Income Taxes

9 Months Ended

Sep. 30, 2020

. Income Taxes

Income Tax Allocation


	Three Months Ended September 30,						Nine Months Ended September 30,
(In millions)	2020			2019			2020			2019
(Loss) income from continuing operations before income taxes	$	(789)		$	55		$	(1,136)		$	133
Provision for income taxes	(135)			(18)			(64)			(39)
Effective tax rate	(17.1)		%	32.7		%	(5.6)		%	29.3		%

We classify accruals for uncertain tax positions within Other long-term liabilities on the Balance Sheets separate from any related income tax payable which is reported within Accrued other liabilities. The accrual amounts relate to any potential income tax liabilities resulting from uncertain tax positions as well as potential interest or penalties associated with those liabilities.

Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. We have provided a valuation allowance on certain federal, state and foreign deferred tax assets that were not deemed realizable based upon estimates of future taxable income.

As a result of the Merger, the Company acquired $779 million of additional net deferred tax liabilities net of necessary valuation allowances, plus $24 million in additional accruals for uncertain tax positions. The income tax expense for the three and nine months ended September 30, 2020 differed from the expected income tax benefit based on the federal tax rate of 21% primarily due to an increase in the valuation allowance against the deferred tax assets due to the series of transactions with VICI during the quarter. The income tax expense for the three and nine months ended September 30, 2019 differed from the expected income tax expense based on the federal tax rate of 21% primarily due to excess tax benefits associated with stock compensation, state and local income taxes and changes in the valuation allowance against deferred tax assets.

The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted on March 27, 2020. The CARES Act includes, among other things, refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, and technical amendments regarding the income tax depreciation of qualified improvement property placed in service after December 31, 2017. These amendments allow for retroactive accelerated income tax depreciation on certain of the Company’s leasehold improvement assets. The financial impact of these technical amendments on the business was recorded in the three month period ended September 30, 2020 but had no impact on the income tax provision.

The Company, including its subsidiaries, files tax returns with federal, state, and foreign jurisdictions. The Company does not have tax sharing agreements with the other members within its consolidated group. The Company is subject to exam by various state and foreign tax authorities. With few exceptions, the Company is no longer subject to examinations by tax authorities for years before 2016, and it is possible that the amount of the liability for unrecognized tax benefits could change during the next 12 months.