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Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Our income tax (benefit) expense consisted of the following for the years ended December 31 (in millions):
202120202019
Deferred:
Federal$(44)$(247)$119 
State(44)(82)20 
Deferred income tax (benefit) expense(88)(329)139 
Current:
Federal3 (199)36 
State5 (9)19 
Foreign(1)(2)5 
Current income tax expense (benefit)7 (210)60 
Total income tax (benefit) expense$(81)$(539)$199 
On March 27, 2020, the CARES Act was enacted in response to the COVID-19 pandemic. The CARES Act permits net operating loss (NOL) carryovers and carrybacks to offset 100% of taxable income for taxable years beginning before 2021. In addition, the CARES Act allows NOLs incurred in 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid incomes taxes. As of December 31, 2021, the Company has filed its Application for Tentative Refund.
Income tax (benefit) expense reconciles to the amount computed by applying the U.S. federal statutory income tax rate to (loss) income before income taxes for the years ended December 31 as follows (in millions):
202120202019
Income tax (benefit) expense at statutory rate$(55)$(398)$161 
State income tax, net of federal benefit(36)(71)31 
Nondeductible expenses5 5 8 
Net operating loss carryback— (73)— 
Foreign tax credit re-characterization— (13)— 
Foreign rate differential(5)2 (3)
Valuation allowance4 10 — 
Unrecognized tax benefit7 (3)— 
Other, net(1)2 2 
Total income tax (benefit) expense$(81)$(539)$199 
The components of our deferred tax assets and liabilities as of December 31 are as follows (in millions):
20212020
Deferred tax assets:
Deferred revenue/gains$301 $161 
Employee benefits70 71 
Foreign tax credit83 77 
Other4 4 
Net operating loss carryforward522 335 
Operating lease liabilities189 204 
Rent expense108 120 
Total deferred tax assets1,277 972 
Valuation allowance(73)(69)
Deferred tax assets, net1,204 903 
Deferred tax liabilities:
Accelerated depreciation(1,845)(1,625)
Operating lease assets(182)(197)
Other(20)(3)
Total deferred tax liabilities(2,047)(1,825)
Net deferred tax liability$(843)$(922)
We have a U.S. foreign tax credit carryforward of $83 million which expires from 2022 to 2031.
In evaluating the realizability of the deferred tax assets, we assess whether it is more likely than not that some portion, or all, of the deferred tax assets, will be realized. We consider, among other things, the generation of future taxable income (including reversals of deferred tax liabilities) during the periods in which the related temporary differences will become deductible. At December 31, 2021, we provided a $73 million valuation allowance to reduce the deferred tax assets to an amount that we consider is more likely than not to be realized. Of the total valuation allowance, $66 million relates to foreign NOL carryforward, and $7 million relates to U.S. foreign tax credit carryforward that begins to expire in 2022.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in millions):
202120202019
Unrecognized tax benefits at January 1,$32 $36 $33 
Increases for tax positions taken during the period2 1 6 
Decreases for tax positions taken during the period(1)— — 
Increases for tax positions taken during a prior period19 — — 
Decreases for tax positions taken during a prior period(12)(5)(3)
Unrecognized tax benefits December 31,$40 $32 $36 
Interest and penalties accrued on unrecognized tax benefits were not significant. If recognized, $10 million of the unrecognized tax benefits as of December 31, 2021 would impact our effective tax rate. We do not expect any significant change in the amount of the unrecognized tax benefits within the next twelve months. As a result of net operating losses and statute of limitations in our major tax jurisdictions, years 2016 through 2020 remain subject to examination by the relevant tax authorities.