Income Taxes (Tables)

12 Months Ended

Dec. 31, 2017

Income Taxes

Provision for Income Taxes

Our income tax expense consisted of the following for the years ended December 31 (in millions):

	2017		2016		2015
Current:
Federal	$	400	$	443	$	192
State		56		88		50
Foreign		37		38		36
		493		569		278
Deferred:
Federal		(316)		57		43
State		62		17		(17)
Foreign		3		(1)		4
		(251)		73		30
Income tax expense	$	242	$	642	$	308

U.S. Federal Statutory Income Tax Rate Reconciled to Effective Rate

The U.S. federal statutory income tax rate is reconciled to the effective income tax rate for the years ended December 31 as follows:

	2017		2016		2015
Income tax expense at U.S. federal statutory rate	35.00	%	35.00	%	35.00	%
State and local income taxes, net of federal income tax benefit	3.25		3.31		3.20
Impacts of enactment of tax reform	(24.14)		—		—
Federal tax credits	(2.31)		(3.08)		(5.49)
Tax impact of equity-based compensation transactions	(1.45)		—		—
Tax impact of impairments	0.66		0.80		0.23
Taxing authority audit settlements and other tax adjustments	0.03		(0.53)		(2.67)
Tax rate differential on foreign income	(0.55)		(0.63)		(0.99)
Other	0.55		0.36		(0.17)
Effective income tax rate	11.04	%	35.23	%	29.11	%

Summary of income source

For financial reporting purposes, income before income taxes by source for the years ended December 31 was as follows (in millions):

	2017		2016		2015
Domestic	$	2,040	$	1,681	$	922
Foreign		151		141		138
Income before income taxes	$	2,191	$	1,822	$	1,060

Components of Net Deferred Tax Assets (Liabilities)

The components of net deferred tax liabilities as of December 31 are as follows (in millions):

	2017		2016
Deferred tax assets:
Net operating loss, capital loss and tax credit carry-forwards	$	259	$	285
Landfill and environmental remediation liabilities		121		116
Miscellaneous and other reserves, net		96		355
Subtotal		476		756
Valuation allowance		(264)		(292)
Deferred tax liabilities:
Property and equipment		(595)		(728)
Goodwill and other intangibles		(865)		(1,218)
Net deferred tax liabilities	$	(1,248)	$	(1,482)

Summary of unrecognized tax benefits

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits, including accrued interest, is as follows (in millions):

	2017		2016		2015
Balance as of January 1	$	82	$	71	$	42
Additions based on tax positions related to the current year		19		19		18
Additions based on tax positions of prior years		11		4		21
Accrued interest		4		2		2
Reductions for tax positions of prior years		—		(7)		(1)
Settlements		(1)		—		(3)
Lapse of statute of limitations		(6)		(7)		(8)
Balance as of December 31	$	109	$	82	$	71