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Income Taxes | 12 Months Ended
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Dec. 31, 2020
Income Tax Disclosure [Abstract] |
Income Taxes | NOTE 10 — INCOME TAXES The Company recognizes deferred income tax assets, net of applicable reserves, related to net operating losses, tax credit carryforwards and certain temporary differences. The Company recognizes future tax benefits to the extent that realization of such benefit is more likely than not. Otherwise, a valuation allowance is applied. Income (loss) before income taxes for domestic and foreign operations consisted of the following:
|  | Year Ended December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
|  | (In thousands) |
Domestic operations |  | $ | (665,376 | ) |  | $ | 2,717,756 |  |  | $ | 660,832 |
Foreign operations |  |  | (846,103 | ) |  |  | 128,969 |  |  |  | (26,826 | )
|  | $ | (1,511,479 | ) |  | $ | 2,846,725 |  |  | $ | 634,006 |
The benefit (provision) for income taxes attributable to income (loss) before income taxes is as follows:
|  | Year Ended December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
Federal: |  | (In thousands) |
Current |  | $ | 207,544 |  |  | $ | (4,928 | ) |  | $ | 11,991 |
Deferred (excluding separate components) |  |  | 19,852 |  |  |  | (537,993 | ) |  |  | (143,468 | )
Deferred – valuation allowance |  |  | (42,109 | ) |  |  | (20,175 | ) |  |  | (19,753 | )
Other noncurrent |  |  | 4,922 |  |  |  | (5,745 | ) |  |  | 576 |
Benefit (provision) for federal income taxes |  |  | 190,209 |  |  |  | (568,841 | ) |  |  | (150,654 | )
State: |  |  |  |  |  |  |  |  |  |  |  |
Current |  |  | (816 | ) |  |  | (22,685 | ) |  |  | (12,564 | )
Deferred (excluding separate components) |  |  | (33,087 | ) |  |  | (32,793 | ) |  |  | (12,731 | )
Deferred – operating loss carryforward |  |  | 47,728 |  |  |  | (5,241 | ) |  |  | (29,490 | )
Deferred – valuation allowance |  |  | (3,375 | ) |  |  | (191 | ) |  |  | 41,068 |
Other noncurrent |  |  | (946 | ) |  |  | (1,401 | ) |  |  | (1,334 | )
Benefit (provision) for state income taxes |  |  | 9,504 |  |  |  | (62,311 | ) |  |  | (15,051 | )
Foreign: |  |  |  |  |  |  |  |  |  |  |  |
Current |  |  | (828 | ) |  |  | (2,454 | ) |  |  | (2,037 | )
Deferred (excluding separate components) |  |  | 4,206 |  |  |  | 44,374 |  |  |  | 63,827 |
Deferred – operating loss carryforward |  |  | 39,920 |  |  |  | 32,915 |  |  |  | 30,574 |
Deferred – valuation allowance |  |  | (51,439 | ) |  |  | (76,028 | ) |  |  | 23,229 |
Benefit (provision) for foreign income taxes |  |  | (8,141 | ) |  |  | (1,193 | ) |  |  | 115,593 |
|  | $ | 191,572 |  |  | $ | (632,345 | ) |  | $ | (50,112 | )
A reconciliation of the federal income tax statutory rate and the Company’s effective tax rate is as follows:
| Year Ended December 31, |
| 2020 |  |  | 2019 |  |  | 2018 |
Federal income tax statutory rate |  | 21.0 | % |  |  | 21.0 | % |  |  | 21.0 | %
Net operating loss carryback rate differential |  | 5.5 |  |  |  | — |  |  |  | — |
Non-controlling interest |  | 1.6 |  |  |  | (0.8 | ) |  |  | (2.4 | )
Foreign jurisdiction income/losses taxed at other than U.S. statutory rate |  | (12.5 | ) |  |  | (0.5 | ) |  |  | (9.5 | )
Federal valuation allowance |  | (2.8 | ) |  |  | 0.7 |  |  |  | 3.1 |
Macau dividend tax |  | — |  |  |  | — |  |  |  | (6.4 | )
State taxes, net |  | 0.5 |  |  |  | 1.7 |  |  |  | 1.9 |
General business credits |  | 0.3 |  |  |  | (0.5 | ) |  |  | (2.9 | )
Stock-based compensation |  | — |  |  |  | (0.1 | ) |  |  | (1.2 | )
Non-deductible employee dining facility costs |  | 0.2 |  |  |  | 0.2 |  |  |  | 1.4 |
Permanent and other items |  | (1.1 | ) |  |  | 0.5 |  |  |  | 2.9 |
|  | 12.7 | % |  |  | 22.2 | % |  |  | 7.9 | %
The tax-effected components of the Company’s net deferred tax liability are as follows:
