
	December 31,
	2019		2018		2017
Current
U.S. Federal	$	(14)	$	(637)	$	(19,856)
U.S. State	868		198		51
Foreign	1,796		1,749		1,674
Total	2,650		1,310		(18,131)
Deferred
U.S. Federal	170,508		(483,681)		(309,423)
U.S. State	3,682		(14,973)		(1,431)
Total	174,190		(498,654)		(310,854)
Total income tax provision (benefit)	$	176,840	$	(497,344)	$	(328,985)


	December 31,
	2019		2018		2017
U.S. Federal statutory rate	21.0	%	21.0	%	35.0	%
Foreign tax credits, net of valuation allowance	13.1	%	(154.9)	%	(136.1)	%
Non-taxable foreign income	(27.4)	%	(48.8)	%	(20.1)	%
Foreign tax rate differential	(10.4)	%	(20.8)	%	(17.0)	%
Global intangible low-taxed income	10.1	%	28.3	%	—	%
Change in tax rate	—	%	—	%	(11.8)	%
Repatriation of foreign earnings	—	%	—	%	81.0	%
Valuation allowance, other	20.6	%	9.3	%	5.9	%
Other, net	9.2	%	3.2	%	4.4	%
Effective income tax rate	36.2	%	(162.7)	%	(58.7)	%

Wynn Macau SA received a five year exemption from Macau's 12% Complementary Tax on casino gaming profits through December 31, 2020. Accordingly, for the years ended December 31, 2019, 2018 and 2017, the Company was exempt from the payment of such taxes totaling $77.7 million, $96.8 million, and $63.0 million or $0.73, $0.90, and $0.61 per diluted share, respectively. The Company's non-gaming profits remain subject to the Macau Complementary Tax and its casino winnings remain subject to the Macau special gaming tax and other levies in accordance with its concession agreement.

Wynn Macau SA also entered into an agreement with the Macau government that provides for an annual payment of MOP 12.8 million (approximately $1.6 million) as complementary tax otherwise due by stockholders of Wynn Macau SA on dividend distributions through 2020. As a result of the stockholder dividend tax agreements, income tax expense includes $1.6 million for each of the years ended December 31, 2019, 2018, and 2017.

The Macau special gaming tax is 35% of gross gaming revenue. U.S. tax laws only allow a foreign tax credit ("FTC") up to 21% of foreign source income. In February 2010, the Company and the IRS entered into a Pre-Filing Agreement ("PFA") providing that the Macau special gaming tax qualifies as a tax paid in lieu of an income tax and could be claimed as a U.S. FTC.

In December 2017, the U.S. Tax Cuts and Jobs Act ("U.S. tax reform") was enacted. Also in December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act, which allowed the Company to record provisional amounts during a measurement period not to extend beyond one year from the enactment date. For the year ended December 31, 2017, the Company recorded a provisional net tax benefit of $339.9 million based on the Company's initial analysis of the U.S. tax reform. During the fourth quarter of 2018, the Company finalized its analysis of U.S. tax reform, which was further clarified by guidance issued by the Internal Revenue Service in the fourth quarter of 2018. The guidance addressed the treatment of foreign-sourced royalties and the allocation of interest expense and other

expenses to foreign source income. As a result, the Company adjusted its valuation allowance for FTC carryovers and recorded a net tax benefit of $390.9 million, which is incremental to the $339.9 million provisional net tax benefit recorded in 2017.

During the years ended December 31, 2019, 2018 and 2017, the Company recognized tax benefits of $32.9 million, $82.8 million and $746.6 million, respectively (net of valuation allowance and uncertain tax positions), for FTCs generated from the earnings of Wynn Macau SA.

Accounting standards require recognition of a future tax benefit to the extent that realization of such benefit is more likely than not; otherwise, a valuation allowance is applied. During the years ended December 31, 2019 and 2018, the aggregate valuation allowance for deferred tax assets increased by $115.5 million and decreased by $746.6 million, respectively. The 2019 increase is primarily related to the realizability of deferred tax assets related to disallowed interest expense carryforwards. The 2018 decrease is primarily related to the expiration of FTCs.

The Company recorded tax benefits resulting from the exercise of nonqualified stock options and the value of vested restricted stock and accrued dividends of $5.7 million, $2.0 million, and $2.6 million for the years ended December 31, 2019, 2018, and 2017, respectively, in excess of the amounts reported for such items as compensation costs under accounting standards related to stock-based compensation.


