We are treated as a REIT for U.S. federal income tax purposes, and we have been organized and operated, and expect to continue to be organized and operate, in a manner to qualify as a REIT. To qualify as a REIT, we must satisfy requirements related to, among other things, the real estate qualification of sources of our income, the real estate composition and values of our assets, the amounts we distribute to our stockholders annually and the diversity of ownership of our stock. To the extent we continue to remain qualified as a REIT, we generally will not be subject to U.S. federal income tax on taxable income generated by our REIT activities that we distribute annually to our stockholders. Accordingly, no provision for U.S. federal income taxes has been included in our accompanying consolidated financial statements for the years ended December 31, 2019 and 2018 related to our REIT activities, other than taxes associated with built-in gains related to our assets owned at the date of our spin-off including the remeasurement of associated deferred tax assets and liabilities.

H.R. 1, commonly referred to as The Tax Cuts and Jobs Act of 2017 (the “Act”) was enacted on December 22, 2017. The Act, which amended the Internal Revenue Code of 1986, was the most significant tax legislative development in decades. Major elements of the Act from our perspective include reducing the corporate tax rate; restricting the eligibility for tax deferred like-kind exchange treatment solely to real property; limiting the deductibility of interest expense; the one-time transition tax on foreign cash and unremitted earnings; and the treatment of global intangible low-taxed income for REIT gross income purposes. As a result of the changes in the Act, we recognized a $25 million income tax benefit for the year ended December 31, 2017 and $8 million of income tax expense for the year ended December 31, 2018 when our analysis of the effects of the Act was completed.

We will be subject to U.S. federal income tax on taxable sales of built-in gain property (representing property with an excess of fair value over tax basis held by us on January 4, 2017) during the five-year period following the date of our spin-off. In addition, we are subject to non-U.S. income tax on foreign held REIT activities. Further, our taxable REIT subsidiaries (“TRSs”) are generally subject to U.S. federal, state and local, and foreign income taxes (as applicable).

Our tax provision includes U.S. federal, state and foreign income taxes payable. The domestic and foreign components of income before income taxes were:

	Year Ended December 31,
	2019		2018		2017
	(in millions)
U.S. income before tax	$	350	$	498	$	279
Foreign income before tax		1		2		6
Income before income taxes	$	351	$	500	$	285

	Year Ended December 31,
	2019		2018			2017
	(in millions)
Current:
U.S. Federal	$	16	$	34		$	21
State		3		6			2
Foreign		11		3			9
Total current		30		43			32
Deferred:
U.S. Federal		3		(18	)		(2,373	)
Foreign		2		(2	)		(5	)
Total deferred		5		(20	)		(2,378	)
Total provision (benefit) for income taxes	$	35	$	23		$	(2,346	)

Reconciliations of our tax provision at the U.S. statutory rate to the (benefit) provision for income taxes were:

	Year Ended December 31,
	2019			2018			2017
	(in millions)
Statutory U.S. federal income tax provision	$	74		$	105		$	100
State income taxes, net of U.S. federal tax benefit		2			3			2
Foreign income tax expense		13			2			4
Change in deferred tax asset valuation allowance		2			—			3
Tax rate change		—			(2	)		(25	)
REIT income not subject to tax		(69	)		(92	)		(83	)
Derecognition and remeasurement of deferred taxes		13			7			(2,347	)
Provision (benefit) for income taxes	$	35		$	23		$	(2,346	)

Deferred income taxes represent the tax effect of the differences between the book and tax bases of assets and liabilities plus carryforward items. The composition of net deferred tax balances were as follows:

	December 31,
	2019			2018
	(in millions)
Deferred income tax assets⁽¹⁾	$	8		$	3
Deferred income tax liabilities		(50	)		(42	)
Net deferred tax liability	$	(42	)	$	(39	)

The tax effects of the temporary differences and carryforwards that give rise to our net deferred tax liability were:

	December 31,
	2019			2018
	(in millions)
Deferred tax assets:
Net operating loss carryforwards	$	9		$	8
Deferred income		4			3
Accrued compensation		2			3
Other		6			4
Total gross deferred tax assets		21			18
Less: valuation allowance		(6	)		(4	)
Deferred tax assets		15			14
Deferred tax liabilities:
Property and equipment		(48	)		(44	)
Investments		(8	)		(9	)
Accrued compensation		(1	)		—
Deferred tax liabilities		(57	)		(53	)
Net deferred tax liability	$	(42	)	$	(39	)

As of December 31, 2019, we had U.S. federal, state and foreign net operating loss carryforwards of $65 million, which resulted in deferred tax assets of $9 million. Our U.S. federal and state net operating loss carryforwards of approximately $18 million and $24 million begin to expire in 2038 and 2025, respectively, and our foreign net operating loss carryforwards of approximately $23 million are not subject to expiration. Our valuation allowance increased $2 million during the year ended December 31, 2019.

For periods ended prior to January 4, 2017, Hilton filed income tax returns for us, with U.S. federal, state and foreign jurisdictions. Hilton is under regular and recurring audit by the Internal Revenue Service on open tax positions. The timing of the resolution of tax audits is highly uncertain, as are the amounts, if any, that may ultimately be paid upon such resolution. Changes may result from the conclusion of ongoing audits, appeals or litigation in U.S. federal, state, local, and foreign tax jurisdictions or from the resolution of various proceedings between the U.S. and foreign tax authorities. Hilton is no longer subject to U.S. federal income tax examination for years through 2005. As of December 31, 2019, Hilton remains subject to U.S. federal examinations from 2007 through 2017, state examinations from 2007 through 2017 and foreign examinations of their income tax returns for the years 1998 through 2017. We will be subject to U.S. federal, state and foreign examinations for periods ending after January 4, 2017.

For U.S. federal income tax purposes, the cash distributions to stockholders are characterized as follows:

	For the Year Ended		For the Year Ended
	December 31, 2019		December 31, 2018
Common distributions (per share):
Ordinary dividends	$	1.61	$	1.64
Capital gain distributions		0.29		1.32