XML 44 R23.htm IDEA: XBRL DOCUMENT
v3.20.4

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2020
Income Tax Disclosure [Abstract] |
Income Taxes | 16. Income Taxes The components of income tax expense (benefit) were as follows:
| Successor |  |  | Predecessor
Total Income Tax Expense (Benefit) | Year Ended December 31, 2020 |  | Year Ended December 31, 2019 |  | Five Months Ended December 31, 2018 |  |  | Seven Months Ended July 31, 2018
Current Income Taxes |  |  |  |  |  |  |  |
Federal | $ | (3) |  |  | $ | 19 |  |  | $ | — |  |  |  | $ | (14) |
State | 92 |  |  | 74 |  |  | — |  |  |  | (1) |
Total current income taxes | 89 |  |  | 93 |  |  | — |  |  |  | (15) |
Deferred Income Taxes |  |  |  |  |  |  |  |
Federal | 86 |  |  | (298) |  |  | (1,015) |  |  |  | 54 |
State | (83) |  |  | (68) |  |  | (6) |  |  |  | 9 |
Total deferred income taxes | 3 |  |  | (366) |  |  | (1,021) |  |  |  | 63 |
Total income tax expense (benefit) | $ | 92 |  |  | $ | (273) |  |  | $ | (1,021) |  |  |  | $ | 48 |
The following table presents a reconciliation of the income tax provision computed at the U.S. federal statutory tax rate to the actual effective tax rate:
| Successor |  |  | Predecessor
Reconciliation of the Income Tax Provision | Year Ended December 31, 2020 |  | Year Ended December 31, 2019 |  | Five Months Ended December 31, 2018 |  |  | Seven Months Ended July 31, 2018
Tax Expense (Benefit) at Federal Statutory Rate | $ | 84 |  |  | 21.0 | % |  | $ | (1) |  |  | 21.0 | % |  | $ | (29) |  |  | 21.0 | % |  |  | $ | 42 |  |  | 21.0 | %
Effect of: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
State taxes, net of federal benefit | 7 |  |  | 1.6 | % |  | 5 |  |  | (141.2) | % |  | (6) |  |  | 4.2 | % |  |  | 8 |  |  | 3.8 | %
Non-controlling interests | — |  |  | — | % |  | 1 |  |  | (21.1) | % |  | — |  |  | — | % |  |  | — |  |  | — | %
Change in valuation allowance | — |  |  | — | % |  | (285) |  |  | 8066.4 | % |  | (990) |  |  | 720.0 | % |  |  | — |  |  | — | %
Deferred adjustments | (5) |  |  | (1.1) | % |  | 2 |  |  | (64.1) | % |  | 3 |  |  | (1.8) | % |  |  | (1) |  |  | (0.5) | %
Nondeductible items | 7 |  |  | 1.7 | % |  | 4 |  |  | (136.5) | % |  | 1 |  |  | (1.0) | % |  |  | 7 |  |  | 3.3 | %
Other, net | (1) |  |  | (0.2) | % |  | 1 |  |  | (5.7) | % |  | — |  |  | — | % |  |  | (8) |  |  | (3.8) | %
Total income tax expense (benefit) | $ | 92 |  |  | 23.0 | % |  | $ | (273) |  |  | 7718.8 | % |  | $ | (1,021) |  |  | 742.4 | % |  |  | $ | 48 |  |  | 23.8 | %
In 2020, the effective tax rate differed from the statutory tax rate primarily due to state tax adjustments and permanent differences such as nondeductible executive compensation and nondeductible penalties. In 2019, the effective tax rate differed from the statutory tax rate primarily due to the release of the valuation allowance associated with the net operating loss (“NOL”) carryforwards of WMIH and state tax adjustments. The effective tax rate for the five months ended December 31, 2018 differed from the statutory tax rate primarily due to the reversal of the valuation allowance associated with the NOL carryforwards of WMIH, permanent differences including executive compensation disallowed under Internal Revenue Code Section 162(m), penalties and nondeductible meals and entertainment expenses. In the assessment of whether a valuation allowance was required as of December 31, 2020, the Company considered the four sources of taxable income, as follows, under ASC 740-10-30-18: 1.Taxable income in prior carryback year(s) if carryback is permitted under the tax law; 2.Future reversals of existing taxable temporary differences; 3.Tax-planning strategies; and 4.Future taxable income exclusive of reversing temporary differences and carryforwards. As part of the CARES Act enacted on March 27, 2020, the Company noted provisions allowing certain NOLs to be carried back and determined it does not have NOLs available for carryback as a result of this change in law. In determining the appropriate deferred tax asset valuation allowance as of December 31, 2020, the Company considered and evaluated the remaining three sources of income. The Company considered the future reversals of existing taxable temporary differences and identified tax-planning strategies that were considered prudent and feasible. In addition, the Company