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INCOME TAXES
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
INCOME TAXES 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,
 202220212020
 (In thousands)
Domestic operations$4,251,418 $2,094,324 $(665,376)
Foreign operations(3,347,619)(632,520)(846,103)
 $903,799 $1,461,804 $(1,511,479)

The benefit (provision) for income taxes attributable to income (loss) before income taxes is as follows:

 
Year Ended December 31,
 202220212020
Federal:(In thousands)
Current$(206,426)$(8,984)$207,544 
Deferred (excluding separate components)(678,371)(189,657)19,852 
Deferred – valuation allowance
5,346 (14,967)(42,109)
Other noncurrent18,326 (14,262)4,922 
Benefit (provision) for federal income taxes(861,125)(227,870)190,209 
State:
Current(10,389)5 (816)
Deferred (excluding separate components)(33,878)(28,068)(33,087)
Deferred – operating loss carryforward
(15,442)(27,936)47,728 
Deferred – valuation allowance
(2,345)(601)(3,375)
Other noncurrent— 13,260 (946)
Benefit (provision) for state income taxes(62,054)(43,340)9,504 
Foreign:
Current(2,259)(3,717)(828)
Deferred (excluding separate components)311,614 8,943 4,206 
Deferred – operating loss carryforward
6,331 5,793 39,920 
Deferred – valuation allowance
(89,575)6,776 (51,439)
Benefit (provision) for foreign income taxes226,111 17,795 (8,141)
 $(697,068)$(253,415)$191,572 
A reconciliation of the federal income tax statutory rate and the Company’s effective tax rate is as follows:
 
Year Ended December 31,
 202220212020
Federal income tax statutory rate21.0 %21.0 %21.0 %
Net operating loss carryback rate differential— — 5.5 
Noncontrolling interest(2.4)(3.2)1.6 
Foreign income/losses taxed at other than U.S. statutory rate53.3 8.2 (12.5)
Federal valuation allowance(0.6)1.0 (2.8)
State taxes, net5.5 2.3 0.5 
Gain on consolidation of CityCenter, net— (10.1)— 
General business credits(1.5)(0.3)0.3 
Permanent and other items1.8 (1.6)(0.9)
 77.1 %17.3 %12.7 %

The tax-effected components of the Company’s net deferred tax liability are as follows:
 December 31,
 20222021
Deferred tax assets – federal and state:(In thousands)
Net operating loss carryforward$23,151 $35,350 
Accruals, reserves and other9,481 39,163 
Lease liabilities5,830,582 2,714,308 
Tax credits2,764,266 3,060,733 
 8,627,480 5,849,554 
Less: Valuation allowance(2,641,770)(2,735,451)
 5,985,710 3,114,103 
Deferred tax assets – foreign:
Net operating loss carryforward198,686 185,936 
Accruals, reserves and other12,315 15,228 
Property and equipment32,585 27,366 
Lease liabilities1,219 1,458 
 244,805 229,988 
Less: Valuation allowance(244,805)(148,811)
 — 81,177 
Total deferred tax assets$5,985,710 $3,195,280 
Deferred tax liabilities – federal and state:
Property and equipment$(330,857)$(1,361,356)
Investments in unconsolidated affiliates(585,275)(1,252,816)
Investment in equity securities(2,236,093)— 
ROU assets(5,612,241)(2,570,620)
Intangibles(160,991)(141,934)
 (8,925,457)(5,326,726)
Deferred tax liabilities – foreign:
Intangibles and other(29,696)(307,918)
 (29,696)(307,918)
Total deferred tax liability(8,955,153)(5,634,644)
Net deferred tax liability$(2,969,443)$(2,439,364)
Deferred income tax valuation allowance consisted of the following:
Balance at Beginning of PeriodIncreaseDecreaseBalance at End of Period
Deferred income tax valuation allowance:(In thousands)
Year Ended December 31, 2022$2,884,262 $2,313 $— $2,886,575 
Year Ended December 31, 20212,875,595 8,667 — 2,884,262 
Year Ended December 31, 20202,574,056 301,539 — 2,875,595 