	December 31,
	2019		2018
Deferred tax assets—U.S.:
Foreign tax credit carryforwards	$	3,070,914	$	3,187,797
Disallowed interest expense carryforward	88,319		67,368
Lease liability	23,650		—
Construction in progress	—		42,528
Receivables, inventories, accrued liabilities and other	15,279		10,878
Stock-based compensation	6,479		5,477
Other tax credit carryforwards	7,224		4,946
Intangibles and related other	—		489
Other	4,719		2,279
	3,216,584		3,321,762
Less: valuation allowance	(2,604,497)		(2,500,027)
	612,087		821,735
Deferred tax liabilities—U.S.:
Property and equipment	(8,887)		(70,560)
Lease asset	(23,650)		—
Prepaid insurance, maintenance and taxes	(15,956)		(12,430)
Other	(1,332)		(2,293)
	(49,825)		(85,283)
Deferred tax assets—Foreign:
Net operating loss carryforwards	96,657		94,244
Property and equipment	50,709		41,520
Pre-opening expenses	6,126		8,421
Other	10,114		651
	163,606		144,836
Less: valuation allowance	(154,934)		(143,872)
	8,672		964
Deferred tax liabilities—Foreign:
Property and equipment	(8,672)		(964)

Net deferred tax asset	$	562,262	$	736,452

FTC carryforwards of $87.1 million expired on December 31, 2019. As of December 31, 2019, the Company had FTC carryforwards (net of uncertain tax positions) of $3.1 billion. Of this amount, $530.4 million will expire in 2020, $540.3 million in 2021, $756.0 million in 2023, $710.7 million in 2024, $47.2 million in 2025 and $486.3 million in 2027. The Company has a disallowed interest carryforward of $385.7 million which does not expire. The Company has no U.S. tax loss carryforwards. The Company incurred foreign tax losses of $376.8 million, $340.0 million and $319.1 million during the tax years ended December 31, 2019, 2018 and 2017, respectively. These foreign tax loss carryforwards expire in 2022, 2021 and 2020, respectively.

The Company records valuation allowances on certain of its U.S. and foreign deferred tax assets. In assessing the need for a valuation allowance, the Company considers whether it is more likely than not that the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. In the assessment of the valuation allowance, appropriate consideration is given to all positive and negative evidence including recent operating profitability, forecast of future earnings, the duration of statutory carryforward periods, and tax planning strategies.

As of December 31, 2019 and 2018, the Company had valuation allowances of $2.51 billion and $2.49 billion, respectively, provided on FTCs expected to expire unutilized, and as of December 31, 2019 the Company had a valuation allowance of $88.3 million provided on disallowed interest expense carryforwards. As of December 31, 2018, the Company had no valuation allowance provided on disallowed interest expense carryforwards. The Company also had valuation allowances of $6.4 million and $5.3 million provided on other U.S. deferred tax assets. As of December 31, 2019 and 2018, the Company had valuation allowances of $154.9 million and $143.9 million, respectively, provided on its foreign deferred tax assets.


	December 31,
	2019		2018		2017
Balance at beginning of period	$	99,470	$	95,236	$	90,523
Increases based on tax positions of the current year	8,986		8,926		8,520
Reductions due to lapse in statutes of limitations	(4,161)		(4,692)		(3,807)
Balance at end of period	$	104,295	$	99,470	$	95,236

As of December 31, 2019, 2018 and 2017, unrecognized tax benefits of $104.3 million, $99.5 million and $95.2 million, respectively, were recorded as reductions in deferred income taxes, net. The Company had no unrecognized tax benefits recorded in other long-term liabilities as of December 31, 2019, 2018 and 2017.

The Company recognizes penalties and interest related to unrecognized tax benefits in the provision for income taxes. During each of the years ended December 31, 2019 and 2018, the Company recognized no interest and penalties. During the year ended December 31, 2017, the Company recognized $0.9 million in interest in the provision for income taxes.

The Company anticipates that the 2015 statute of limitations will expire in the next 12 months for certain foreign tax jurisdictions. Also, the Company's unrecognized tax benefits include certain income tax accounting methods, which govern the timing and deductibility of income tax deductions. As a result, the Company's unrecognized tax benefits could increase up to $5.4 million over the next 12 months.

The Company files income tax returns in the U.S. federal jurisdiction, various states and foreign jurisdictions. The Company's income tax returns are subject to examination by the IRS and other tax authorities in the locations where it operates. The Company's 2002 to 2015 domestic income tax returns remain subject to examination by the IRS to the extent tax attributes carryforward to future years. The Company's 2016 to 2018 domestic income tax returns also remain subject to examination by the IRS. The Company's 2015 to 2018 Macau income tax returns remain subject to examination by the Financial Services Bureau.

In February 2017, 2018, and in May 2019, the Company received notification that the IRS completed its examination of the Company's 2015, 2016, and 2017 U.S. income tax returns, respectively. There were no changes in its unrecognized tax benefits as a result of the completion of these examinations.

On December 31, 2017, 2018 and 2019, the statute of limitations for the 2012, 2013, and 2014 Macau Complementary tax return expired, respectively. As a result of the expiration of the statute of limitations for the Macau Complementary Tax return, the total amount of unrecognized tax benefits decreased by $3.8 million, $4.7 million, and $4.2 million, respectively.

In March 2017, the Financial Services Bureau commenced an examination of the 2013 and 2014 Macau income tax returns of Wynn Macau SA. In July 2018, the Financial Services Bureau issued final tax assessments for the Company for the years 2013 and 2014. While no additional tax was due, adjustments were made to the Company's tax loss carryforwards.