|  | December 31, |
|  | 2020 |  |  | 2019 |
Deferred tax assets – federal and state: |  | (In thousands) |
Bad debt reserve |  | $ | 25,287 |  |  | $ | 25,085 |
Deferred compensation |  |  | 6,331 |  |  |  | 7,918 |
Net operating loss carryforward |  |  | 57,419 |  |  |  | 19,265 |
Accruals, reserves and other |  |  | 106,801 |  |  |  | 97,590 |
Stock-based compensation |  |  | 18,227 |  |  |  | 18,882 |
Lease liabilities |  |  | 1,972,343 |  |  |  | 1,020,171 |
Long-term debt |  |  | 10,907 |  |  |  | 2,022 |
Tax credits |  |  | 3,095,856 |  |  |  | 2,600,142 |
|  |  | 5,293,171 |  |  |  | 3,791,075 |
Less: Valuation allowance |  |  | (2,720,008 | ) |  |  | (2,469,907 | )
|  |  | 2,573,163 |  |  |  | 1,321,168 |
Deferred tax assets – foreign: |  |  |  |  |  |  |  |
Bad debt reserve |  |  | 2,106 |  |  |  | 1,682 |
Net operating loss carryforward |  |  | 180,143 |  |  |  | 140,223 |
Accruals, reserves and other |  |  | 7,814 |  |  |  | 13,112 |
Property and equipment |  |  | 17,890 |  |  |  | 10,125 |
Stock-based compensation |  |  | 7,163 |  |  |  | 6,487 |
Lease liabilities |  |  | 1,368 |  |  |  | 1,213 |
|  |  | 216,484 |  |  |  | 172,842 |
Less: Valuation allowance |  |  | (155,587 | ) |  |  | (104,149 | )
|  |  | 60,897 |  |  |  | 68,693 |
Total deferred tax assets |  | $ | 2,634,060 |  |  | $ | 1,389,861 |
Deferred tax liabilities – federal and state: |  |  |  |  |  |  |  |
Property and equipment |  | $ | (1,349,355 | ) |  | $ | (1,599,948 | )
Investments in unconsolidated affiliates |  |  | (1,158,342 | ) |  |  | (496,501 | )
ROU assets |  |  | (1,860,195 | ) |  |  | (977,870 | )
Intangibles |  |  | (108,728 | ) |  |  | (112,380 | )
|  |  | (4,476,620 | ) |  |  | (3,186,699 | )
Deferred tax liabilities – foreign: |  |  |  |  |  |  |  |
Intangibles |  |  | (309,256 | ) |  |  | (307,728 | )
ROU Assets |  |  | (1,200 | ) |  |  | (1,940 | )
|  |  | (310,456 | ) |  |  | (309,668 | )
Total deferred tax liability |  | $ | (4,787,076 | ) |  | $ | (3,496,367 | )
Net deferred tax liability |  | $ | (2,153,016 | ) |  | $ | (2,106,506 | )
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law. The CARES Act contains certain income tax provisions that are beneficial to the Company; namely, the relaxation of the interest expense deduction limitation for the 2019 and 2020 tax years and the allowance of a five-year carryback of net operating losses (“NOLs”) incurred during tax years 2018 through 2020. The Company has recorded a federal income tax receivable of $206 million to reflect the carryback of its 2020 NOL, with a corresponding increase in benefit for income taxes during the year ended December 31, 2020. Furthermore, since the NOL was carried back to tax years when the federal income tax rate was 35%, compared to the 21% rate currently in effect, the Company realized $83 million more income tax benefit than if it would have only been able to carry the NOL forward. The Company has recorded a valuation allowance of $2.7 billion on its foreign tax credit (“FTC”) carryover of $3.1 billion as of December 31, 2020, resulting in an FTC net deferred tax asset of $379 million. The FTCs are attributable to the Macau Special Gaming Tax, which is 35% of gross gaming revenue in Macau. Because MGM Grand Paradise is presently exempt from the Macau 12% complementary tax on gaming profits, the Company believes that payment of the Macau Special Gaming Tax qualifies as a tax paid in lieu of an income tax that is creditable against U.S. taxes. While the Company generally does not expect to generate new FTC carryovers after the year ended December 31, 2017, it will be able to utilize its existing FTC carryovers to the extent that it has active foreign source income during the 10-year FTC carryforward period. Such foreign source income includes the recapture, to the extent of U.S. taxable income, of overall domestic losses that