6.	Income Taxes

We elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code commencing with our taxable year ended December 31, 1999. To qualify as a REIT, we must meet a number of organizational and operational requirements, including a requirement that we distribute at least 90% of our taxable income to our stockholders, excluding net capital gain. As a REIT, we generally will not be subject to federal corporate income tax on that portion of our taxable income that currently is distributed to our stockholders. If we fail to qualify for taxation as a REIT in any taxable year, we will be subject to federal corporate income taxes at regular corporate rates (including any applicable alternative minimum tax) and may not be able to qualify as a REIT for four subsequent taxable years. Even if we qualify for taxation as a REIT, we may be subject to certain state, local and foreign taxes on our income and property, and to federal income and excise taxes on our undistributed taxable income.

We have recorded a 100% valuation allowance of approximately $20 million against the deferred tax asset related to the net operating loss carryovers as of December 31, 2015 with respect to our hotel in Mexico. There is a $3 million valuation allowance recorded against the deferred tax asset related to the net operating loss and capital loss carryovers as of December 31, 2015 with respect to our hotels in Canada. We expect that the 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, 2015 and December 31, 2014 is approximately $22 million and $16 million, respectively. The primary components of our net deferred tax assets are as follows (in millions):

	As of December 31,
	2015			2014
Deferred tax assets
Related party interest expense	$	7		$	21
Net operating loss and capital loss carryovers		63			70
Alternative minimum tax credits		5			5
Property and equipment		4			4
Investments in domestic affiliates		3			3
Deferred revenue and expenses		52			55
Other		2			1
Total gross deferred tax assets		136			159
Less: Valuation allowance		(23	)		(45	)
Total deferred tax assets, net of valuation allowance	$	113		$	114
Deferred tax liabilities
Property and equipment		(16	)		(17	)
Investments in domestic and foreign affiliates		(12	)		(8	)
Other		(2	)		(2	)
Total gross deferred tax liabilities		(30	)		(27	)
Net deferred tax assets	$	83		$	87

At December 31, 2015, we have aggregate gross domestic and foreign net operating loss, and capital loss carryovers of approximately $186 million. We have deferred tax assets related to these loss and tax credit carryovers of approximately $63 million, with a valuation allowance of approximately $23 million. Our net operating loss carryovers expire through 2035, and our foreign capital loss carryovers have no expiration period. Our alternative minimum tax credit carryovers have no expiration period. In addition to the net deferred tax assets reflected in the above table, we have recorded a deferred tax asset related to AOCI activity concerning net foreign exchange losses of approximately $18 million and $8 million at December 31, 2015 and 2014, respectively. We believe that it is more likely than not that we will be able to realize our deferred tax assets, net of valuation allowance, of $113 million in the future.

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

	Year ended December 31,
	2015		2014		2013
U.S. income	$	536	$	744	$	213
Foreign income		44		17		18
Total	$	580	$	761	$	231

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

		Year ended December 31,
		2015			2014			2013
Current	—Federal	$	2		$	3		$	2
	—State		(1	)		2			4
	—Foreign		3			10			9
			4			15			15
Deferred	—Federal		2			(1	)		4
	—State		—			(1	)		1
	—Foreign		3			1			1
			5			(1	)		6
Income tax provision – continuing operations		$	9		$	14		$	21

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,
	2015			2014			2013
Statutory federal income tax provision – continuing operations	$	204		$	265		$	81
Adjustment for nontaxable income of Host Inc. – continuing operations		(203	)		(268	)		(77	)
State income tax provision, net		1			1			5
Provision for uncertain tax positions		1			5			2
Foreign income tax provision		6			11			10
Income tax provision – continuing operations	$	9		$	14		$	21

Cash paid for income taxes, net of refunds received, was $9 million, $22 million, and $17 million in 2015, 2014, and 2013, respectively.

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

	2015			2014
Balance at January 1	$	10		$	5
State decreases		(2	)		2
Other increases		3			3
Balance at December 31	$	11		$	10

All of such uncertain tax position amounts, if recognized, would impact our reconciliation between the income tax provision calculated at the statutory U.S. federal income tax rate of 35% and the actual income tax provision recorded each year.

We expect a decrease to the balance of unrecognized tax benefits within 12 months of the reporting date of approximately $1 million. As of December 31, 2015, the tax years that remain subject to examination by major tax jurisdictions generally include 2012-2015.

There were no material interest or penalties recorded for the years ended December 31, 2015, 2014 and 2013.