v3.22.4
Income Taxes
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Income Tax Provision (Benefit)

The domestic and foreign components of income (loss) before income taxes were as follows:

Year Ended December 31,
202220212020
(in millions)
U.S. income (loss) before income taxes$1,320 $631 $(267)
Foreign income (loss) before income taxes414 (71)(657)
Income (loss) before income taxes$1,734 $560 $(924)

The components of our provision (benefit) for income taxes were as follows:

Year Ended December 31,
202220212020
(in millions)
Current:
Federal$306 $89 $(6)
State81 45 (32)
Foreign56 23 69 
Total current443 157 31 
Deferred:
Federal16 51 (102)
State6 (14)(34)
Foreign12 (41)(99)
Total deferred34 (4)(235)
Total provision (benefit) for income taxes$477 $153 $(204)
Reconciliations of the provision (benefit) for income taxes at the U.S. statutory rate to the provision (benefit) for income taxes were as follows:

Year Ended December 31,
202220212020
(in millions)
Statutory U.S. federal income tax provision (benefit)$364 $118 $(194)
State income taxes, net of U.S. federal income tax benefit65 22 (24)
Impact of foreign operations35 8 (106)
Goodwill impairment losses— — 22 
Tax rate differential on U.S. federal net operating loss carryback— — (14)
Changes in deferred tax asset valuation allowances(5)34 116 
Income tax rate changes(1)
— (45)— 
Provision for uncertain tax positions14 15 7 
Other, net4 1 (11)
Provision (benefit) for income taxes$477 $153 $(204)
____________
(1)Income tax rate changes resulted in the remeasurement of our deferred tax assets and liabilities and other tax liabilities to the new tax rates, resulting in a $49 million deferred tax benefit and a $4 million current tax expense, respectively.

Deferred Income Taxes

Deferred income taxes represent the tax effect of the differences between the book and tax bases of assets and liabilities plus carryforward items. The tax effects of the temporary differences and carryforwards that give rise to our net deferred taxes were as follows:
December 31,
20222021
(in millions)
Deferred tax assets:
Net tax loss carryforwards and carrybacks$641 $649 
Compensation117 101 
Reserves66 76 
Operating and finance lease liabilities301 341 
Deferred income271 278 
Foreign tax credit carryforwards49 48 
Other102 144 
Total gross deferred tax assets1,547 1,637 
Less: valuation allowance(649)(669)
Deferred tax assets898 968 
Deferred tax liabilities:
Brands(1,151)(1,152)
Finite-lived intangible assets(40)(61)
Investment in foreign subsidiaries(22)(24)
Operating and finance lease ROU assets(206)(218)
Other(10)— 
Deferred tax liabilities(1,429)(1,455)
Net deferred taxes$(531)$(487)

As of December 31, 2022, we had gross U.S. separate return limitation year loss carryforwards and foreign operating loss carryforwards of $2.6 billion, resulting in deferred tax assets of $641 million. Approximately $41 million of our deferred tax assets as of December 31, 2022 related to loss carryforwards that will expire between 2023 and 2042 with less than $1 million of that amount expiring in 2023. Approximately $600 million of our deferred tax assets as of December 31, 2022 resulted from loss carryforwards that are not subject to expiration. We believe that it is more likely than not that the benefit from certain U.S. and foreign loss carryforwards will not be realized. In recognition of this assessment, we provided valuation allowances totaling $494 million as of December 31, 2022 on the deferred tax assets relating to these loss carryforwards. As of December 31, 2022, we also had deferred tax assets for U.S. tax credit carryforwards of $49 million that will expire between 2029 and 2032, for which we have provided valuation allowances.
Tax Uncertainties

We file income tax returns, including returns for our subsidiaries, with federal, state, local and foreign tax jurisdictions. We are under regular and recurring audit by the Internal Revenue Service ("IRS") and other taxing authorities on open tax positions. The timing of the resolution of tax audits is highly uncertain, as are the amounts, if any, that may ultimately be paid upon such resolution. Changes may result from the conclusion of ongoing audits, appeals or litigation in federal, state, local and foreign tax jurisdictions or from the resolution of various proceedings between the U.S. and foreign tax authorities. As of December 31, 2022, the Company's federal income tax returns remain subject to examination by the IRS for tax years from 2005 through 2022. Various income tax returns filed with state, local and foreign jurisdictions remain subject to examination by the applicable taxing authorities.

Reconciliations of the beginning and ending amounts of unrecognized tax benefits were as follows:

Year Ended December 31,
202220212020
(in millions)
Balance at beginning of year$375 $451 $395 
Additions for tax positions related to prior years1 33 45 
Additions for tax positions related to the current year3 2 56 
Reductions for tax positions related to prior years(32)(39)(13)
Settlements— (66)(37)
Lapse of statute of limitations(5)(2)(1)
Currency translation adjustment(5)(4)6 
Balance at end of year$337 $375 $451 

As of December 31, 2021, we had entered into a tentative agreement with the IRS, subject to approval by the Joint Committee on Taxation, to settle our federal examination through the 2010 tax year, and the settlement was approved by the Joint Committee on Taxation during the year ended December 31, 2022. As a result, the extended federal statute of limitations for tax years from 2005 through 2010 is set to expire in 2023. The assets and liabilities relating to the settlement were previously recognized as of December 31, 2021, and no adjustments were necessary as a result of the settlement approval.

We recognize interest and penalties accrued related to uncertain tax positions in income tax benefit (expense) in our consolidated statements of operations. During the years ended December 31, 2022, 2021 and 2020, we recognized income tax expense related to interest and penalties of $17 million, $16 million and $13 million, respectively, in our consolidated statements of operations. As of December 31, 2022 and 2021, we had accrued approximately $79 million and $65 million, respectively, for interest and penalties related to our unrecognized tax benefits in our consolidated balance sheets. Included in the balances of unrecognized tax benefits as of December 31, 2022 and 2021 were $337 million and $343 million, respectively, associated with positions that, if favorably resolved, would provide a benefit to our effective income tax rate. As a result of the expected resolution of examination issues with foreign tax authorities, we believe it is reasonably possible that during the next 12 months, the amount of unrecognized tax benefits will decrease by up to $32 million.