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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2022

Summary of Our Domestic and Foreign Income (Loss) Before Income Taxes

The following table presents a summary of our domestic and foreign income (loss) before income taxes for the periods presented:


	Year Ended December 31,
	2022		2021			2020
	(in millions)
Domestic	$	37	$	(127	)	$	(262	)
Foreign		30		(58	)		(107	)
Income (loss) before income taxes	$	67	$	(185	)	$	(369	)

Summary of the Components of Our Provision (Benefit) for Income Taxes

The components of our provision (benefit) for income taxes consisted of the following for the periods presented:


	Year Ended December 31,
	2022			2021			2020
	(in millions)
Current income tax expense (benefit):
Federal	$	37		$	6		$	(73	)
State		3			(1	)		(3	)
Foreign		26			2			(3	)
Current income tax expense (benefit)		66			7			(79	)
Deferred income tax expense (benefit):
Federal		(19	)		(21	)		13
State		1			(5	)		(10	)
Foreign		(1	)		(18	)		(4	)
Deferred income tax expense (benefit)		(19	)		(44	)		(1	)
Provision (benefit) for income taxes	$	47		$	(37	)	$	(80	)

Summary of Deferred Tax Assets and Deferred Tax Liabilities

The significant components of our deferred tax assets and deferred tax liabilities consisted of the following for the periods presented:


	December 31,
	2022			2021
	(in millions)
Deferred tax assets:
Stock-based compensation	$	28		$	31
Net operating loss carryforwards		83			102
Provision for accrued expenses		6			4
Lease financing obligation		17			20
Foreign advertising spend		14			15
Tax credit carryforward		7			12
Capitalized research expenses (1)		39			—
Interest carryforward		53			71
Other		19			15
Total deferred tax assets	$	266		$	270
Less: valuation allowance		(114	)		(123	)
Net deferred tax assets	$	152		$	147
Deferred tax liabilities:
Intangible assets	$	(48	)	$	(51	)
Property and equipment		(6	)		(22	)
Prepaid expenses		(4	)		(3	)
Building - corporate headquarters		(16	)		(17	)
Other		(1	)		(1	)
Total deferred tax liabilities	$	(75	)	$	(94	)
Net deferred tax asset (liability)	$	77		$	53

(1)

As required by the 2017 tax Cuts and Jobs Act, effective January 1, 2022, our research and development expenditures were capitalized and amortized, which resulted in a deferred tax asset.

Reconciliation of the (Benefit) Provision for Income Taxes

A reconciliation of the provision (benefit) for income taxes to the amounts computed by applying the statutory federal income tax rate to income (loss) before income taxes is as follows for the periods presented:


	Year Ended December 31,
	2022			2021			2020
	(in millions)
Income tax expense at the federal statutory rate	$	14		$	(39	)	$	(77	)
Foreign rate differential (1)		—			(14	)		(9	)
State income taxes, net of effect of federal tax benefit		5			(2	)		(11	)
Unrecognized tax benefits and related interest		17			4			4
Rate differential on US NOL carryback (2)		—			—			(23	)
Research tax credit		(2	)		(7	)		(9	)
Stock-based compensation		11			(1	)		14
Change in valuation allowance		5			8			25
Local income tax on intercompany transaction		—			—			1
Executive compensation		1			6			6
Other, net		(4	)		8			(1	)
Provision (benefit) for income taxes	$	47		$	(37	)	$	(80	)

(1)

During 2021, we extinguished intercompany debt which resulted in a reduction of our overall foreign rate differential.

(2)

As a result of the CARES Act, an income tax benefit of $23 million was recorded during the year ended December 31, 2020 related to the income tax rate differential in tax years applicable to U.S. loss carryforwards that became eligible for carryback.

Reconciliation of the Beginning and Ending Amount of Gross Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits (excluding interest and penalties) is as follows during the periods presented:


	December 31,
	2022			2021			2020
	(in millions)
Balance, beginning of year	$	144		$	144		$	140
Increases to tax positions related to the current year		5			5			3
Increases to tax positions related to the prior year		29			1			1
Decreases due to lapsed statute of limitations		(20	)		—			—
Decreases due to tax positions related to the prior year		(1	)		—			—
Settlements during current year		—			(6	)		—
Balance, end of year	$	157		$	144		$	144