|12 Months Ended|
Dec. 31, 2022
|Income Tax Disclosure [Abstract]|
|Income Taxes||Income Taxes
The income tax provision/(benefit) attributable to continuing operations consisted of the following (in millions):
Pre-tax income/(loss) for domestic and foreign operations attributable to continuing operations consisted of the following (in millions):
Deferred income tax assets and liabilities were comprised of the following (in millions):
(a) The valuation allowance of $151 million at December 31, 2022, relates to foreign tax credits, net operating loss carryforwards, and certain deferred tax assets of $52 million, $20 million, and $79 million. The valuation allowance of $156 million at December 31, 2021, relates to foreign tax credits, net operating loss carryforwards, and certain deferred tax assets of $56 million, $21 million, and $79 million. The valuation allowance will be reduced when and if the Company determines it is more likely than not that the related deferred income tax assets will be realized.
As of December 31, 2022, the Company’s net operating loss carryforwards primarily relate to state and foreign net operating losses of $17 million and $14 million. The state net operating losses are due to expire at various dates, but no later than 2042 for those that cannot be carried forward indefinitely. The majority of the foreign net operating losses can be carried forward indefinitely. As of December 31, 2022, the Company had $69 million of foreign tax credits. These foreign tax credits expire between the 2022 and 2032 tax years.
The Company’s effective income tax rate differs from the U.S. federal statutory rate as follows:
The following table summarizes the activity related to the Company’s unrecognized tax benefits (in millions):
The gross amount of the unrecognized tax benefits that, if recognized, would affect the Company’s effective tax rate were $20 million, $22 million, and $22 million as of December 31, 2022, 2021, and 2020. The Company records potential penalties and interest as a component of Provision/(benefit) for income taxes on the Consolidated Statements of Income/(Loss) related to these unrecognized tax benefits. During 2022, penalties and interest decreased by $1 million. During 2021 and 2020 penalties and interest increased by $1 million in each respective year. The Company had a liability for potential penalties of $4 million as of December 31, 2022, 2021, and 2020, and potential interest of $10 million, $11 million, and $10 million as of December 31, 2022, 2021, and 2020. Such liabilities are reported as a component of Accrued expenses and other liabilities on the Consolidated Balance Sheets.
The Company believes that it is reasonably possible that its unrecognized tax benefits could decrease by $2 million within 12 months of the current reporting date due to the expiration of certain statutes of limitations. The Company does not expect other changes to the unrecognized tax benefits balance to be significant.
The Company files U.S. federal and state, and foreign income tax returns in jurisdictions with varying statutes of limitations. With few exceptions, the Company is no longer subject to U.S. federal income tax examinations for years prior to 2019 and state and local income tax examinations prior to 2016. In significant foreign jurisdictions, generally years prior to 2015 are no longer subject to income tax examinations by their respective tax authorities.
The Company asserts that substantially all undistributed foreign earnings will be reinvested indefinitely as of December 31, 2022. In the event the Company determines not to continue to assert that all or part of its undistributed foreign earnings are permanently reinvested, such a determination in the future could result in the accrual and payment of additional foreign withholding taxes, as well as U.S. taxes on currency transaction gains and losses, the determination of which is not practicable.
The Company made cash income tax payments, net of refunds, of $153 million, $110 million, and $50 million during 2022, 2021, and 2020. In addition, the Company made cash income tax payments, net of refunds, of $8 million during 2020 related to discontinued operations. Such payments exclude income tax related payments made to or refunded by the Company’s former parent Cendant and Wyndham Hotels.
No definition available.
The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef