Income Taxes (Tables)

12 Months Ended

Dec. 31, 2016

Primary Components of Net Deferred Tax Asset

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

Income From Continuing Operations Before Income Taxes

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

Provision for Income Taxes from Continuing Operations

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

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,
	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

Unrecognized Tax Benefits Reconciliation

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