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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 the Company’s provision for income taxes for the years ended December 31, 2021, 2020 and 2019 are presented below.
Components of Income (Loss) Before Income Taxes | Years Ended December 31,
(In millions) | 2021 |  | 2020 |  | 2019
United States | $ | (1,272) |  |  | $ | (1,608) |  |  | $ | 125 |
Outside of the U.S. | 3 |  |  | 2 |  |  | — |
| $ | (1,269) |  |  | $ | (1,606) |  |  | $ | 125 |
Income Tax Provision (Benefit) | Years Ended December 31,
(In millions) | 2021 |  | 2020 |  | 2019
United States |  |  |  |  |
Current |  |  |  |  |
Federal | $ | (1) |  |  | $ | (43) |  |  | $ | 31 |
State & Local | (2) |  |  | (24) |  |  | 14 |
Deferred |  |  |  |  |
Federal | (219) |  |  | 208 |  |  | 5 |
State & Local | (106) |  |  | (11) |  |  | (6) |
Outside of the U.S. |  |  |  |  |
Current | 2 |  |  | 2 |  |  | — |
Deferred | 43 |  |  | — |  |  | — |
| $ | (283) |  |  | $ | 132 |  |  | $ | 44 |
Allocation of Income Tax Provision (Benefit) | Years Ended December 31,
(In millions) | 2021 |  | 2020 |  | 2019
Income tax provision (benefit) applicable to: |  |  |  |  |
Income from operations | $ | (283) |  |  | $ | 132 |  |  | $ | 44 |
Discontinued operations | 19 |  |  | (9) |  |  | — |
Other comprehensive income | 3 |  |  | 8 |  |  | — |
The following is a reconciliation of the statutory federal income tax rate to the Company’s effective tax rate for the years ended December 31, 2021, 2020 and 2019:
Effective Income Tax Rate Reconciliation | Years Ended December 31,
| 2021 |  | 2020 |  | 2019
Federal statutory rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State and local taxes | 4.2 | % |  | 5.4 | % |  | 5.5 | %
Stock compensation | 0.5 | % |  | (0.1) | % |  | 1.8 | %
Goodwill impairment and dispositions | — | % |  | (1.6) | % |  | 7.4 | %
Nondeductible transaction expenses | — | % |  | (0.5) | % |  | — | %
Nondeductible convertible notes costs | (3.3) | % |  | (1.0) | % |  | — | %
Decrease in uncertain tax positions | 0.4 | % |  | 0.9 | % |  | — | %
Change in tax rates from change in tax law | (1.2) | % |  | — | % |  | — | %
Deferred tax benefit of foreign subsidiaries held for sale | — | % |  | 1.0 | % |  | — | %
Valuation allowance | 2.6 | % |  | (33.9) | % |  | 1.8 | %
Deferred tax recognition on life insurance | (1.3) | % |  | — | % |  | — | %
Tax credits | 0.4 | % |  | 0.1 | % |  | (1.1) | %
Other | (1.0) | % |  | 0.5 | % |  | (1.2) | %
Effective income tax rate | 22.3 | % |  | (8.2) | % |  | 35.2 | %
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s net deferred taxes at December 31, 2021 and 2020 are as follows:
| As of December 31,
(In millions) | 2021 |  | 2020
Deferred tax assets: |  |  |
Loss carryforwards | $ | 1,006 |  |  | $ | 1,071 |
Foreign investment - held for sale | — |  |  | 74 |
Excess business interest expense | 180 |  |  | 61 |
Credit carryforwards | 114 |  |  | 106 |
Financing obligation | 2,517 |  |  | 2,557 |
Long-term lease obligation | 161 |  |  | 187 |
Other | 330 |  |  | 289 |
| 4,308 |  |  | 4,345 |
Deferred tax liabilities: |  |  |
Identified intangibles | (1,111) |  |  | (836) |
Other debt-related items | (35) |  |  | (108) |
Foreign investment - held for sale | (139) |  |  | — |
Fixed assets | (2,212) |  |  | (2,424) |
Right-of-use assets | (131) |  |  | (154) |
Other | (103) |  |  | (68) |
| (3,731) |  |  | (3,590) |
Valuation allowance | (1,840) |  |  | (1,921) |
Net deferred tax liabilities | $ | (1,263) |  |  | $ | (1,166) |
The net deferred tax liabilities above are presented in the Balance Sheets as follows:
| As of December 31,
(In millions) | 2021 |  | 2020
Deferred income taxes | $ | (1,111) |  |  | $ | (1,166) |
Assets held for sale | 7 |  |  | 1 |
Liabilities related to assets held for sale | (159) |  |  | (1) |
Net deferred tax liabilities | $ | (1,263) |  |  | $ | (1,166) |
As a result of the Merger, the Company assumed $767 million of additional net deferred tax liabilities, net of valuation allowances, plus $24 million in additional accruals for uncertain tax positions including accrued interest. As a result of the William Hill Acquisition, the Company assumed $377 million of additional net deferred tax liabilities net of valuation allowances, plus $34 million in additional accruals for uncertain tax positions including accrued interest. Of the deferred tax liabilities and uncertain tax positions recorded due to the William Hill Acquisition, $132 million and $34 million, respectively, have been presented in Liabilities related to assets held for sale. A valuation allowance is recognized if, based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax asset will not be realized. Management must analyze all available positive and negative evidence regarding realization of the deferred tax assets and make an assessment of the likelihood of sufficient future taxable income. We have provided a valuation allowance on certain federal, state, and foreign deferred tax assets that were not deemed realizable based upon