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Income Taxes (Notes)
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Tax Disclosure [Text Block] INCOME TAXES
The components of pretax income for domestic and foreign operations consisted of the following:
 Year Ended December 31,
 202120202019
Domestic$486 $(449)$(171)
Foreign(3)(11)— 
Pretax income (loss)$483 $(460)$(171)
The components of income tax expense (benefit) consisted of the following:
 Year Ended December 31,
 202120202019
Current:
Federal$29 $(5)$3 
State30 13 7 
Foreign2 2 1 
Total current61 10 11 
Deferred:
Federal70 (66)4 
State2 (48)(1)
Foreign— — — 
Total deferred72 (114)3 
Income tax expense (benefit)$133 $(104)$14 
A reconciliation of the Company’s effective income tax rate at the U.S. federal statutory rate of 21% to the actual expense was as follows:
 Year Ended December 31,
 202120202019
Federal statutory rate21 %21 %21 %
State and local income taxes, net of federal tax benefits6 3 6 
Discontinued operations—establishment/reversal of deferred tax liability (a)— 10 (26)
Non-deductible equity compensation1 (2)(4)
Non-deductible executive compensation1 (1)(1)
Goodwill impairment— (7)(3)
Meals & entertainment— — (1)
Net change in valuation allowance— (1)— 
Other permanent differences(1)— — 
Effective tax rate28 %23 %(8)%
_______________
(a)This item reflects the tax impact from the 2019 recognition of gain on the pending sale of Cartus Relocation Services (previously recorded in discontinued operations) and the 2020 de-recognition of that gain.
Deferred income taxes result from temporary differences between the amount of assets and liabilities recognized for financial reporting and tax purposes. The components of the deferred income tax assets and liabilities are as follows:
December 31,
20212020
Deferred income tax assets:
Net operating loss carryforwards$45 $124 
Tax credit carryforwards27 26 
Accrued liabilities and deferred income91 88 
Operating leases147 151 
Minimum pension obligations15 19 
Provision for doubtful accounts9 9 
Liability for unrecognized tax benefits1 1 
Interest rate swaps12 21 
Other2 — 
Total deferred tax assets349 439 
Less: valuation allowance(20)(21)
Total deferred income tax assets after valuation allowance329 418 
Deferred income tax liabilities:
Depreciation and amortization546 553 
Operating leases119 119 
Prepaid expenses9 9 
Basis difference in investment in joint ventures7 11 
Other1 1 
Total deferred tax liabilities682 693 
Net deferred income tax liabilities$(353)$(275)
The net deferred income tax liability of $353 million as of December 31, 2021 is included in the accompanying Consolidated Balance Sheets in deferred income taxes (non-current liabilities). The net deferred income tax liability of $275 million as of December 31, 2020 is included in the accompanying Consolidated Balance Sheets with $276 million in deferred income taxes (non-current liabilities) and $1 million in other non-current assets.
As of December 31, 2021, the Company’s deferred tax asset for net operating loss carryforwards is primarily related to certain state net operating loss carryforwards that expire between 2025 and 2035.
Accounting for Uncertainty in Income Taxes
The Company utilizes the FASB guidance for accounting for uncertainty in income taxes, which prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. The Company reflects changes in its liability for unrecognized tax benefits as income tax expense in the Consolidated Statements of Operations. As of December 31, 2021, the Company’s gross liability for unrecognized tax benefits was $17 million, of which $16 million would affect the Company’s effective tax rate, if recognized. The Company does not expect that its unrecognized tax benefits will significantly change over the next twelve months.
The Company files U.S., state and foreign income tax returns in jurisdictions with varying statutes of limitations.  Tax returns for the 2006 through 2021 tax years remain subject to examination by federal and certain state tax authorities.  In significant foreign jurisdictions, tax returns for the 2016 through 2021 tax years generally remain subject to examination by their respective tax authorities.  The Company believes that it is reasonably possible that the total amount of its unrecognized tax benefits could decrease by $1 million in certain taxing jurisdictions where the statute of limitations is set to expire within the next twelve months.
The Company recognizes accrued interest and penalties related to unrecognized tax benefits in interest expense and operating expenses, respectively. The Company did not recognize a change of interest expense for the years ended December 31, 2021, 2020 and 2019.
The rollforward of unrecognized tax benefits are summarized in the table below:
Unrecognized tax benefits—January 1, 2019$20 
Gross increases—tax positions in prior periods1 
Reduction due to lapse of statute of limitations(1)
Unrecognized tax benefits—December 31, 201920 
Reduction due to lapse of statute of limitations(1)
Unrecognized tax benefits—December 31, 202019 
Settlements(1)
Reduction due to lapse of statute of limitations(1)
Unrecognized tax benefits—December 31, 2021$17 
The Company is subject to income taxes in the United States and several foreign jurisdictions. Significant judgment is required in determining the worldwide provision for income taxes and recording related assets and liabilities. In the ordinary course of business, there are many transactions and calculations where the ultimate tax determination is uncertain. The Company is regularly under audit by tax authorities whereby the outcome of the audits is uncertain. The Company believes there is appropriate support for positions taken on its tax returns. The liabilities that have been recorded represent the best estimates of the probable loss on certain positions and are adequate for all open years based on an assessment of many factors including past experience and interpretations of tax law applied to the facts of each matter. However, the outcomes of tax audits are inherently uncertain.
Tax Sharing Agreement
Under the Tax Sharing Agreement with Cendant, Wyndham Worldwide and Travelport, the Company is generally responsible for 62.5% of payments made to settle claims with respect to tax periods ending on or prior to December 31, 2006 that relate to income taxes imposed on Cendant and certain of its subsidiaries, the operations (or former operations) of which were determined by Cendant not to relate specifically to the respective businesses of Realogy, Wyndham Worldwide, Avis Budget or Travelport. With respect to any remaining residual legacy Cendant tax liabilities, the Company and its former parent believe there is appropriate support for the positions taken on Cendant’s tax returns. However, tax audits and any related litigation, including disputes or litigation on the allocation of tax liabilities between parties under the Tax Sharing Agreement, could result in outcomes for the Company that are different from those reflected in the Company’s historical financial statements.