Income Taxes (Tables)

12 Months Ended

Dec. 31, 2018

Domestic and Foreign Income (Loss) Before Income Taxes

The following table summarizes our U.S. and foreign income (loss) before income taxes:



	Year Ended December 31,
	2018		2017			2016
	(In millions)
U.S.	$	32	$	(45	)	$	(47	)
Foreign	453		462			324
Total	$	485	$	417		$	277

Components of Income Tax Expense

The following table summarizes our provision for income taxes:



	Year Ended December 31,
	2018			2017			2016
				(In millions)
Current income tax expense:
Federal	$	186		$	12		$	(41	)
State	42			6			6
Foreign	167			130			65
Current income tax expense	395			148			30
Deferred income tax (benefit) expense:
Federal	(273		)	(94		)	(5		)
State	(25		)	(1		)	(3		)
Foreign	(10		)	(8		)	(6		)
Deferred income tax (benefit) expense:	(308		)	(103		)	(14		)
Income tax expense	$	87		$	45		$	16

Components of Deferred Tax Assets and Deferred Tax Liabilities

As of December 31, 2018 and 2017, the significant components of our deferred tax assets and deferred tax liabilities were as follows:



	December 31,
	2018			2017
	(In millions)
Deferred tax assets:
Provision for accrued expenses	$	87		$	44
Deferred loyalty rewards	166			131
Net operating loss and tax credit carryforwards	123			122
Stock-based compensation	67			52
Property and equipment	55			—
Other	68			52
Total deferred tax assets	566			401
Less valuation allowance	(80		)	(76		)
Net deferred tax assets	$	486		$	325
Deferred tax liabilities:
Goodwill and intangible assets	(486		)	(499		)
Property and equipment	—			(131		)
Other	—			(6		)
Total deferred tax liabilities	$	(486	)	$	(636	)
Net deferred tax liability	$	—		$	(311	)

Schedule of Statutory Federal Income Tax Rate to Income from Continuing Operations before Income Taxes

A reconciliation of amounts computed by applying the federal statutory income tax rate to income before income taxes to total income tax expense is as follows:



	Year Ended December 31,
	2018			2017			2016
				(In millions)
Income tax expense at the federal statutory rate of 21% for 2018 and 35% for 2017 and 2016	$	102		$	146		$	97
Foreign tax rate differential	(42		)	(82		)	(67		)
Federal research and development credit	(23		)	(16		)	(15		)
Excess tax benefits related to stock-based compensation	(10		)	(60		)	(40		)
Unrecognized tax benefits and related interest	23			27			33
Change in valuation allowance	8			4			(14		)
Return to provision true-ups	(7		)	1			(14		)
trivago stock-based compensation	7			5			17
State taxes	11			3			—
Non-deductible goodwill impairment	16			—			—
Tax Act transition tax	—			144			—
U.S. statutory tax rate change	—			(158		)	—
Global intangible low-taxed income	13			—			—
Foreign-derived intangible income	(38		)	—			—
Other, net	27			31			19
Income tax expense	$	87		$	45		$	16

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

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits and interest is as follows:



	2018			2017			2016
				(In millions)
Balance, beginning of year	$	261		$	220		$	171
Increases to tax positions related to the current year	24			35			43
Increases to tax positions related to prior years	2			4			8
Decreases to tax positions related to prior years	—			(1		)	(2		)
Reductions due to lapsed statute of limitations	(2		)	(3		)	(5		)
Settlements during current year	—			(1		)	—
Interest and penalties	8			7			5
Balance, end of year	$	293		$	261		$	220