estimates of future taxable income. As of December 31, 2021, the Company had federal and state net operating loss carryforwards of $2.4 billion and $9.4 billion, respectively. The federal and state net operating loss carryforwards include $450 million and $2.2 billion, respectively, that do not expire. The remaining federal and state net operating loss carryforwards will begin to expire in 2032 and 2022, respectively. As of December 31, 2021, the Company had federal general business tax credit and research tax credit carryforwards of $116 million, which begin to expire in 2029. As of December 31, 2021, the Company had foreign net operating loss carryforwards of $60 million. The foreign net operating loss carryforwards include $58 million that do not expire. The remaining $2 million foreign net operating losses begin to expire in 2033. In general, Section 382 of the Internal Revenue Code provides an annual limitation with respect to the ability of a corporation to utilize its net operating loss carryovers, as well as certain built-in losses, against future taxable income in the event of a change in ownership. The Merger in July 2020 and the William Hill Acquisition in April 2021 resulted in a change in ownership for purposes of Section 382, making its provisions applicable to the Company. However, it is unlikely that the annual limitation on tax attribute usage resulting from the acquisition will adversely affect the Company’s ability to utilize its net operating loss carryovers against its future taxable income.
Reconciliation of Unrecognized Tax Benefits | Years Ended December 31,
(In millions) | 2021 |  | 2020 |  | 2019
Balance as of beginning of year | $ | 137 |  |  | $ | — |  |  | $ | — |
Acquisition of Caesars Entertainment Corporation | — |  |  | 152 |  |  | — |
Acquisition of William Hill | 32 |  |  | — |  |  | — |
Additions based on tax positions related to the current year | 4 |  |  | — |  |  | — |
Additions for tax positions of prior years | 5 |  |  | 1 |  |  | — |
Reductions for tax positions for prior years | (8) |  |  | — |  |  | — |
Settlements | — |  |  | (4) |  |  | — |
Expiration of statutes | (13) |  |  | (12) |  |  | — |
Balance as of end of year | $ | 157 |  |  | $ | 137 |  |  | $ | — |
We classify reserves for tax uncertainties within Other long-term liabilities in our Balance Sheets, separate from any related income tax payable or Deferred income taxes. Included in the $157 million of unrecognized tax benefits as of the end of 2021 is $21 million related to discontinued operations. Reserve amounts relate to any potential income tax liabilities resulting from uncertain tax positions as well as potential interest or penalties associated with those liabilities. We accrue interest and penalties related to unrecognized tax benefits in income tax expense. During 2021, we increased our accrual by $20 million, primarily due to the William Hill Acquisition. During 2020, we increased our accrual by $137 million, primarily as a result of the Merger. There was no accrual during 2019. There was an accrual for the payment of interest and penalties of $2 million and $2 million as of December 31, 2021 and December 31, 2020, respectively. Included in the balances of unrecognized tax benefits as of December 31, 2021 and December 31, 2020 was $117 million and $123 million, respectively, of unrecognized tax benefits that, if recognized, would impact the effective tax rate. The Company, including its subsidiaries, files tax returns with federal, state and foreign jurisdictions. The Company does not have tax sharing agreements with the other members within the consolidated group. With few exceptions, the Company is no longer subject to US federal or state and local tax assessments by tax authorities for years before 2018. The tax years 2016 to 2021 remain subject to examination in Gibraltar and Malta. The tax years 2020 to 2021 remain subject to examination in the United Kingdom. We believe that it is reasonably possible that the unrecognized tax benefits liability will not materially change within the next 12 months. Audit outcomes and the timing of audit settlements are subject to significant uncertainty. Although we believe that adequate provision has been made for such issues, there is the possibility that the ultimate resolution of such issues could have an adverse effect on our earnings. Conversely, if these issues are resolved favorably in the future, the related provision would be reduced, thus having a favorable impact on earnings.

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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=121826272&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=122134291&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=121826272&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=122134291&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=121826272&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 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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