Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

7.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 continue 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 annual taxable income to our stockholders, excluding net capital gain. As a REIT, generally we will not be subject to U.S. federal and state corporate income taxes on that portion of our annual taxable income that is distributed to our stockholders. If we fail to qualify for taxation as a REIT in any taxable year, we will be subject to U.S. federal and state corporate income taxes at regular corporate income tax rates and may not be able to qualify as a REIT for four subsequent taxable years. Even if we qualify to be treated as a REIT, we may be subject to certain state, local and foreign taxes on our income and property, and to U.S. federal and state corporate income and excise taxes on our undistributed taxable income.

Set forth below is a table that documents our domestic and foreign income tax attributes at December 31, 2021:

Type	Jurisdiction	Amount (in millions)		Expiration
Net operating loss	U.S. Federal	$	835	None
Capital loss	U.S. Federal and States		34	2023
Net operating loss	U.S. States		1,160	Various
Net operating loss	Brazil		17	None
Net operating loss	Canada		21	Through 2041
Capital loss	Canada		5	None

We have recorded a 100% valuation allowance of approximately $8 million against the deferred tax asset related to our domestic capital loss carryover and a valuation allowance of approximately $5 million against the deferred tax asset related to certain of our foreign net operating loss and capital loss carryovers as of December 31, 2021. We also have recorded a valuation allowance of approximately $5 million against the deferred tax asset related to our accumulated other comprehensive income (“AOCI”) foreign exchange net losses. The net decrease of our valuation allowance for the year ended December 31, 2021 is approximately $1 million from the year ended December 31, 2020.

The primary components of our net deferred tax assets are as follows (in millions):

	As of December 31,
	2021			2020
Deferred tax assets
Net operating losses, general business credits, and capital loss carryovers	$	262		$	172
Property and equipment		3			3
Deferred revenue and expenses		17			17
Foreign exchange net losses (AOCI)		12			12
Total gross deferred tax assets		294			204
Less: Valuation allowance		(18	)		(19	)
Total deferred tax assets, net of valuation allowance	$	276		$	185
Deferred tax liabilities
Investments in domestic affiliates		(10	)		(1	)
Total gross deferred tax liabilities		(10	)		(1	)
Net deferred tax assets	$	266		$	184

We believe that it is more likely than not that the results of future operations will generate sufficient taxable income in order to realize our total deferred tax assets, net of a valuation allowance of $18 million, of $276 million.

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

	Year ended December 31,
	2021			2020			2019
U.S. income (loss)	$	(89	)	$	(945	)	$	949
Foreign income (loss)		(13	)		(16	)		13
Total	$	(102	)	$	(961	)	$	962

The income tax provision (benefit) for continuing operations consists of (in millions):

		Year ended December 31,
		2021			2020			2019
Current	—Federal	$	1		$	(57	)	$	14
	—State		1			1			6
	—Foreign		—			1			3
			2			(55	)		23
Deferred	—Federal		(66	)		(96	)		3
	—State		(24	)		(63	)		1
	—Foreign		(3	)		(6	)		3
			(93	)		(165	)		7
Income tax provision (benefit) – continuing operations		$	(91	)	$	(220	)	$	30

The differences between the income tax provision (benefit) calculated at the statutory U.S. federal corporate income tax rate of 21% and the actual income tax provision (benefit) recorded for continuing operations are as follows (in millions):

	Year ended December 31,
	2021			2020			2019
Statutory federal income tax provision (benefit)	$	(21	)	$	(202	)	$	202
Adjustment for nontaxable (income) loss of Host Inc.		(40	)		34			(182	)
Adjustment for net operating loss carryback to 2017-2019		—			18			—
State income tax provision (benefit), net		(23	)		(62	)		7
Change to uncertain tax provision		(4	)		(3	)		(3	)
Foreign income tax provision (benefit)		(3	)		(5	)		6
Total	$	(91	)	$	(220	)	$	30

Cash taxes activity included a net refund of $34 million in 2021, immaterial amounts paid or received in 2020, and net payments of $93 million in 2019.

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

	2021			2020
Balance at January 1	$	5		$	8
Reduction of unrecognized tax benefits due to expiration of statute of limitations		(4	)		(3	)
Balance at December 31	$	1		$	5

All of such uncertain tax position amounts, if recognized, would impact our reconciliation between the income tax provision (benefit) calculated at the statutory U.S. federal corporate income tax rate of 21% and the actual income tax provision (benefit) recorded each year.

As of December 31, 2021, the tax years that remain subject to examination by major tax jurisdictions generally include 2018-2021. There were no material interest or penalties recorded for the years ended December 31, 2021, 2020 and 2019.