Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Note 12 — Income Taxes

Consolidated income (loss) before taxes and noncontrolling interests for domestic and foreign operations is as follows:

	Year Ended December 31,
	2021		2020		2019
	(In millions)
Foreign	$	(1,091)	$	(1,614)	$	3,145
Domestic	(383)		(262)		455
Total income (loss) before income taxes from continuing operations	$	(1,474)	$	(1,876)	$	3,600

The components of the income tax expense (benefit) from continuing operations are as follows:

	Year Ended December 31,
	2021		2020		2019
	(In millions)
Foreign:
Current	$	32	$	7	$	245
Deferred	(12)		3		(10)
Federal:
Current	8		(5)		8
Deferred	(33)		21		134
State:
Current	—		(2)		33
Deferred	—		—		22
Total income tax expense (benefit)	$	(5)	$	24	$	432

The reconciliation of the statutory federal income tax rate and the Company's effective tax rate for continuing operations is as follows:

	Year Ended December 31,
	2021		2020		2019
Statutory federal income tax rate	(21.0)	%	(21.0)	%	21.0	%
Increase (decrease) in tax rate resulting from:
Change in valuation allowance	13.1	%	11.4	%	2.9	%
Foreign and U.S. tax rate differential	6.7	%	7.8	%	(5.9)	%
Tax exempt (income) loss of foreign subsidiary	0.6	%	2.4	%	(8.4)	%
Other, net	0.3	%	0.7	%	2.4	%
Effective tax rate	(0.3)	%	1.3	%	12.0	%

The Company enjoys an income tax exemption in Macao that exempts the Company from paying corporate income tax on profits generated by gaming operations. The Company will continue to benefit from this tax exemption through June 26, 2022, the date VML's subconcession agreement expires. Had the Company not received the income tax exemption in Macao, consolidated net income attributable to LVSC would have been reduced by $200 million and diluted earnings per share would have been reduced by $0.26 per share for the year ended December 31, 2019. The VML gaming losses incurred during 2021 and 2020 did not generate a tax benefit because they are not subject to tax. In April 2019, the Company entered into a renewed agreement with the Macao government, effective through June 26, 2022, providing for payments as a substitution for a 12% tax otherwise due from VML shareholders on dividend distributions paid from VML gaming profits; namely an annual payment of 38 million patacas (approximately $5 million at exchange rates in effect on December 31, 2021) for each of the years 2021, 2020 and 2019, each payment to be made on or before January 31 of the following year, and a payment of 18 million patacas (approximately $2 million at exchange rates in effect on December 31, 2021) for the period between January 1, 2022 through June 26, 2022, to be paid on or before July 26, 2022. In September 2013, the Company and the Internal Revenue Service entered into a Pre-Filing Agreement providing the Macao special gaming tax (35% of gross gaming revenue) qualifies as a tax paid in lieu of an income tax and could be claimed as a U.S. foreign tax credit.

The Company's foreign and U.S. tax rate differential reflects the fact that the U.S. tax rate of 21% is higher than the statutory tax rates in Singapore and Macao of 17% and 12%, respectively.

The primary tax affected components of the Company's net deferred tax assets are as follows:

	December 31,
	2021		2020
	(In millions)
Deferred tax assets:
U.S. foreign tax credit carryforwards	$	4,815	$	4,812
Net operating loss carryforwards	539		466
Interest expense carryforward	18		—
Stock-based compensation	16		16
Provision for credit losses	14		14
Deferred gain on mall sale transactions	11		12
Accrued expenses	21		10
Pre-opening expenses	6		7
Other	2		—
	5,442		5,337
Less — valuation allowances	(5,034)		(4,922)
Total deferred tax assets	408		415
Deferred tax liabilities:
Property and equipment	(273)		(274)
Prepaid expenses	(5)		(4)
Other	(6)		(7)
Total deferred tax liabilities	(284)		(285)
Deferred tax assets, net	$	124	$	130

