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Income Taxes (Notes) | 12 Months Ended
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Dec. 31, 2022
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,
| 2022 |  | 2021 |  | 2020
Domestic | $ | (368) |  |  | $ | 486 |  |  | $ | (449) |
Foreign | 17 |  |  | (3) |  |  | (11) |
Pretax (loss) income | $ | (351) |  |  | $ | 483 |  |  | $ | (460) |
The components of income tax (benefit) expense consisted of the following:
| Year Ended December 31,
| 2022 |  | 2021 |  | 2020
Current: |  |  |  |  |
Federal | $ | 24 |  |  | $ | 29 |  |  | $ | (5) |
State | — |  |  | 30 |  |  | 13 |
Foreign | 4 |  |  | 2 |  |  | 2 |
Total current | 28 |  |  | 61 |  |  | 10 |
Deferred: |  |  |  |  |
Federal | (78) |  |  | 70 |  |  | (66) |
State | (18) |  |  | 2 |  |  | (48) |
Foreign | — |  |  | — |  |  | — |
Total deferred | (96) |  |  | 72 |  |  | (114) |
Income tax (benefit) expense | $ | (68) |  |  | $ | 133 |  |  | $ | (104) |
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,
| 2022 |  | 2021 |  | 2020
Federal statutory rate | 21 | % |  | 21 | % |  | 21 | %
State and local income taxes, net of federal tax benefits | 3 |  |  | 6 |  |  | 3 |
Discontinued operations—establishment/reversal of deferred tax liability (a) | — |  |  | — |  |  | 10 |
Non-deductible equity compensation | — |  |  | 1 |  |  | (2) |
Non-deductible executive compensation | (1) |  |  | 1 |  |  | (1) |
Goodwill impairment | (8) |  |  | — |  |  | (7) |
Uncertain tax positions | (1) |  |  | — |  |  | — |
Tax credits (b) | 7 |  |  | — |  |  | — |
Net change in valuation allowance | — |  |  | — |  |  | (1) |
Other permanent differences | (2) |  |  | (1) |  |  | — |
Effective tax rate | 19 | % |  | 28 | % |  | 23 | %
_______________ (a)This item reflects the tax impact from the 2019 recognition of gain on the pending sale of Cartus (previously recorded in discontinued operations) and the 2020 de-recognition of that gain. (b)This item includes a benefit related to the completion of a research tax credit study for tax years 2016 through 2022. 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,
| 2022 |  | 2021
Deferred income tax assets: |  |  |
Net operating loss carryforwards | $ | 39 |  |  | $ | 45 |
Tax credit carryforwards | 27 |  |  | 27 |
Accrued liabilities and deferred income | 86 |  |  | 91 |
Interest expense limitation carryforward | 41 |  |  | — |
Operating leases | 133 |  |  | 147 |
Minimum pension obligations | 14 |  |  | 15 |
Provision for doubtful accounts | 9 |  |  | 9 |
Liability for unrecognized tax benefits | 1 |  |  | 1 |
Interest rate swaps | — |  |  | 12 |
Other | 1 |  |  | 2 |
Total deferred tax assets | 351 |  |  | 349 |
Less: valuation allowance | (20) |  |  | (20) |
Total deferred income tax assets after valuation allowance | 331 |  |  | 329 |
Deferred income tax liabilities: |  |  |
Depreciation and amortization | 433 |  |  | 546 |
Operating leases | 111 |  |  | 119 |
Prepaid expenses | 9 |  |  | 9 |
Basis difference in investment in joint ventures | 17 |  |  | 7 |
Other | — |  |  | 1 |
Total deferred tax liabilities | 570 |  |  | 682 |
Net deferred income tax liabilities | $ | (239) |  |  | $ | (353) |
As of December 31, 2022, the Company’s deferred tax asset for net operating loss carryforwards is primarily related to certain state net operating loss carryforwards which expire between 2025 and 2034. The Company’s deferred tax asset for tax credits carryforwards is primarily related to foreign tax credits and certain state R&D credits which expire between 2024 and 2033. The Company's interest expense limitation carryforward never expires. 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, 2022, the Company’s gross liability for unrecognized tax benefits was $20 million, of which $18 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 2022 tax years remain subject to examination by federal and certain state tax authorities. In significant foreign jurisdictions, tax returns for the 2017 through 2022 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 recognized an increase of interest expense of $1 million for the year ended December 31, 2022 and no change of interest expense for the years ended December 31, 2021 and 2020. The rollforward of unrecognized tax benefits are summarized in the table below:
Unrecognized tax benefits—January 1, 2020 | $ | 20 |
Reduction due to lapse of statute of limitations | (1) |
Unrecognized tax benefits—December 31, 2020 | 19 |
Settlements | (1) |
Reduction due to lapse of statute of limitations | (1) |
Unrecognized tax benefits—December 31, 2021 | 17 |
Gross increases - tax positions in prior periods | 3 |
Gross decreases - tax positions in prior periods | (1) |
Gross increases - tax positions in current period | 1 |
Unrecognized tax benefits—December 31, 2022 | $ | 20 |
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 Anywhere, 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.

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