(in millions)	2019			2018			2017
Current income tax expense:
Federal	$	735		$	605		$	1,166
State and local		109			97			36
Foreign		400			600			289
Total net current income tax expense		1,244			1,302			1,491
Deferred income tax expense (benefit):
Federal		15			(71	)		(1,382	)
State and local		7			(1	)		81
Foreign		(5	)		(154	)		80
Total net deferred income tax expense (benefit)		17			(226	)		(1,221	)
Total income tax expense	$	1,261		$	1,076		$	270

Income tax expense has been based on the following components of income before taxes, less net income (loss) attributable to NCI:

(in millions)	2019		2018		2017
Domestic	$	3,766	$	3,536	$	3,280
Foreign		1,971		1,845		1,942
Total	$	5,737	$	5,381	$	5,222

The foreign income before taxes includes countries that have statutory tax rates that are different than the US federal statutory tax rate of 21%, such as the United Kingdom, Ireland, Canada and Netherlands.

A reconciliation of income tax expense with expected federal income tax expense computed at the applicable federal income tax rate of 21% for 2019 and 2018 and 35% for 2017 is as follows:

(in millions)	2019					2018					2017
Statutory income tax expense	$	1,205		21	%	$	1,130		21	%	$	1,834		35	%
Increase (decrease) in income taxes resulting from:
State and local taxes (net of federal benefit)		96		2			99		2			60		1
Impact of federal, foreign, state, and local tax rate changes on deferred taxes		5		—			0		—			(1,637	)	(31	)
Mandatory deemed repatriation tax		—		—			0		—			477		9
Stock-based compensation awards		(23	)	—			(64	)	(1	)		(159	)	(3	)
Effect of foreign tax rates		(76	)	(1	)		(119	)	(2	)		(337	)	(6	)
Other		54		—			30		—			32		—
Income tax expense	$	1,261		22	%	$	1,076		20	%	$	270		5	%

Deferred income taxes are provided for the effects of temporary differences between the tax basis of an asset or liability and its reported amount in the consolidated financial statements. These temporary differences result in taxable or deductible amounts in future years.

	December 31,
(in millions)	2019			2018
Deferred income tax assets:
Compensation and benefits	$	282		$	267
Loss carryforwards		84			82
Other		481			362
Gross deferred tax assets		847			711
Less: deferred tax valuation allowances		(51	)		(68	)
Deferred tax assets net of valuation allowances		796			643
Deferred income tax liabilities:
Goodwill and acquired indefinite-lived intangibles		3,971			3,939
Acquired finite-lived intangibles		179			48
Unrealized investment gains		63			30
Other		142			34
Gross deferred tax liabilities		4,355			4,051
Net deferred tax (liabilities)	$	(3,559	)	$	(3,408	)

Deferred income tax assets and liabilities are recorded net when related to the same tax jurisdiction. At December 31, 2019, the Company recorded on the consolidated statement of financial condition deferred income tax assets, within other assets, and deferred income tax liabilities of $175 million and $3,734 million, respectively. At December 31, 2018, the Company recorded on the consolidated statement of financial condition deferred income tax assets, within other assets, and deferred income tax liabilities of $163 million and $3,571 million, respectively.

Income tax expense for 2019 included a $28 million discrete tax benefit, primarily related to stock-based compensation awards that vested in 2019.

Income tax expense for 2018 reflected a reduced tax rate associated with The 2017 Tax Cuts and Jobs Act and $81 million of discrete tax benefits, primarily related to changes in the Company’s organizational entity structure and a $64 million discrete tax benefit, related to stock-based compensation awards that vested in 2018.

At December 31, 2019 and 2018, the Company had available state net operating loss carryforwards of $1.9 billion and $2.9 billion, respectively, which will begin to expire in 2020. At December 31, 2019 and 2018, the Company had foreign net operating loss carryforwards of $110 million and $76 million, respectively, of which $3 million will begin to expire in 2021.

At December 31, 2019 and 2018, the Company had $51 million and $68 million of valuation allowances for deferred income tax assets, respectively, recorded on the consolidated statements of financial condition.

Goodwill recorded in connection with the Quellos Transaction has been reduced during the period by the amount of tax benefit realized from tax-deductible goodwill. See Note 11, Goodwill, for further discussion.

Current income taxes are recorded net on the consolidated statements of financial condition when related to the same tax jurisdiction. At December 31, 2019, the Company had current income taxes receivable and payable of $282 million and $293 million, respectively, recorded in other assets and accounts payable and accrued liabilities, respectively. At December 31, 2018, the Company had current income taxes receivable and payable of $282 million and $341 million, respectively, recorded in other assets and accounts payable and accrued liabilities, respectively.

The following tabular reconciliation presents the total amounts of gross unrecognized tax benefits:

(in millions)	2019			2018			2017
Balance at January 1	$	795		$	629		$	410
Additions for tax positions of prior years		99			82			161
Reductions for tax positions of prior years		(27	)		(15	)		(3	)
Additions based on tax positions related to current year		47			102			67
Lapse of statute of limitations		(4	)		(3	)		(6	)
Settlements		(10	)		—			—
Balance at December 31	$	900		$	795		$	629

Included in the balance of unrecognized tax benefits at December 31, 2019, 2018 and 2017, respectively, are $513 million, $462 million and $316 million of tax benefits that, if recognized, would affect the effective tax rate.

The Company recognizes interest and penalties related to income tax matters as a component of income tax expense. Related to the unrecognized tax benefits noted above, the Company accrued interest and penalties of $27 million during 2019 and in total, as of December 31, 2019, had recognized a liability for interest and penalties of $133 million. The Company accrued interest and penalties of $30 million during 2018 and in total, as of December 31, 2018, had recognized a liability for interest and penalties of $106 million. The Company accrued interest and penalties of $17 million during 2017 and in total, as of December 31, 2017, had recognized a liability for interest and penalties of $76 million.

BlackRock is subject to US federal income tax, state and local income tax, and foreign income tax in multiple jurisdictions. Tax years after 2009 remain open to US federal income tax examination.

In June 2014, the Internal Revenue Service commenced its examination of BlackRock’s 2010 through 2012 tax years. During 2019, the Internal Revenue Service commenced its examination of BlackRock’s 2013 through 2015 tax years. While the examination impact on the Company’s consolidated financial statements is undetermined, it is not expected to be material.

The Company is currently under audit in several state and local jurisdictions. The significant state and local income tax examinations are in New York State for tax years 2012 through 2014, New York City for tax years 2009 through 2011, and California for tax years 2015 through 2016. No state and local income tax audits cover years earlier than 2009. No state and local income tax audits are expected to result in an assessment material to BlackRock’s consolidated financial statements.

Upon conclusion of its examination, Her Majesty’s Revenue and Customs issued a closure notice during 2017 for various UK BlackRock subsidiaries for tax years 2009 and years after. The Company made a decision to pursue litigation for the tax matters included on such notice. BlackRock does not expect the ultimate resolution to result in a material impact to the consolidated financial statements.

From time to time, BlackRock may receive or be subject to tax authorities’ assessments and challenges related to income taxes. BlackRock does not currently expect the ultimate resolution of any existing matters to be material to the consolidated financial statements.

At December 31, 2019, it is reasonably possible the total amounts of unrecognized tax benefits will change within the next twelve months due to completion of tax authorities’ exams or the expiration of statues of limitations. Management estimates that the existing liability for uncertain tax positions could decrease by approximately $5 million to $20 million within the next twelve months.