considered: 1.Internal forecasts of future pre-tax income exclusive of reversing temporary differences and carryforwards; 2.The nature and timing of future reversals of existing temporary differences; 3.Future originating temporary and permanent differences; and 4.NOL carryforward expiration dates. Consistent with the prior year analysis, the Company based its projection of future taxable income on historical pre-tax income and assumed a steady state of operations that would generate cash flows and liquidity sufficient to maintain current operations. The Company considered other factors in its determination of future taxable income that was demonstrated by historical performance. As a result, the Company still believes it is more likely than not that its deferred tax assets will be realized prior to its expiration except for federal 382 limited NOLs and immaterial state NOL carryforwards that begin to expire with the 2020 tax year if unused. A federal and state valuation allowance of $7 and $2, respectively, was recorded as of December 31, 2020 and 2019 related to these NOL carryforwards. The Company does not expect any future tax loss limitations under Sections 382 and 384 that would impact its utilization of remaining federal NOL carryforwards. Accordingly, the Company has federal NOL carryforwards (pre-tax) of approximately $2.6 billion and $4.7 billion as of December 31, 2020 and 2019, respectively. It is expected that the federal NOL carryforwards will begin to expire beginning with the 2026 tax year, if unused. The Company also has immaterial state NOL carryforwards that begin to expire with the 2020 tax year, if unused. Temporary differences and carryforwards that give rise to deferred tax assets and liabilities are comprised of the following:
| Successor
Deferred Tax Assets and Liabilities | December 31, 2020 |  | December 31, 2019
Deferred Tax Assets |  |  |
Effect of: |  |  |
Goodwill and intangible assets | $ | 728 |  |  | $ | 364 |
Loss carryforwards (federal, state & capital) | 558 |  |  | 998 |
Loss reserves | 115 |  |  | 108 |
Reverse mortgage interests | 38 |  |  | 44 |
Lease liability | 26 |  |  | 32 |
Accruals | 24 |  |  | 16 |
Other, net | 15 |  |  | 16 |
Total deferred tax assets | 1,504 |  |  | 1,578 |
Deferred Tax Liabilities |  |  |
MSR amortization and mark-to-market, net | (117) |  |  | (181) |
Right-of-use assets | (23) |  |  | (29) |
Depreciation and amortization, net | (13) |  |  | (12) |
Prepaid assets | (2) |  |  | (2) |
Total deferred tax liabilities | (155) |  |  | (224) |
Valuation allowance | (9) |  |  | (9) |
Deferred tax assets, net | $ | 1,340 |  |  | $ | 1,345 |
The Company elected to account for the Global Intangible Low-Taxed Income (“GILTI”) tax expense in the period in which it is incurred. As a result, no deferred tax impact of GILTI has been provided in the consolidated financial statements. The Company files income tax returns in the U.S. federal jurisdiction and numerous U.S. state jurisdictions. With few exceptions, as of December 31, 2020, the Company is no longer subject to U.S. federal and state income tax examinations for tax years prior to 2017. As of December 31, 2020 and 2019, the Company had no unrecognized tax benefits recorded related to uncertain tax positions. The following is a tabular reconciliation of the beginning and ending balances of the total amounts of unrecognized tax benefits, excluding interest and penalties, for the Predecessor:
| Predecessor
Unrecognized Tax Benefits | Seven Months Ended July 31, 2018
Balance - beginning of period | $ | 17 |
Decreases in tax positions of prior years | (17) |
Balance - end of period | $ | — |
As of December 31, 2017, the Predecessor recorded $19 of unrecognized tax benefits related to uncertain tax positions, including $2 in interest and penalties. In the period ended March 31, 2018 the Predecessor took certain actions to remediate the uncertain tax position that existed as of the prior period. As a result, the Predecessor recognized all of the unrecognized tax benefits and recorded an income tax benefit of approximately $6, exclusive of any benefits related to interest and penalties in the period ended March 31, 2018.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition 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. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration