Our effective tax rate was 28% and 21% for the years ended December 31, 2020 and December 31, 2019, respectively. The increase in our effective tax rate is primarily due to the impact of our 2020 loss before taxes compared to our 2019 income before taxes. The calculation of our effective tax rates for both 2020 and 2019 includes reconciling items that provide an overall beneficial impact to the statutory worldwide income tax rates. Our 2020 effective tax rate was higher than the statutory worldwide tax rate primarily due to U.S. federal income tax

benefits attributable to Foreign Derived Intangible Income (“FDII”) deductions, and state income tax benefits attributable to 2020 credit incentives and prior year favorable provision to return adjustments. The Tax Cuts and Jobs Act (“TCJ Act”) established a deduction for FDII. On July 9, 2020, the U.S. Treasury Department issued final tax regulations related to FDII effective on a retroactive bases to the year ended December 31, 2018, which clarified that certain items of our income qualified for FDII treatment. Our 2019 effective tax rate was lower than the statutory worldwide tax rate primarily due to the tax benefit derived from the IRS approval of a tax accounting method change effective for a pre-TCJ Act year related to the allocation of inventory costs.

We believe the income tax provisions of the relief provided by the Coronavirus Aid, Relief, and Economic Security (CARES) Act enacted on March 27, 2020 and the Consolidated Appropriations Act, 2021 enacted on December 27, 2020 and have no effect on our income tax rate for year ended December 31, 2020. We will continue to evaluate the income tax provisions of both Acts and monitor the developments in the jurisdictions where we have significant operations for tax law changes that could have income tax implications.

Our net deferred tax liability decreased by $124 million as of December 31, 2020, as compared to the same period in 2019, primarily due to the IRS approval of a tax accounting method change effective for our 2020 taxable year related to certain timeshare upgrade transactions and the impairment of certain long-lived assets during the fourth quarter of 2020.

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

	Year Ended December 31,
($ in millions)	2020			2019		2018
U.S. (loss) income before tax	$	(287	)	$	234	$	380
Foreign income before tax		7			39		23
Total (loss) income before taxes	$	(280	)	$	273	$	403

	Year Ended December 31,
($ in millions)	2020			2019			2018
Current:
Federal	$	36		$	37		$	62
State		5			9			15
Foreign		3			8			8
Total current		44			54			85
Deferred:
Federal		(98	)		3			17
State		(23	)		1			4
Foreign		(2	)		(1	)		(1	)
Total deferred		(123	)		3			20
Total provision for income taxes	$	(79	)	$	57		$	105

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)	2020			2019			2018
Statutory U.S. federal income tax provision	$	(59	)	$	57		$	85
State and local income taxes, net of U.S. federal tax benefit		(17	)		11			19
Impact of foreign operations		(5	)		1			2
Interest on installment sales, net of U.S. federal tax benefit		1			4			3
Effects of the TCJ Act		—			—			(4	)
Tax accounting method change		—			(18	)		—
Other		1			2			—
Provision for income taxes	$	(79	)	$	57		$	105

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

	December 31,
($ in millions)	2020			2019
Deferred income tax assets	$	4		$	2
Deferred income tax liabilities		(137	)		(259	)
Net deferred taxes	$	(133	)	$	(257	)

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)	2020			2019
Deferred tax assets:
Compensation	$	16		$	12
Domestic tax loss and credit carryforwards		5			4
Foreign tax loss carryforwards		2			1
Other reserves		89			86
		112			103
Valuation allowance		(4	)		(4	)
Deferred tax assets		108			99
Deferred tax liabilities:
Property and equipment		(70	)		(87	)
Amortizable intangible assets		(7	)		(9	)
Deferred income		(164	)		(259	)
Other liabilities		—			(1	)
Deferred tax liabilities		(241	)		(356	)
Net deferred taxes	$	(133	)	$	(257	)

Tax loss and credit carryforwards as of December 31, 2020 have expiration dates ranging between 9 years and no expiration in certain instances. The amount of foreign tax loss carryforwards as of December 31, 2020 and December 31, 2019 was $6 million and $2 million, respectively. The amount of state tax loss carryforwards as of December 31, 2020 and December 31, 2019 was $8 million. The amount of federal tax credit carryforwards as of December 31, 2020 and December 31, 2019 was $4 million and $3 million, respectively. The amount of state tax credit carryforwards as of December 31, 2020 was $2 million. There were no state tax credit carryforwards as of December 31, 2019.

The total valuation allowance did not change during the year and remained at $4 million as of December 31, 2020. The valuation allowance has been established for financial reporting purposes to offset certain federal and state deferred tax assets due to uncertainty regarding our ability to realize them in the future.