The Company's U.S. foreign tax credit carryforwards were $4.87 billion as of December 31, 2021 and 2020, which will begin to expire in 2022. There was a valuation allowance of $4.62 billion and $4.58 billion as of December 31, 2021 and 2020, respectively, provided on certain net U.S. deferred tax assets, as the Company believes these assets do not meet the "more-likely-than-not" criteria for recognition. The Company’s U.S. net operating loss carryforward was $563 million and $568 million as of December 31, 2021 and 2020, respectively, which does not have an expiration date. The Company's U.S. interest expense carryforward was $87 million as of December 31, 2021, which does not have an expiration date. Net operating loss carryforwards for the Company's foreign subsidiaries were $3.46 billion and $2.84 billion as of December 31, 2021 and 2020, respectively, which began to expire in 2022. There are valuation allowances of $416 million and $342 million as of December 31, 2021 and 2020, respectively, provided on the net deferred tax assets of certain foreign jurisdictions, as the Company believes these assets do not meet the "more-likely-than-not" criteria for recognition.

Undistributed earnings of subsidiaries are accounted for as a temporary difference, except deferred tax liabilities are not recorded for undistributed earnings of foreign subsidiaries deemed to be indefinitely reinvested in foreign jurisdictions. U.S. tax reform required the Company to compute a tax on previously unremitted earnings of its foreign subsidiaries upon transition from a worldwide tax system to a territorial tax system during the year ended December 31, 2017. The Company expects these earnings to be exempt from U.S. income tax if distributed as these earnings were taxed during the year ended December 31, 2017, under U.S. tax reform. The Company does not consider current year's tax earnings and profits of its foreign subsidiaries to be indefinitely reinvested. Beginning with the year ended December 31, 2015, the Company's major foreign subsidiaries distributed, and may continue to distribute, earnings in excess of their current year's tax earnings and profits in order to meet the Company's liquidity needs. As of December 31, 2021, the amount of earnings and profits of foreign subsidiaries the Company does not intend to repatriate was $2.85 billion. The Company does not expect withholding taxes or other foreign income taxes to apply should these earnings be distributed in the form of dividends or otherwise.

A reconciliation of the beginning and ending amounts of unrecognized tax benefits, is as follows:

	December 31,
	2021		2020		2019
	(In millions)
Balance at the beginning of the year	$	131	$	134	$	118
Additions to tax positions related to prior years	—		—		1
Reductions to tax positions related to prior years	(4)		(14)		—
Additions to tax positions related to current year	9		11		15
Balance at the end of the year	$	136	$	131	$	134

As of December 31, 2021, 2020 and 2019, unrecognized tax benefits of $57 million, $60 million and $53 million, respectively, were recorded as reductions to the U.S. foreign tax credit deferred tax asset. As of December 31, 2021, 2020 and 2019, unrecognized tax benefits of $79 million, $71 million and $81 million, respectively, were recorded in other long-term liabilities.

Included in the unrecognized tax benefit balance as of December 31, 2021, 2020 and 2019, are $126 million, $123 million and $115 million, respectively, of uncertain tax benefits that would affect the effective income tax rate if recognized.

The Company's major tax jurisdictions are the U.S., Macao and Singapore. The Company could be subject to examination for tax years beginning in 2017 in Macao and Singapore and tax years 2010 through 2015 and 2018 through 2020 in the U.S. The Company believes it has adequately reserved and provided for its uncertain tax positions; however, there is no assurance the taxing authorities will not propose adjustments that are different from the Company's expected outcome and it could impact the provision for income taxes.

The Company recognizes interest and penalties, if any, related to unrecognized tax positions in the provision for income taxes in the accompanying consolidated statement of operations. Interest and penalties of $10 million, $7 million and $5 million were accrued as of December 31, 2021, 2020 and 2019, respectively. The Company does not expect a significant increase or decrease in unrecognized tax benefits over the next twelve months.