totaled $1.5 billion at December 31, 2020. The Company relies on future U.S. source operating income in assessing utilization of the overall domestic losses and, by extension, future FTC realization during the 10-year FTC carryover period. The FTC carryovers will expire if not utilized as follows: $340 million in 2022; $976 million in 2023; $769 million in 2024; $674 million in 2025; $134 million in 2026; and $200 million in 2027. The Company’s assessment of the realization of its FTC deferred tax asset is based on available evidence, including assumptions concerning future U.S. operating profits and foreign source income. As a result, significant judgment is required in assessing the possible need for a valuation allowance and changes to such assumptions could result in a material change in the valuation allowance with a corresponding impact on the provision for income taxes in the period including such change. On March 30, 2020, MGM Grand Paradise was granted an extension of its exemption from the Macau 12% complementary tax on gaming profits through June 26, 2022, concurrent with the end of the term of its gaming subconcession. The prior exemption was set to expire on March 31, 2020. The Company previously re-measured its net deferred tax liability for MGM Grand Paradise during 2019 assuming it would receive the complementary tax exemption extension through June 26, 2022 as a result of required non-discriminatory treatment among gaming concessionaires and subconcessionaires under Macanese law. As a result, no additional remeasurement is required for the year ended December 31, 2020. The Company continues to assume that MGM Grand Paradise will pay the Macau 12% complementary tax on gaming profits for all periods beyond June 26, 2022 and has factored that assumption into the measurement of Macau deferred tax assets and liabilities. Absent the exemption from complementary tax on gaming profits, “Net income attributable to MGM Resorts International” would have increased by $4 million and decreased by $54 million in 2020 and 2019, respectively, and diluted earnings per share would have increased by $0.01 and decreased $0.10 in 2020 and 2019, respectively. Non-gaming operations remain subject to the Macau complementary tax. MGM Grand Paradise had at December 31, 2020 a complementary tax NOL carryforward of $1.5 billion resulting from non-gaming operations that will expire if not utilized in years 2021 through 2023. MGM Grand Paradise’s exemption from the 12% complementary tax on gaming profits does not apply to dividend distributions of such profits to MGM China. MGM Grand Paradise has had an agreement with the Macau government to settle the 12% complementary tax that would otherwise be due by its shareholder, MGM China, on distributions of its gaming profits by paying a flat annual payment (“annual fee arrangement”) regardless of the amount of distributable dividends. Such annual fee arrangement covers the distributions of gaming profits earned for the period of January 1, 2017 through March 31, 2020. Payments of approximately $1 million were made for 2017 through 2019 and a payment of approximately $0.3 million was made for the first quarter 2020. MGM Grand Paradise has applied for an extension of the annual fee arrangement to cover distributions of gaming profits to be earned through June 26, 2022. Until the extension is granted, the 12% complementary tax will accrue on distributions of gaming profits earned after March 31, 2020; however, no amounts are accrued for the year ended December 31, 2020 since MGM Grand Paradise generated losses due to the impact of COVID-19. The Company has NOLs in certain of the states in which it operates that total $885 million as of December 31, 2020, which equates to deferred tax assets of $57 million after federal tax effect and before valuation allowance. The majority of these