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INCOME TAXES
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
Deferred Income Taxes

Deferred income taxes reflect the impact of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and such amounts for tax purposes. The Company has a net deferred tax liability, primarily due to differences in depreciation rates for federal income tax purposes and for financial reporting purposes.
Deferred tax (assets) and liabilities comprise the following (in millions):
 20222021
Excess of tax over book depreciation$1,312 $1,145 
Intangibles - net17 19 
Operating lease assets356 351 
Other - net49 76 
Deferred tax liabilities1,734 1,591 
Mileage Plan(436)(416)
Inventory obsolescence(21)(17)
Employee benefits(145)(127)
Net operating losses(28)(25)
Operating lease liabilities(392)(374)
Leasehold maintenance(67)(40)
Other - net(88)(34)
Deferred tax assets(1,177)(1,033)
Valuation allowance17 20 
Net deferred tax liabilities$574 $578 

At December 31, 2022, the Company has paid taxes of $38 million and does not expect to pay any additional tax for 2022. The Company received $285 million in federal tax refunds as a result of carrying back losses from the 2020 tax year and other various amendments of prior year tax returns. The Company also received $10 million in a refund for an overpayment on their 2021 Federal Form 1120 and an additional $12 million in cash was received for various state amended returns. The Company also has gross state NOLs of approximately $325 million that expire beginning in 2027 and continuing through 2042.

Valuation allowances are provided to reduce the related deferred income tax assets to an amount which will, more likely than not, be realized. The Company assesses available positive and negative evidence regarding the ability to realize its deferred tax assets. The Company has determined that, based on evidence, a portion of the state NOL carryforward may not be realized and, therefore, has provided a valuation allowance of $17 million for that portion as of December 31, 2022. The Company has likewise concluded it is more likely than not that all of its federal and the remaining state deferred income tax assets will be realized and thus no additional valuation allowance has been recorded. The Company reassesses the need for a valuation allowance each reporting period.

Components of Income Tax Expense (Benefit)

The components of income tax expense (benefit) are as follows (in millions): 
 202220212020
Current income tax expense (benefit):   
Federal$(11)$40 $(212)
State(3)16 (11)
Total current income tax expense (benefit)(14)56 (223)
Deferred income tax expense (benefit):   
Federal32 80 (246)
State3 15 (47)
Total deferred income tax expense (benefit)35 95 (293)
Income tax expense (benefit)$21 $151 $(516)
Income Tax Rate Reconciliation

Income tax expense (benefit) reconciles to the amount computed by applying the 2022 U.S. federal rate of 21% to income (loss) before income tax and for deferred taxes as follows (in millions):
 
 202220212020
Income (loss) before income tax$79 $629 $(1,840)
Expected tax expense (benefit)17 132 (386)
Nondeductible expenses11 10 9 
State income tax expense (benefit)5 20 (62)
Tax law changes— (14)(93)
Valuation allowance(4)1 18 
Tax credits(5)(2)— 
FIN48 reserve change(3)3 (2)
Other - net— 1 — 
Actual tax expense (benefit)$21 $151 $(516)
Effective tax rate(a)
26.2 %24.0 %28.0 %
(a)Figures in the table above are rounded to the nearest million. As a result, a manual recalculation of the effective tax rate for 2022 using these rounded figures will not agree directly to the Company's actual effective tax rate for 2022 of 26.2%.

In 2021, the Company recorded a current tax benefit of $14 million as a result of provisions outlined in the CARES Act. In 2020, as a result of tax changes signed into law during 2017, with final regulations issued in 2019, the Company recorded a current tax benefit of $93 million.

Uncertain Tax Positions

The Company has identified its federal tax return and its state tax returns in Alaska, Oregon and California as “major” tax jurisdictions. A summary of the Company's jurisdictions and the periods that are subject to examination are as follows:
JurisdictionPeriod
Federal2007 to 2021
Alaska2018 to 2021
California2007 to 2021
Oregon2015 to 2021

Certain tax years are open to the extent of net operating loss carryforwards.

Changes in the liability for gross unrecognized tax benefits during 2022, 2021 and 2020 are as follows (in millions):
202220212020
Balance at January 1$41 $35 $40 
Additions related to prior years— 3 1 
Releases related to prior years(1)— (1)
Additions related to current year activity1 3 — 
Releases due to settlements(20)— (4)
Releases due to lapse of statute of limitations— — (1)
Balance at December 31$21 $41 $35 

As of December 31, 2022, the Company had $21 million of accrued tax contingencies, of which $19 million, if fully recognized, would decrease the effective tax rate. As of December 31, 2022, 2021 and 2020, the Company has accrued interest and penalties, net of federal income tax benefit, of $3 million, $8 million, and $6 million. In 2022, 2021, and 2020, the Company recognized a benefit of $5 million, expense of $2 million, and benefit of $1 million, for interest and penalties, net of
federal income tax. At December 31, 2022, the Company has unrecognized tax benefits recorded as a liability. The Company decreased its reserves for uncertain tax positions in 2022 by $20 million, primarily due to settlements on state income taxes. These uncertain tax positions could change because of the Company's ongoing audits, settlement of issues, new audits, and status of other taxpayer court cases. The Company cannot predict the timing of these actions. Due to the positions being taken in various jurisdictions, the amounts currently accrued are the Company's best estimate as of December 31, 2022.