Income Taxes (Tables)

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

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:

	Year Ended December 31,
	2020			2019		2018
	(in millions)
Domestic	$	(262	)	$	92	$	104
Foreign		(107	)		102		69
Income (loss) before income taxes	$	(369	)	$	194	$	173

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

The following table presents a summary of the components of our (benefit) provision for income taxes:

	Year Ended December 31,
	2020			2019			2018
	(in millions)
Current income tax expense (benefit):
Federal	$	(73	)	$	31		$	37
State		(3	)		5			12
Foreign		(3	)		26			17
Current income tax expense (benefit)		(79	)		62			66
Deferred income tax expense (benefit):
Federal		13			25			(10	)
State		(10	)		7			(1	)
Foreign		(4	)		(26	)		5
Deferred income tax expense (benefit):		(1	)		6			(6	)
(Benefit) provision for income taxes	$	(80	)	$	68		$	60

Summary of Deferred Tax Assets and Deferred Tax Liabilities

The significant components of our deferred tax assets and deferred tax liabilities is as follows:

	December 31,
	2020			2019
	(in millions)
Deferred tax assets:
Stock-based compensation	$	31		$	47
Net operating loss carryforwards		81			49
Provision for accrued expenses		4			6
Lease financing obligation		23			24
Foreign advertising spend		15			15
Interest carryforward		32			20
Other		20			14
Total deferred tax assets	$	206		$	175
Less: valuation allowance		(106	)		(72	)
Net deferred tax assets	$	100		$	103
Deferred tax liabilities:
Intangible assets	$	(53	)	$	(51	)
Property and equipment		(24	)		(27	)
Prepaid expenses		(2	)		(2	)
Building - corporate headquarters		(20	)		(22	)
Other		(1	)		(2	)
Total deferred tax liabilities	$	(100	)	$	(104	)
Net deferred tax asset (liability)	$	—		$	(1	)

Reconciliation of the (Benefit) Provision for Income Taxes

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

	Year Ended December 31,
	2020			2019			2018
	(in millions)
Income tax expense at the federal statutory rate	$	(77	)	$	40		$	36
Foreign rate differential		(9	)		(16	)		(17	)
State income taxes, net of effect of federal tax benefit		(11	)		9			9
Unrecognized tax benefits and related interest		4			11			15
Change in cost-sharing treatment of stock-based compensation		—			15			(3	)
FDII, GILTI and other provisions		—			(3	)		(5	)
Rate differential on US NOL carryback (1)		(23	)		—			—
Research tax credit		(9	)		(11	)		(9	)
Stock-based compensation		14			4			8
Change in valuation allowance		25			6			9
Local income tax on intercompany transactions (2)		1			7			10
Executive compensation		6			3			2
Other, net		(1	)		3			5
(Benefit) provision for income taxes	$	(80	)	$	68		$	60

(1) 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.

(2) During 2018, we completed an intra-entity transfer from Australia to the U.S. of certain intangible property (“IP”) rights associated with a subsidiary’s technology platform. This transfer resulted in an income tax expense for Australian tax purposes of approximately $10 million. As a result of the IP transfer, we utilized NOLs and consequently released the valuation allowance on our Australian entity. During 2019, we completed an intra-entity transfer from China to Singapore of certain IP. As a result of the transfer, we utilized NOLs and consequently released the valuation allowance on certain deferred tax assets on our China entity. During 2020, we completed an intra-entity transfer from the U.S. to the UK and Singapore of certain IP. The resulting tax rate differential is reflected above based on the local deductibility of the IP.

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:

	December 31,
	2020		2019			2018
	(in millions)
Balance, beginning of year	$	140	$	136		$	123
Increases to tax positions related to the current year		3		11			11
Increases to tax positions related to the prior year		1		1			2
Reductions due to lapsed statute of limitations		—		—			—
Decreases to tax positions related to the prior year		—		(8	)		—
Settlements during current year		—		—			—
Balance, end of year	$	144	$	140		$	136