INCOME TAXES

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

Our tax provision includes federal, state and foreign income taxes payable. The domestic and foreign components of our income (loss) before taxes were as follows:

	Year Ended December 31,
($ in millions)	2023		2022		2021
U.S. income before tax	$	335	$	384	$	195
Foreign income before tax	114		97		74
Total income before taxes	$	449	$	481	$	269

The components of our provision for income taxes were as follows:

	Year Ended December 31,
($ in millions)	2023		2022		2021
Current:
Federal	$	105	$	102	$	(5)
State	18		19		9
Foreign	36		46		31
Total current	159		167		35
Deferred:
Federal	(22)		(21)		61
State	(1)		(16)		(1)
Foreign	—		(1)		(2)
Total deferred	(23)		(38)		58
Total provision for income taxes	$	136	$	129	$	93

Reconciliations of our tax provision at the U.S. statutory rate to the provision for income taxes were as follows:

	Year Ended December 31,
($ in millions)	2023		2022		2021
Statutory U.S. federal income tax provision	$	94	$	101	$	57
State and local income taxes, net of U.S. federal tax benefit	17		4		8
Impact of foreign operations	10		17		11
Interest on installment sales, net of U.S. federal tax benefit	3		1		3
Uncertain Tax Positions	5		4		3
Transaction costs	—		—		5
Share-based compensation, net of IRC §162(m) limitation	2		3		5
Other	5		(1)		1
Provision for income taxes	$	136	$	129	$	93

Deferred income taxes represent the tax effect of the differences between the book and tax bases of assets and liabilities plus carryforward items.

The compositions of net deferred tax balances were as follows:

	December 31,
($ in millions)	2023		2022
Deferred tax assets	$	9	$	8
Deferred tax liabilities	(631)		(659)
Net deferred tax liability	$	(622)	$	(651)

The tax effects of the temporary differences and carryforwards that give rise to our net deferred tax liability were as follows:

	December 31,
($ in millions)	2023		2022
Deferred tax assets:
Compensation	$	20	$	18
Domestic tax loss and credit carryforwards	35		37
Foreign tax loss carryforwards	41		38
Other reserves	177		152
	273		245
Valuation allowance	(81)		(78)
Deferred tax assets	192		167
Deferred tax liabilities:
Property and equipment	(128)		(138)
Amortizable intangible assets	(251)		(284)
Deferred income	(435)		(396)
Deferred tax liabilities	(814)		(818)
Net deferred tax liability	$	(622)	$	(651)

As of December 31, 2023, we have $43 million federal, $163 million foreign, and $112 million state tax loss carryforwards with varying expiration dates. The federal losses will expire between 2024 and 2034, while the majority of the foreign tax losses can be carried forward indefinitely. The majority of state tax losses have expiration periods between fifteen years and twenty years. We have foreign tax credit carryforwards of $12 million and state tax credit carryforwards of $5 million. The credit carryforwards will generally expire between 2027 and 2037.

We establish valuation allowances for financial reporting purposes to offset certain deferred tax assets due to uncertainty regarding our ability to realize them in the future. The valuation allowance increased from $78 million as of

December 31, 2022, to $81 million as of December 31, 2023, primarily as a result of foreign currency impacts on net operating losses.

Reconciliations of the amounts of unrecognized tax benefits were as follows:

	December 31,
($ in millions)	2023		2022		2021
Unrecognized tax benefits at beginning of year	$	23	$	12	$	—
Current period tax position increases	2		2		1
Prior period tax position increases	3		11		18
Decreases due to lapse in applicable statute of limitations	(3)		(2)		(7)
Unrecognized tax benefits at end of year	$	25	$	23	$	12

We recorded $25 million and $23 million as of December 31, 2023 and 2022, respectively, excluding interest and penalties, as a liability for unrecognized tax benefits in Accounts payable, accrued expenses and other in the consolidated balance sheet. Had we recognized these tax benefits, $25 million and $23 million, along with related interest and penalties, it would have favorably impacted the annual effective tax rate. The total liability accrued for interest and penalties was $34 million and $31 million as of December 31, 2023, and 2022, respectively. We do not anticipate any significant increases or decreases in our unrecognized tax benefits within the next twelve months.

We file federal, state and foreign income tax returns in jurisdictions with varying statute of limitations. We are currently under audit in several tax jurisdictions. The open tax years for major tax jurisdictions are 2006 through 2023. While there is no assurance as to the results, we believe we are adequately reserved for these audits.

Although the Tax Cuts and Jobs Act of 2017 generally eliminates U.S. federal income tax on dividends from foreign subsidiaries, foreign withholding taxes may be incurred if these profits are distributed. No income or deferred taxes have been accrued on foreign earnings or other outside basis differences, as we intend to indefinitely reinvest these amounts in our foreign operations. An estimate of these amounts is not practicable due to the inherent complexity of the multi-jurisdictional tax environment in which we operate.