Income Taxes (Tables)

12 Months Ended

Dec. 31, 2014

Primary Components of Net Deferred Tax Asset

We have recorded a 100% valuation allowance of approximately $27 million against the deferred tax asset related to the net operating loss and asset tax credit carryovers as of December 31, 2014 with respect to our hotel in Mexico. There is a $4 million valuation allowance against the deferred tax asset related to the net operating loss and capital loss carryovers as of December 31, 2014 with respect to our hotels in Canada. There is a $4 million valuation allowance related to the net operating loss incurred by our office in Rio de Janeiro as of December 31, 2014. Finally, there is a $10 million valuation allowance against the deferred tax asset related to the net operating loss carryovers as of December 31, 2014 with respect to certain of our U.S. taxable REIT subsidiaries that acted as lessee pursuant to the terminated HPT leases. We expect that the remaining net operating loss and alternative minimum tax credit carryovers for U.S. federal income tax purposes will be realized. The net decrease in the valuation allowance for the year ending December 31, 2014 and December 31, 2013 is approximately $16 million and $2 million, respectively. The primary components of our net deferred tax assets are as follows (in millions):

	As of December 31,
	2014			2013
Deferred tax assets
Accrued related party interest	$	21		$	19
Net operating loss and capital loss carryovers		70			85
Alternative minimum tax credits		5			5
Property and equipment		4			4
Investments in domestic affiliates		3			3
Deferred revenue and expenses		55			57
Other		1			1
Total gross deferred tax assets		159			174
Less: Valuation allowance		(45	)		(61	)
Total deferred tax assets, net of valuation allowance	$	114		$	113
Deferred tax liabilities
Property and equipment		(17	)		(21	)
Investments in domestic and foreign affiliates		(8	)		(6	)
Other		(2	)		(3	)
Total gross deferred tax liabilities		(27	)		(30	)
Net deferred tax assets	$	87		$	83

Income (Loss) From Continuing Operations Before Income Taxes

Our U.S. and foreign income (loss) from continuing operations before income taxes was as follows (in millions):

	Year ended December 31,
	2014		2013		2012
U.S. income (loss)	$	744	$	213	$	(22	)
Foreign income		17		18		45
Total	$	761	$	231	$	23

Provision for Income Taxes from Continuing Operations

The provision for income taxes from continuing operations consists of (in millions):

		Year ended December 31,
		2014			2013		2012
Current	—Federal	$	3		$	2	$	3
	—State		2			4		1
	—Foreign		10			9		10
			15			15		14
Deferred	—Federal		(1	)		4		11
	—State		(1	)		1		1
	—Foreign		1			1		5
			(1	)		6		17
Income tax provision – continuing operations		$	14		$	21	$	31

Income Tax Provision Calculated at Statutory U.S. Federal Income Tax Rate and Actual Income Tax Provision Recorded

The differences between the income tax provision calculated at the statutory U.S. federal income tax rate of 35% and the actual income tax provision recorded for continuing operations are as follows (in millions):

	Year ended December 31,
	2014			2013			2012
Statutory federal income tax provision – continuing operations	$	265		$	81		$	8
Adjustment for nontaxable (income) loss of Host Inc. – continuing operations		(268	)		(77	)		4
State income tax provision, net		1			5			2
Provision for uncertain tax positions		5			2			2
Foreign income tax provision		11			10			15
Income tax provision – continuing operations	$	14		$	21		$	31

Unrecognized Tax Benefits Reconciliation

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in millions):

	2014		2013
Balance at January 1	$	5	$	3
State increases		2		—
Other increases		3		2
Balance at December 31	$	10	$	5