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 beginning January 1, 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, generally we will not be subject to federal and state 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 and state 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 and state income and excise taxes on our undistributed taxable income.

We have recorded a 100% valuation allowance of approximately $22 million against the deferred tax asset related to the net operating loss carryovers as of December 31, 2016 with respect to our hotel in Mexico. During 2016, we reversed the $3 million valuation allowance previously recorded against the deferred tax asset related to the net operating loss carryovers of our hotels in Canada. We expect that the net operating loss and alternative minimum tax and investment 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, 2016 and December 31, 2015 is approximately $1 million and $22 million, respectively. The primary components of our net deferred tax assets are as follows (in millions):

	As of December 31,
	2016			2015
Deferred tax assets
Related party interest expense	$	—		$	7
Net operating loss and capital loss carryovers		43			63
Alternative minimum tax and investment tax credits		8			5
Property and equipment		4			4
Investments in domestic affiliates		2			3
Deferred revenue and expenses		42			52
Foreign exchange net losses (AOCI)		12			18
Other		2			2
Total gross deferred tax assets		113			154
Less: Valuation allowance		(22	)		(23	)
Total deferred tax assets, net of valuation allowance	$	91		$	131
Deferred tax liabilities
Property and equipment		(11	)		(16	)
Investments in domestic and foreign affiliates		(7	)		(12	)
Other		(2	)		(2	)
Total gross deferred tax liabilities		(20	)		(30	)
Net deferred tax assets	$	71		$	101

At December 31, 2016, we have aggregate gross domestic and foreign net operating loss and capital loss carryovers of approximately $137 million. We have deferred tax assets related to these loss carryovers of approximately $43 million, with a valuation allowance of approximately $22 million. Our net operating loss carryovers expire through 2035, and our foreign capital loss carryovers have no expiration period. Our alternative minimum tax and investment tax credit carryovers have no expiration period. We believe that it is more likely than not that the results of future operations will generate sufficient taxable income to realize our total deferred tax assets, net of a valuation allowance of $22 million, of $91 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,
	2016		2015		2014
U.S. income	$	763	$	530	$	738
Foreign income		48		44		17
Total	$	811	$	574	$	755

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

		Year ended December 31,
		2016			2015			2014
Current	—Federal	$	—		$	2		$	3
	—State		1			(1	)		2
	—Foreign		12			3			10
			13			4			15
Deferred	—Federal		24			2			(1	)
	—State		6			—			(1	)
	—Foreign		(3	)		3			1
			27			5			(1	)
Income tax provision – continuing operations		$	40		$	9		$	14

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,
	2016			2015			2014
Statutory federal income tax provision	$	284		$	204		$	265
Adjustment for nontaxable income of Host Inc.		(260	)		(203	)		(268	)
State income tax provision, net		7			1			1
Provision for uncertain tax positions		—			1			5
Foreign income tax provision		9			6			11
Income tax provision	$	40		$	9		$	14

Cash paid for income taxes, net of refunds received, was $15 million, $9 million, and $22 million in 2016, 2015, and 2014, respectively.

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

	2016		2015
Balance at January 1	$	11	$	10
State decreases		—		(2	)
Other increases		—		3
Balance at December 31	$	11	$	11

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.

As of December 31, 2016, the tax years that remain subject to examination by major tax jurisdictions generally include 2013-2016.

There were no material interest or penalties recorded for the years ended December 31, 2016, 2015 and 2014.