Deferred tax recognition on life insurance

CAESARS ENTERTAINMENT, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)Note 17. Income Taxes The components of the Company’s provision for income taxes for the years ended December 31, 2021, 2020 and 2019 are presented below.

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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
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| Components of Income (Loss) Before Income Taxes | Years Ended December 31, |
| (In millions) | 2021 |  | 2020 |  | 2019 |
| United States | $ | (1,272) |  |  | $ | (1,608) |  |  | $ | 125  |  |
| Outside of the U.S. | 3  |  |  | 2  |  |  | —  |  |
|  | $ | (1,269) |  |  | $ | (1,606) |  |  | $ | 125  |  |



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| Income Tax Provision (Benefit) | Years Ended December 31, |
| (In millions) | 2021 |  | 2020 |  | 2019 |
| United States |  |  |  |  |  |
| Current |  |  |  |  |  |
| Federal | $ | (1) |  |  | $ | (43) |  |  | $ | 31  |  |
| State & Local | (2) |  |  | (24) |  |  | 14  |  |
| Deferred |  |  |  |  |  |
| Federal | (219) |  |  | 208  |  |  | 5  |  |
| State & Local | (106) |  |  | (11) |  |  | (6) |  |
| Outside of the U.S. |  |  |  |  |  |
| Current | 2  |  |  | 2  |  |  | —  |  |
| Deferred | 43  |  |  | —  |  |  | —  |  |
|  | $ | (283) |  |  | $ | 132  |  |  | $ | 44  |  |



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|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Allocation of Income Tax Provision (Benefit) | Years Ended December 31, |
| (In millions) | 2021 |  | 2020 |  | 2019 |
| Income tax provision (benefit) applicable to: |  |  |  |  |  |
| Income from operations | $ | (283) |  |  | $ | 132  |  |  | $ | 44  |  |
| Discontinued operations | 19  |  |  | (9) |  |  | —  |  |
| Other comprehensive income | 3  |  |  | 8  |  |  | —  |  |

The following is a reconciliation of the statutory federal income tax rate to the Company’s effective tax rate for the years ended December 31, 2021, 2020 and 2019:

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Effective Income Tax Rate Reconciliation | Years Ended December 31, |
|  | 2021 |  | 2020 |  | 2019 |
| Federal statutory rate | 21.0  | % |  | 21.0  | % |  | 21.0  | % |
| State and local taxes | 4.2  | % |  | 5.4  | % |  | 5.5  | % |
| Stock compensation | 0.5  | % |  | (0.1) | % |  | 1.8  | % |
| Goodwill impairment and dispositions | —  | % |  | (1.6) | % |  | 7.4  | % |
| Nondeductible transaction expenses | —  | % |  | (0.5) | % |  | —  | % |
| Nondeductible convertible notes costs | (3.3) | % |  | (1.0) | % |  | —  | % |
| Decrease in uncertain tax positions | 0.4  | % |  | 0.9  | % |  | —  | % |
| Change in tax rates from change in tax law | (1.2) | % |  | —  | % |  | —  | % |
| Deferred tax benefit of foreign subsidiaries held for sale | —  | % |  | 1.0  | % |  | —  | % |
| Valuation allowance | 2.6  | % |  | (33.9) | % |  | 1.8  | % |
| Deferred tax recognition on life insurance | (1.3) | % |  | —  | % |  | —  | % |
| Tax credits | 0.4  | % |  | 0.1  | % |  | (1.1) | % |
| Other | (1.0) | % |  | 0.5  | % |  | (1.2) | % |
| Effective income tax rate | 22.3  | % |  | (8.2) | % |  | 35.2  | % |

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