The Company has recorded a valuation allowance of $2.6 billion on its foreign tax credit (“FTC”) carryover of $2.8 billion as of December 31, 2022, resulting in an FTC net deferred tax asset of approximately $130 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 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 it has active foreign source income during the 10-year FTC carryforward period. Such foreign source income includes the recapture, to the extent of a portion of U.S. taxable income each year, of overall domestic losses that totaled approximately $356 million at December 31, 2022. 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: $976 million in 2023; $780 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 September 5, 2022, MGM Grand Paradise was granted an extension of its exemption from the Macau 12% complementary tax on gaming profits through December 31, 2022, concurrent with the end of the term of its gaming subconcession. Absent the exemption from complementary tax on gaming profits, “Net income attributable to MGM Resorts International” would have increased by $3 million in 2022 and decreased by $10 million in 2021 and diluted earnings per share would have increased by $0.01 in 2022 and decreased by $0.02 in 2021. The Company continues to assume that MGM Grand Paradise will pay the Macau 12% complementary tax on gaming profits for all periods beyond December 31, 2022 and has factored that assumption into the measurement of Macau deferred tax assets and liabilities.

Non-gaming operations remain subject to the Macau complementary tax. At December 31, 2022, foreign net operating loss carryforwards primarily consisted of a complementary tax NOL carryforward of $1.6 billion at MGM Grand Paradise resulting from non-gaming operations that will expire if not utilized in years 2023 through 2025.

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. Through the year ended December 31, 2022, in lieu of the 12% complementary tax that would otherwise be due by its shareholder, MGM China, on distributions of its gaming profits, MGM Grand Paradise agreed to pay a flat annual payment of approximately $2 million regardless of the amount of distributable dividends.

There is a $245 million valuation allowance on certain foreign deferred tax assets, which primarily relates to Macau deferred tax assets at MGM Grand Paradise. The valuation allowance on Macau deferred tax assets increased by $89 million during 2022 as a result of accelerating amortization for the remaining useful life of the MGM Grand Paradise gaming subconcession.

The Company has NOLs in some of the states in which it operates that total $373 million as of December 31, 2022, which equates to deferred tax assets of $23 million after federal tax effect and before valuation allowance. The NOL carryforwards in most of the states will expire, if not utilized, between 2025 through 2041. Otherwise, the NOL carryforward can be carried forward indefinitely. The Company has provided a valuation allowance of $8 million on some of its state deferred tax assets for the NOLs described above.
A reconciliation of the beginning and ending amounts of gross unrecognized tax benefits is as follows:
 
Year Ended December 31,
 2022 2021 2020
 (In thousands)
Gross unrecognized tax benefits at January 1$19,568 $35,617 $33,298 
Gross increases - prior period tax positions— 12,949 3,717 
Gross decreases - prior period tax positions(12,968)(13,388)(1,398)
Gross increases - current period tax positions285 654 — 
     Settlements with Taxing Authorities— (16,264)— 
Gross unrecognized tax benefits at December 31$6,885 $19,568 $35,617 

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $7 million and $11 million at December 31, 2022 and 2021, respectively. The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense, which were not material for each of the periods presented.

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, 2022, other than adjustments resulting from the federal and state income tax audits discussed herein, the federal, state, and local tax jurisdictions in which the Company files tax returns generally cannot assess tax with respect to years ended prior to 2016. However, NOLs generated or utilized in earlier years may be subject to adjustment.

The Company's 2015 through 2019 U.S. consolidated federal income tax returns are currently under examination by the IRS. Such examination is expected to close during 2023, and the Company does not anticipate any material adjustments upon resolution of the examination. The Company's income tax returns filed in New York City for the tax years 2017 through 2019 are currently under examination. Additionally, in 2022, the Company filed a complaint with the Michigan Court of Claims appealing some of the adjustments from the Michigan examination of tax years 2014 through 2018. The Company does not anticipate any material adjustments upon resolution of either matter.
During the twelve months ended December 31, 2022, the Company reversed $13 million of unrecognized tax benefit upon the resolution of a tax accounting method issue related to its customer loyalty program.