INCOME TAXES

The components of our earnings before income taxes for the last three fiscal years consisted of:



($ in millions)	2014		2013		2012
U.S.	$	808	$	630	$	631
Non-U.S.	280		267		218
	$	1,088	$	897	$	849

Our provision for income taxes for the last three fiscal years consists of:



($ in millions)		2014			2013			2012
Current	-U.S. Federal	$	(224	)	$	(139	)	$	6
	-U.S. State	(43		)	(17		)	(8		)
	-Non-U.S.	(47		)	(44		)	(34		)
		(314		)	(200		)	(36		)

Deferred	-U.S. Federal	(21		)	(68		)	(211		)
	-U.S. State	(5		)	(10		)	(30		)
	-Non-U.S.	5			7			(1		)
		(21		)	(71		)	(242		)
		$	(335	)	$	(271	)	$	(278	)

Our current tax provision does not reflect the following benefits attributable to us for the vesting or exercise of employee share-based awards: $89 million in 2014, $66 million in 2013, and $76 million in 2012. The preceding table includes tax credits of $4 million in 2014, $3 million in 2013, and $3 million in 2012. We had a tax provision applicable to other comprehensive income of $5 million in 2014, $2 million in 2013, and $5 million in 2012.

We have made no provision for U.S. income taxes or additional non-U.S. taxes on the cumulative unremitted earnings of non-U.S. subsidiaries ($894 million as of year-end 2014). We consider the earnings for substantially all non-U.S. subsidiaries to be indefinitely reinvested. These earnings could become subject to additional taxes if the non-U.S. subsidiaries dividend or loan those earnings to us or to a U.S. affiliate or if we sell our interests in the non-U.S. subsidiaries. We cannot practically estimate the amount of additional taxes that might be payable on the unremitted earnings.

Unrecognized Tax Benefits

The following table reconciles our unrecognized tax benefit balance for each year from the beginning of 2012 to the end of 2014:



($ in millions)	Amount
Unrecognized tax benefit at beginning of 2012	$	39
Change attributable to withdrawal of tax positions previously taken or expected to be taken	12
Change attributable to tax positions taken during the current period	(20		)
Decrease attributable to lapse of statute of limitations	(2		)
Unrecognized tax benefit at year-end of 2012	29
Change attributable to tax positions taken during the current period	8
Decrease attributable to settlements with taxing authorities	(2		)
Decrease attributable to lapse of statute of limitations	(1		)
Unrecognized tax benefit at year-end of 2013	34
Change attributable to tax positions taken during the current period	3
Decrease attributable to settlements with taxing authorities	(27		)
Decrease attributable to lapse of statute of limitations	—
Unrecognized tax benefit at year-end of 2014	$	10

These unrecognized tax benefits reflect the following year-over-year changes: (1) a $24 million decrease in 2014, largely attributable to the favorable settlements reached with taxing authorities on both federal and international positions taken in prior years; (2) a $5 million increase in 2013, primarily due to a U.S. federal tax issue, offset by a settlement with international taxing authorities; and (3) $10 million decrease in 2012, primarily reflecting the changes attributable to settlements with taxing authorities and positions taken during 2012.

Our unrecognized tax benefit balances included $7 million at year-end 2014, $12 million at year-end 2013, and $13 million at year-end 2012 of tax positions that, if recognized, would impact our effective tax rate.

The IRS has examined our federal income tax returns, and we have settled all issues for tax years through 2009. We participate in the IRS Compliance Assurance Program, which accelerates IRS examination of key transactions with the goal of resolving any issues before the taxpayer files its return. As a result, the audits of our open tax years 2010 through 2013 are complete, while the 2014 tax year audit is currently ongoing. Various foreign, state, and local income tax returns are also under examination by the applicable taxing authorities. It is reasonably possible that we will resolve two state apportionment issues during the next 12 months for which we have an unrecognized tax balance of $4 million. One issue is currently under audit, and the second issue is pending an expected court ruling in 2015. The unrecognized tax balance of $4 million is partly offset by a related deferred tax asset.

Deferred Income Taxes

Deferred income tax balances reflect the effects of temporary differences between the carrying amounts of assets and liabilities and their tax bases, as well as from net operating loss and tax credit carry-forwards. We state those balances at the enacted tax rates we expect will be in effect when we actually pay or recover the taxes. Deferred income tax assets represent amounts available to reduce income taxes we will pay on taxable income in future years. We evaluate our ability to realize these future tax deductions and credits by assessing whether we expect to have sufficient future taxable income from all sources, including reversal of taxable temporary differences, forecasted operating earnings, and available tax planning strategies to utilize these future deductions and credits. We establish a valuation allowance when we no longer consider it more likely than not that a deferred tax asset will be realized.

We had the following total deferred tax assets and liabilities at year-end 2014 and year-end 2013:



($ in millions)	At Year-End 2014		At Year-End 2013
Deferred tax assets	$	803	$	878
Deferred tax liabilities	—		(12		)
Net deferred taxes	$	803	$	866

The following table details the composition of our net deferred tax balances at year-end 2014 and year-end 2013:



($ in millions) Balance Sheet Caption	At Year-End 2014			At Year-End 2013
Current deferred taxes, net	$	311		$	252
Deferred taxes, net	530			647
Accrued expenses and other	(22		)	(19		)
Other noncurrent liabilities	(16		)	(14		)
Net deferred taxes	$	803		$	866

The following table presents the tax effect of each type of temporary difference and carry-forward that gave rise to a significant portion of our deferred tax assets and liabilities as of year-end 2014 and year-end 2013:



($ in millions)	At Year-End 2014			At Year-End 2013
Employee benefits	$	347		$	340
Net operating loss carry-forwards	257			293
Tax credits	182			273
Reserves	55			61
Frequent guest program	47			30
Self-insurance	24			23
Deferred income	20			23
Other, net	16			(12		)
Deferred taxes	948			1,031
Less: valuation allowance	(145		)	(165		)
Net deferred taxes	$	803		$	866

At year-end 2014, we had approximately $28 million of tax credits that expire through 2024 and $153 million of tax credits that do not expire. We recorded $10 million of net operating loss benefits in 2014 and $14 million in 2013. At year-end 2014, we had approximately $1.2 billion of primarily state and foreign net operating losses, of which $561 million expire through 2034.

Reconciliation of U.S. Federal Statutory Income Tax Rate to Actual Income Tax Rate

The following table reconciles the U.S. statutory tax rate to our effective income tax rate for the last three fiscal years:



	2014		2013		2012
U.S. statutory tax rate	35.0	%	35.0	%	35.0	%
U.S. state income taxes, net of U.S. federal tax benefit	2.7		2.6		2.6
Nondeductible expenses	0.2		0.5		0.3
Non-U.S. income	(4.8	)	(5.7	)	(3.9	)
Change in valuation allowance	(0.4	)	0.3		(0.2	)
Tax credits	(0.3	)	(0.4	)	(0.4	)
Other, net	(1.6	)	(2.1	)	(0.7	)
Effective rate	30.8	%	30.2	%	32.7	%

We paid cash for income taxes, net of refunds of $172 million in 2014 and $77 million in 2013, and we received $17 million of cash for income tax refunds, net of payments in 2012.