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INCOME TAXES | 12 Months Ended
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Dec. 31, 2021
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES The components of our earnings (losses) before income taxes for the last three fiscal years consisted of:
($ in millions) | 2021 |  | 2020 |  | 2019
U.S. | $ | 890 |  |  | $ | (320) |  |  | $ | 549 |
Non-U.S. | 290 |  |  | (146) |  |  | 1,050 |
| $ | 1,180 |  |  | $ | (466) |  |  | $ | 1,599 |
Our (provision) benefit for income taxes for the last three fiscal years consisted of:
($ in millions) | 2021 |  | 2020 |  | 2019
Current | -U.S. Federal | $ | 99 |  |  | $ | 9 |  |  | $ | (272) |
| -U.S. State | 24 |  |  | (41) |  |  | (57) |
| -Non-U.S. | (86) |  |  | (78) |  |  | (161) |
|  | 37 |  |  | (110) |  |  | (490) |
Deferred | -U.S. Federal | (122) |  |  | 180 |  |  | 141 |
| -U.S. State | (37) |  |  | 81 |  |  | 39 |
| -Non-U.S. | 41 |  |  | 48 |  |  | (16) |
|  | (118) |  |  | 309 |  |  | 164 |
|  | $ | (81) |  |  | $ | 199 |  |  | $ | (326) |
Unrecognized Tax Benefits The following table reconciles our unrecognized tax benefit balance for each year from the beginning of 2019 to the end of 2021:
($ in millions) | Amount
Unrecognized tax benefit at beginning of 2019 | $ | 623 |
Change attributable to tax positions taken in prior years | (13) |
Change attributable to tax positions taken during the current period | 13 |
Decrease attributable to settlements with taxing authorities | (54) |
Unrecognized tax benefit at year-end 2019 | 569 |
Change attributable to tax positions taken in prior years | (66) |
Change attributable to tax positions taken during the current period | 4 |
Decrease attributable to settlements with taxing authorities | (43) |
Unrecognized tax benefit at year-end 2020 | 464 |
Change attributable to tax positions taken in prior years | (134) |
Change attributable to tax positions taken during the current period | — |
Decrease attributable to settlements with taxing authorities | (48) |
Unrecognized tax benefit at year-end 2021 | $ | 282 |
Our unrecognized tax benefit balances included $266 million at year-end 2021, $410 million at year-end 2020, and $498 million at year-end 2019 of tax positions that, if recognized, would impact our effective tax rate. It is reasonably possible that within the next 12 months we will reach resolution of income tax examinations in one or more jurisdictions. The actual amount of any change to our unrecognized tax benefits could vary depending on the timing and nature of the settlement. Therefore, an estimate of the change cannot be provided. We recognize accrued interest and penalties for our unrecognized tax benefits as a component of tax expenses. Related interest (benefit) expense totaled $(21) million in 2021, $(15) million in 2020, and $28 million in 2019. We accrued interest and penalties related to our unrecognized tax benefits of approximately $45 million at year-end 2021 and $85 million at year-end 2020. We file income tax returns, including returns for our subsidiaries, in various jurisdictions around the world. The U.S. Internal Revenue Service (“IRS”) has examined our federal income tax returns, and as of year-end 2021, we have settled all issues for Marriott for tax years through 2015 and for tax year 2018. For Starwood, we have settled all tax years through 2016, the year the acquisition was completed. Our Marriott 2016, 2017, and 2019 through 2021 tax year audits are currently ongoing. Various foreign, state, and local income tax returns are also under examination by the applicable taxing authorities. Deferred Income Taxes Deferred income tax balances reflect the effects of temporary differences between the carrying amounts of assets and liabilities and their tax bases, as well as from net operating loss and tax credit carry-forwards. We state those balances at the enacted tax rates we expect will be in effect when we pay or recover the taxes. Deferred income tax assets represent amounts available to reduce income taxes we will pay on taxable income in future years. We evaluate our ability to realize these future tax deductions and credits by assessing whether we expect to have sufficient future taxable income from all sources, including reversal of taxable temporary differences, forecasted operating earnings, and available tax planning strategies to utilize these future deductions and credits. We establish a valuation allowance when we no longer consider it more likely than not that a deferred tax asset will be realized. The following table presents the tax effect of each type of temporary difference and carry-forward that gave rise to significant portions of our deferred tax assets and liabilities as of year-end 2021 and year-end 2020:
($ in millions) | At Year-End 2021 |  | At Year-End 2020
Deferred Tax Assets |  |  |
Employee benefits | $ | 235 |  |  | $ | 262 |
Net operating loss carry-forwards | 771 |  |  | 818 |
Accrued expenses and other reserves | 191 |  |  | 214 |
Receivables, net | 11 |  |  | 12 |
Tax credits | 53 |  |  | 49 |
Loyalty Program | 181 |  |  | 367 |
Deferred income | 98 |  |  | 69 |
Lease liabilities | 336 |  |  | 252 |
Interest Limitation | 163 |  |  | — |
Other | 34 |  |  | 82 |
Deferred tax assets | 2,073 |  |  | 2,125 |
Valuation allowance | (984) |  |  | (1,009) |
Deferred tax assets after valuation allowance | 1,089 |  |  | 1,116 |
Deferred Tax Liabilities |  |  |
Equity method investments | (40) |  |  | (29) |
Property and equipment | (9) |  |  | (42) |
Intangibles | (666) |  |  | (663) |
Right-of-use assets | (290) |  |  | (197) |
Self-insurance | (25) |  |  | (19) |
Deferred tax liabilities | (1,030) |  |  | (950) |
Net deferred taxes | $ | 59 |  |  | $ | 166 |
Our valuation allowance is primarily attributable to non-U.S. net operating loss carry-forwards. At year-end 2021, we had approximately $36 million of tax credits that will expire through 2031 and $18 million of tax credits that do not expire. We recorded $51 million of net operating loss benefits in 2021 and $44 million in 2020. At year-end 2021, we had approximately $3,778 million of primarily state and foreign net operating losses, of which $1,738 million will expire through 2041. We made no provision for U.S. income taxes or additional non-U.S. taxes on certain undistributed earnings of non-U.S. subsidiaries. These earnings could become subject to additional taxes if the non-U.S. subsidiaries dividend or loan those earnings to an affiliate or if we sell our interests in the non-U.S. subsidiaries. We cannot practically estimate the amount of additional taxes that might be payable on the undistributed earnings. Reconciliation of U.S. Federal Statutory Income Tax Rate to Actual Income Tax Rate The following table reconciles the U.S. statutory tax rate to our effective income tax rate for the last three fiscal years:
| 2021 |  | 2020 |  | 2019
U.S. statutory tax rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
U.S. state income taxes, net of U.S. federal tax benefit | 2.7 |  |  | 3.8 |  |  | 1.6 |
Non-U.S. income | (0.5) |  |  | 12.5 |  |  | (3.3) |
Change in valuation allowance | (0.7) |  |  | (20.0) |  |  | 3.4 |
Change in uncertain tax positions | (12.0) |  |  | 12.2 |  |  | 1.9 |
Permanent items | (0.5) |  |  | 9.4 |  |  | 1.3 |
Tax on asset dispositions | (0.7) |  |  | 0.0 |  |  | (0.7) |
Excess tax benefits related to equity awards | (2.8) |  |  | 6.4 |  |  | (3.2) |
U.S. tax on foreign earnings | 0.4 |  |  | (3.0) |  |  | 0.1 |
Other, net | (0.1) |  |  | 0.6 |  |  | (1.7) |
Effective rate | 6.8 | % |  | 42.9 | % |  | 20.4 | %
The non-U.S. income tax benefit presented in the table above includes tax-exempt income in Hong Kong and Singapore, and a deemed interest deduction in Switzerland, which collectively represented 3.2% in 2021, 12.9% in 2020, and 8.8% in 2019. We included the impact of these items in the non-U.S. income line above because we consider them to be equivalent to a reduction of the statutory tax rates in these jurisdictions. Pre-tax income in Switzerland, Singapore, and Hong Kong totaled $255 million in 2021, $314 million in 2020, and $709 million in 2019. The non-U.S. income tax benefit also includes U.S. income tax expense on non-U.S. operations, which represents (0.5)% in 2021, 0.8% in 2020, and 2.0% in 2019. We included the impact of this tax in the non-U.S. income line above because we consider this tax to be an integral part of the foreign taxes. Other Information We paid cash for income taxes, net of refunds, of $362 million in 2021, $279 million in 2020, and $526 million in 2019.

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