Income Taxes (Tables)

12 Months Ended

Dec. 28, 2012

Income (Loss) Before Provision of Income Taxes by Geographic Region

The income (loss) before provision (benefit) of income taxes by geographic region is as follows:

($ in millions)	2012			2011			2010
United States	$	45		$	(129	)	$	88
Non-U.S. jurisdictions.		(8	)		(85	)		24
	$	37		$	(214	)	$	112

Benefit from (Provision for) Income Taxes

Our (provision for) benefit from income taxes consists of:

($ in millions)	2012			2011			2010
Current - U.S. Federal	$	(62	)	$	(10	)	$	39
- U.S. State		(9	)		(1	)		1
- Non-U.S.		—			(10	)		(9	)
		(71	)		(21	)		31
Deferred - U.S. Federal		43			55			(68	)
- U.S. State		6			6			(7	)
- Non-U.S.		1			(4	)		(1	)
		50			57			(76	)
	$	(21	)	$	36		$	(45	)

Reconciliation of Unrecognized Tax Benefit

The following table reconciles our unrecognized tax benefit balance for each year from the beginning of 2010 to the end of 2012:

($ in millions)	2012			2011		2010
Unrecognized tax benefit at beginning of year	$	2		$	1	$	—
Change attributable to tax positions taken during a prior period		—			1		1
Decrease attributable to settlements with taxing authorities		(2	)		—		—
Unrecognized tax benefit at end of year	$	—		$	2	$	1

Total Deferred Tax Assets and Liabilities

Total deferred tax assets and liabilities as of year-end 2012 and year-end 2011 were as follows:

($ in millions)	At Year-End 2012			At Year-End 2011
Deferred tax assets	$	128		$	106
Deferred tax liabilities		(171	)		(184	)
Net deferred tax liability	$	(43	)	$	(78	)

Tax Effect of Each Type of Temporary Difference and Carry-Forward That Gives Rise to Significant Portion of Deferred Tax Assets And Liabilities

The tax effect of each type of temporary difference and carry-forward that gives rise to a significant portion of our deferred tax assets and liabilities as of year-end 2012 and year-end 2011 were as follows:

($ in millions)	At Year-End 2012			At Year-End 2011
Inventory	$	(55	)	$	(58	)
Reserves		—			(43	)
Deferred income		(1	)		6
Property and equipment		(13	)		(21	)
Vacation Ownership financing		—			4
Marriott Rewards customer loyalty program		10			—
Deferred sales of vacation ownership interests		(34	)		—
Long lived intangible assets		38			35
Net operating loss carry-forwards		35			27
Other, net		26			25
Deferred tax asset (liability)		6			(25	)
Less: Valuation allowance		(49	)		(53	)
Net deferred tax liability	$	(43	)	$	(78	)

Reconciliation of US Statutory Income Tax Rate to Effective Tax Rate

The following table reconciles the benefit or expense related to the U.S. statutory income tax rate to our effective income tax rate for continuing operations:

	2012			2011			2010
U.S. statutory income tax rate expense/(benefit)		35.00	%		(35.00	)%		35.00	%
U.S. state income taxes, net of U.S. federal tax benefit		3.99			(2.34	)		3.07
Permanent differences(1)		9.03			0.17			0.05
Non-U.S. income(2)		6.01			14.44			1.61
Accrual to return adjustment(3)		(10.83	)		—			—
Other items		5.47			—			—
Change in valuation allowance(4)		8.87			5.94			0.33
Effective rate expense/(benefit)		57.54	%		(16.79	)%		40.06	%

(1) Primarily attributed to interest on mandatorily redeemable preferred stock of a consolidated subsidiary and foreign income subject to U.S. tax.

(2) Primarily attributed to the difference between U.S. and foreign income tax rates offset by the benefit of tax holidays in certain jurisdictions.

(3) Attributable to the difference in the provision for income taxes and the actual tax paid upon filing.

(4) Primarily attributed to establishment of valuation allowances in foreign jurisdictions for losses that cannot be benefited in the U.S. income tax provision as discussed above.