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Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Note 13 – Income Taxes Our sources of Income (loss) before income taxes were as follows:
Year Ended December 31,
(in millions)202120202019
U.S. income$3,401 $3,493 $4,557 
Foreign (loss) income(50)37 46 
Income from continuing operations before income taxes$3,351 $3,530 $4,603 
Income tax expense is summarized as follows:
Year Ended December 31,
(in millions)202120202019
Current tax (expense) benefit
Federal$(22)$17 $24 
State(89)(84)(70)
Foreign(19)(10)2 
Total current tax expense(130)(77)(44)
Deferred tax (expense) benefit
Federal(541)(676)(954)
State327 (34)(125)
Foreign17 1 (12)
Total deferred tax expense(197)(709)(1,091)
Total income tax expense$(327)$(786)$(1,135)

The reconciliation between the U.S. federal statutory income tax rate and our effective income tax rate is as follows:
Year Ended December 31,
202120202019
Federal statutory income tax rate21.0 %21.0 %21.0 %
State taxes, net of federal benefit4.5 4.8 5.1 
Effect of law and rate changes(1.7)(0.8)0.4 
Change in valuation allowance(10.7)(2.6)(1.8)
Foreign taxes, net of federal benefit0.1 0.3 0.3 
Permanent differences0.3 0.4 0.6 
Federal tax credits, net of reserves(2.5)(0.9)(0.8)
Equity-based compensation(2.6)(2.5)(0.6)
Non-deductible compensation1.5 2.3 0.6 
Other, net(0.1)0.3 (0.1)
Effective income tax rate9.8 %22.3 %24.7 %

Significant components of deferred income tax assets and liabilities, tax effected, are as follows:
(in millions)December 31,
2021		December 31,
2020
Deferred tax assets
Loss carryforwards$4,414 $4,540 
Lease liabilities7,717 8,031 
Property and equipment— 90 
Reserves and accruals1,280 1,348 
Federal and state tax credits404 411 
Other2,888 2,665 
Deferred tax assets, gross16,703 17,085 
Valuation allowance(435)(878)
Deferred tax assets, net16,268 16,207 
Deferred tax liabilities
Spectrum licenses18,060 17,518 
Property and equipment380 — 
Lease right-of-use assets6,761 7,239 
Other intangible assets769 912 
Other514 504 
Total deferred tax liabilities26,484 26,173 
Net deferred tax liabilities$10,216 $9,966 
Classified on the consolidated balance sheets as:
Deferred tax liabilities$10,216 $9,966 
As of December 31, 2021, we have tax effected federal net operating loss (“NOL”) carryforwards of $3.5 billion, state NOL carryforwards of $1.4 billion and foreign NOL carryforwards of $37 million, expiring through 2041. Federal and certain state NOLs generated in and after 2018 do not expire. As of December 31, 2021, our tax effected federal and state NOL carryforwards for financial reporting purposes were approximately $221 million and $473 million, respectively, less than our NOL carryforwards for federal and state income tax purposes, due to unrecognized tax benefits of the same amount. There were no differences in our foreign NOL carryforwards for financial reporting purposes and our NOL carryforwards for foreign income tax purposes as of December 31, 2021. The unrecognized tax benefit amounts exclude offsetting tax effects of $132 million in other jurisdictions.

As of December 31, 2021, we have research and development, foreign tax and other general business credit carryforwards with a combined value of $581 million for federal income tax purposes, an immaterial amount of which begins to expire in 2023.

As of December 31, 2021, 2020 and 2019, our valuation allowance was $435 million, $878 million and $129 million, respectively. The change from December 31, 2020 to December 31, 2021 primarily related to a reduction in the valuation allowance against deferred tax assets in certain state jurisdictions resulting from legal entity reorganizations of legacy Sprint entities. The change from December 31, 2019 to December 31, 2020 primarily related to $851 million of deferred tax assets acquired via the Merger for which a valuation allowance was deemed necessary, partially offset by a reduction in the valuation allowance against deferred tax assets in federal and certain other jurisdictions associated with additional tax attribute utilization and expiration. It is possible that our valuation allowance may change within the next 12 months.

We file income tax returns in the U.S. federal jurisdiction and in various state and foreign jurisdictions. We are currently under examination by the IRS and various states. Management does not believe the resolution of any of the audits will result in a material change to our financial condition, results of operations or cash flows. The IRS has concluded its audits of our federal tax returns through the 2009 tax year; however, NOL and other carryforwards for certain audited periods remain open for examination. U.S. federal, state and foreign examination for years prior to 2002 are generally closed.

A reconciliation of the beginning and ending amount of unrecognized tax benefits were as follows:
Year Ended December 31,
(in millions)202120202019
Unrecognized tax benefits, beginning of year$1,159 $514 $462 
Gross increases to tax positions in prior periods73 6 — 
Gross decreases to tax positions in prior periods(123)(28)— 
Gross increases to current period tax positions72 45 64 
Gross increases due to current period business acquisitions36 624 — 
Gross decreases due to settlements with taxing authorities— (2)(12)
Unrecognized tax benefits, end of year$1,217 $1,159 $514 

As of December 31, 2021, 2020 and 2019, we had $932 million, $857 million and $310 million, respectively, in unrecognized tax benefits that, if recognized, would affect our annual effective tax rate. Penalties and interest on income tax assessments are included in Selling, general and administrative and Interest expense, respectively, on our Consolidated Statements of Comprehensive Income. The accrued interest and penalties associated with unrecognized tax benefits are insignificant.