Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

We are a REIT for U.S. federal income tax purposes. We have been organized and operated, and we 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 (and state) 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, 2023, 2022 and 2021 related to our REIT activities other than taxes related to our sale of built-in gain property.

The components of our provision for income taxes were:

	Year Ended December 31,
	2023		2022		2021
	(in millions)
Current:
U.S. Federal	$	5	$	1	$	5
State	19		1		(2)
Total current	24		2		3
Deferred:
U.S. Federal	4		—		(1)
State	10		(2)		—
Total deferred	14		(2)		(1)
Total provision for income taxes	$	38	$	—	$	2

For the year ended December 31, 2023, the total provision for income taxes includes $28 million of income taxes associated with the effective exit from the Hilton San Francisco Hotels.

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

	Year Ended December 31,
	2023		2022		2021
	(in millions)
Statutory U.S. federal income tax provision (benefit)	$	30	$	36	$	(94)
State income taxes, net of U.S. federal tax benefit	29		1		—
Change in deferred tax asset valuation allowance	—		4		(22)
REIT income not subject to tax	(23)		(39)		116
Derecognition and remeasurement of deferred taxes	—		(2)		(1)
Other	2		—		3
Provision for income taxes	$	38	$	—	$	2

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,
	2023		2022
	(in millions)
Deferred income tax assets(1)	$	1	$	—
Deferred income tax liabilities(2)	(24)		(9)
Net deferred tax liability	$	(23)	$	(9)

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(1)Included within other assets in our consolidated balance sheets, net of valuation allowance.

(2)Included within other liabilities in our consolidated balance sheets.

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

	December 31,
	2023		2022
	(in millions)
Deferred tax assets:
Net operating loss carryforwards	$	49	$	53
Deferred income	—		4
Investments	5		3
Interest expense limitation	4		—
Other	7		6
Total gross deferred tax assets	65		66
Less: valuation allowance	(59)		(59)
Deferred tax assets	6		7
Deferred tax liabilities:
Property and equipment	(16)		(3)
Investments	(10)		(9)
Accrued compensation	(2)		(4)
Other	(1)		—
Deferred tax liabilities	(29)		(16)
Net deferred tax liability	$	(23)	$	(9)

As of December 31, 2023, we had U.S. federal and state net operating loss carryforwards of approximately $673 million, which resulted in deferred tax assets of $49 million. Our U.S. federal net operating loss carryforwards of approximately $267 million are not subject to expiration. Our U.S. state net operating loss carryforwards of approximately $406 million will begin to expire in 2030.

We made no cash distributions to our stockholders in 2021. The cash distributions to stockholders in 2023 and 2022 are characterized, for U.S. federal income tax purposes, as follows:

	Year Ended December 31,
	2023		2022
Common distributions (per share):
Ordinary dividends	$	0.000000	$	0.000000
Capital gain distributions(1)	2.150000		0.280000

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(1)Capital gain distribution disclosure pursuant to Treasury Regulation §1.1061-6(c). The following additional information relates to the capital gain distributions for calendar years 2023 and 2022, as reported on Park Hotels & Resorts Inc. Form 1099-DIV, Box 2a. For purposes of Internal Revenue Code Section 1061, which is generally applicable to direct and indirect holders of “applicable partnership interests”: (i) the “One Year Amounts” are $0.000000 per share, and (ii) the “Three Year Amounts” are $0.000000 per share, with respect to both the 2023 and 2022 capital gain distributions.