Income Tax (Tables)

12 Months Ended

Dec. 31, 2020

The income tax provision consisted of the following for the years ended December 31 (in millions):


	2020		2019		2018
Current
Federal	$	42	$	74	$	(24)
State	12		9		(6)
Foreign	11		29		38
	65		112		8
Deferred
Federal	(82)		57		77
State	(3)		17		44
Foreign	(3)		5		1
	(88)		79		122
(Benefit)/provision for income taxes	$	(23)	$	191	$	130

Pre-Tax Income For Domestic And Foreign Operations

Pre-tax (loss)/income for domestic and foreign operations consisted of the following for the years ended December 31 (in millions):


	2020		2019		2018
Domestic	$	(326)	$	452	$	258
Foreign	50		228		138
(Loss)/income before income taxes	$	(276)	$	680	$	396

Current and Non-Current Deferred Income Tax Assets and Liabilities

Deferred income tax assets and liabilities, as of December 31, were comprised of the following (in millions):


	2020		2019
Deferred income tax assets:
Net operating loss carryforward	$	37	$	33
Foreign tax credit carryforward	75		78
Tax basis differences in assets of foreign subsidiaries	12		12
Accrued liabilities and deferred income	80		49
Provision for doubtful accounts and loan loss reserves for vacation ownership contract receivables	227		229

Other comprehensive income	69		64
Other	92		82
Valuation allowance (a)	(153)		(133)
Deferred income tax assets	439		414

Deferred income tax liabilities:
Depreciation and amortization	228		189
Installment sales of vacation ownership interests	780		876
Estimated VOI recoveries	60		68
Other comprehensive income	49		47
Other	20		23
Deferred income tax liabilities	1,137		1,203
Net deferred income tax liabilities	$	698	$	789

Reported in:
Other assets	$	27	$	26
Deferred income taxes	725		815
Net deferred income tax liabilities	$	698	$	789

(a) The valuation allowance of $153 million at December 31, 2020, relates to foreign tax credits, net operating loss carryforwards, and certain deferred tax assets of $50 million, $22 million, and $81 million. The valuation allowance of $133 million at December 31, 2019, relates to foreign tax credits, net operating loss carryforwards, and certain deferred tax assets of $35 million, $21 million, and $77 million. The valuation allowance will be reduced when and if the Company determines it is more likely than not that the related deferred income tax assets will be realized.

Difference of Effective Income Tax Rate From US Rederal Statutory Rate

The following table presents the impact of the accounting for the enactment of U.S. tax reform on the Company’s benefit/provision for income taxes for the year ended December 31, 2018 (in millions). There were no such amounts for the years ended December 31, 2020 and 2019.


	2018
Remeasurement of net deferred income tax and uncertain tax liabilities	$	(24)
One-time mandatory repatriation tax on undistributed historic earnings of foreign subsidiaries	8
Valuation allowance established for the impact of the law on certain tax attributes	(13)
Net (benefit) for income taxes impact	$	(29)

The Company’s effective income tax rate differs from the U.S. federal statutory rate as follows for the years ended December 31:


	2020	2019	2018
Federal statutory rate	21.0%	21.0%	21.0%
State and local income taxes, net of federal tax benefits	(0.9)	6.8	1.7
Taxes on foreign operations at rates different than U.S. federal statutory rates	(0.9)	1.4	2.1
Taxes on foreign income, net of tax credits	0.2	0.4	2.7
Valuation allowance	(7.1)	(2.4)	10.8
Non-deductible expenses	(1.6)	—	—
Impact of U.S. tax reform	—	—	(5.5)

Other	(2.4)	0.9	—
	8.3%	28.1%	32.8%

Summary of Activities Related To Unrecognized Tax Benefits

The following table summarizes the activity related to the Company’s unrecognized tax benefits (in millions):


	2020		2019		2018
Beginning balance	$	29	$	28	$	28
Increases related to tax positions taken during a prior period	—		1		1
Increases related to tax positions taken during the current period	2		4		4
Decreases related to settlements with taxing authorities	—		(1)		—
Decreases as a result of a lapse of the applicable statute of limitations	(3)		(2)		(2)
Decreases related to tax positions taken during a prior period	(2)		(1)		(3)
Ending balance	$	26	$	29	$	28