for tax positions of prior years	28			39		44
Reductions for tax positions of prior years	(245		)	—		(101		)
Additions for tax positions of current year	—			—		—
Settlements with Tax Authorities	(33		)	—		—
Balance at December 31,	$	207		$	457	$	418
Unrecognized tax benefits that, if recognized, would impact the effective rate	172			329		293

The Company recognizes accrued interest and penalties related to unrecognized tax benefits in tax expense. Interest and penalties included in the amounts of unrecognized tax benefits at December 31, 2017 and 2016 were $23 million and $67 million, respectively. For 2017, 2016 and 2015, respectively, there were $(44) million, $15 million and $(25) million in interest expense related to unrecognized tax benefits.

It is reasonably possible that the total amount of unrecognized tax benefits will change within the next 12 months due to the conclusion of IRS proceedings and the addition of new issues for open tax years. The possible change in the amount of unrecognized tax benefits cannot be estimated at this time.

As of December 31, 2017, tax years 2010 and subsequent remain subject to examination by the IRS.