NOL carryforwards will expire if not utilized by 2025 through 2040 with the remaining being carried forward indefinitely. The Company has provided a valuation allowance of $6 million on certain of its state deferred tax assets, including a portion of NOLs described above. In addition, there is a valuation allowance of $153 million on certain Macau deferred tax assets, and a valuation allowance of $3 million on Hong Kong NOLs because the Company believes these assets do not meet the “more likely than not” criteria for recognition. A reconciliation of the beginning and ending amounts of gross unrecognized tax benefits is as follows:
| Year Ended December 31, |
| 2020 |  |  | 2019 |  |  | 2018 |
| (In thousands) |
Gross unrecognized tax benefits at January 1 | $ | 33,298 |  |  | $ | 24,464 |  |  | $ | 18,588 |
Gross increases - prior period tax positions |  | 3,717 |  |  |  | 8,960 |  |  |  | 5,345 |
Gross decreases - prior period tax positions |  | (1,398 | ) |  |  | (1,006 | ) |  |  | (957 | )
Gross increases - current period tax positions |  | — |  |  |  | 880 |  |  |  | 1,488 |
Gross unrecognized tax benefits at December 31 | $ | 35,617 |  |  | $ | 33,298 |  |  | $ | 24,464 |
The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $9 million at both December 31, 2020 and 2019. The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense, which were not material as of December 31, 2020, 2019 or 2018. The Company files income tax returns in the U.S. federal jurisdiction, various state and local jurisdictions, and foreign jurisdictions, although the income taxes paid in foreign jurisdictions are not material. As of December 31, 2020, the IRS can no longer assess tax with respect to years ended prior to 2014; however, the IRS may adjust NOLs generated in such years that were utilized in 2014. The IRS examination of the Company’s 2014 U.S. consolidated federal income tax return has been closed and the case has been submitted to the IRS Appeals Office for resolution. At issue are deductions the Company claimed as repairs expense when it implemented new tangible property regulations in such year. The Company has reached a tentative settlement with the IRS Appeals Office on these matters and anticipates signing a closing agreement during the first quarter of 2021. The Company does not anticipate any cash tax payments resulting from the settlement. As of December 31, 2020, other than adjustments resulting from the federal and state income tax audits discussed herein, the various state and local tax jurisdictions in which the Company files tax returns can no longer assess tax with respect to years ended prior to 2016. However, such jurisdictions may adjust NOLs generated in such years that are utilized in subsequent years. The Company has received a preliminary audit determination with respect to the examination of income tax returns filed in the state of Michigan for tax years 2014 through 2018 and has requested an informal conference with the Michigan Department of Treasury Hearings Division to contest the findings of the audit. The Company does not anticipate any material adjustments upon resolution of this audit. In addition, one of the Company’s subsidiaries, Marina District Development Company, LLC, had income tax returns under examination in the state of New Jersey for tax years 2015 through 2018 which were closed during the first quarter of 2021 with no change. The Company believes that it is reasonably possible that the total amounts of unrecognized tax benefits at December 31, 2020 may decrease by up to $30 million within the next twelve months on the expectation during such period of settlements of the IRS and New Jersey examinations described above.

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- 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
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