Goodwill allocated to business divestitures as well as the U.S. Branded Prescription Drug Fee are not deductible for tax purposes. R&D charges primarily from acquisition related and milestone payments to former shareholders are not deductible for tax purposes. These include Cormorant and IFM in 2018; Flexus, Cardioxyl and IFM in 2017; and Flexus, Padlock and Cormorant in 2016. Puerto Rico imposes an excise tax on the gross company purchase price of goods sold from our manufacturer in Puerto Rico. The excise tax is recognized in Cost of products sold when the intra-entity sale occurs. For U.S. income tax purposes, the excise tax is not deductible but results in foreign tax credits that are generally recognized in our provision for income taxes when the excise tax is incurred. The components of current and non-current deferred income tax assets/(liabilities) were as follows: Deferred Taxes and Valuation Allowance December 31, Dollars in Millions 2018 2017 Deferred tax assets Foreign net operating loss carryforwards $ 2,978 $ 2,872 State net operating loss and credit carryforwards 121 143 U.S. Federal net operating loss and credit carryforwards 67 99 Deferred income 188 212 Milestone payments and license fees 552 386 Pension and postretirement benefits 26 131 Intercompany profit and other inventory items 670 651 Other foreign deferred tax assets 327 312 Share-based compensation 54 60 Other 352 280 Total deferred tax assets 5,335 5,146 Valuation allowance (3,193 ) (2,827 ) Deferred tax assets net of valuation allowance 2,142 2,319 Deferred tax liabilities Depreciation (61 ) (11 ) Acquired intangible assets (220) (216) Goodwill and other (533 ) (527 ) Total deferred tax liabilities (814) (754) Deferred tax assets, net $ 1,328 $ 1,565 Recognized as: Deferred income taxes – non-current $ 1,371 $ 1,610 Income taxes payable – non-current (18 ) (45 ) Liabilities related to assets held-for-sale (25) — Total $ 1,328 $ 1,565 The U.S. Federal net operating loss carryforwards were $206 million at December 31, 2018. These carryforwards were acquired as a result of certain acquisitions and are subject to limitations under Section 382 of the Internal Revenue Code. The net operating loss carryforwards expire in varying amounts beginning in 2022. The foreign and state net operating loss carryforwards expire in varying amounts beginning in 2018 (certain amounts have unlimited lives). At December 31, 2018, a valuation allowance of $3.2 billion was established for the following items: $2.9 billion primarily for foreign net operating loss and tax credit carryforwards, $134 million for state deferred tax assets including net operating loss and tax credit carryforwards and $138 million for U.S. Federal deferred tax assets including equity fair value adjustments and U.S. Federal net operating loss carryforwards. 79