XML 35 R22.htm IDEA: XBRL DOCUMENT
v3.22.4

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2022
Income Tax Disclosure [Abstract] |
Income Taxes | Income TaxesWe are subject to income taxes in the United States (federal and state), Canada, and Serbia. We recorded income tax expense of $3 million for the year ended December 31, 2022, primarily driven by state taxes. We recorded an income tax benefit of $1 million for the year ended December 31, 2021, comprised of a $3 million income tax benefit from a decrease in the valuation allowance associated with our September 2021 acquisition of ShowingTime, partially offset by $2 million of tax expense related to state and foreign income taxes. We recorded an income tax benefit of $8 million for the year ended December 31, 2020, primarily driven by a $10 million income tax benefit associated with the $72 million non-cash impairment we recorded during the year ended December 31, 2020. For additional information about the non-cash impairment, see Note 10 of our Notes to Consolidated Financial Statements. The following table presents the components of our income tax expense (benefit) for the periods presented (in millions):
| Year Ended December 31,
| 2022 |  | 2021 |  | 2020
Current income tax expense |  |  |  |  |
State | $ | 2 |  |  | $ | 2 |  |  | $ | — |
Foreign | 1 |  |  | — |  |  | — |
Total current income tax expense | 3 |  |  | 2 |  |  | — |
Deferred income tax benefit: |  |  |  |  |
Federal | — |  |  | (3) |  |  | (7) |
State | — |  |  | — |  |  | (1) |
Total deferred income tax benefit | — |  |  | (3) |  |  | (8) |
Total income tax expense (benefit) | $ | 3 |  |  | $ | (1) |  |  | $ | (8) |
The following table presents a reconciliation of the federal statutory rate and our effective tax rate for the periods presented:
| Year Ended December 31,
| 2022 |  | 2021 |  | 2020
Tax expense at federal statutory rate | (21.0) | % |  | (21.0) | % |  | (21.0) | %
State income taxes, net of federal tax benefit | 6.2 |  |  | 8.7 |  |  | (364.0) |
Share-based compensation | 13.2 |  |  | 84.1 |  |  | (2,329.4) |
Non-deductible executive compensation | 14.3 |  |  | (7.7) |  |  | 86.9 |
Research and development credits | (25.7) |  |  | 40.8 |  |  | (393.0) |
Other | 8.2 |  |  | (4.9) |  |  | (23.2) |
Valuation allowance | 7.4 |  |  | (99.3) |  |  | 2,827.6 |
Effective tax rate | 2.6 | % |  | 0.7 | % |  | (216.1) | %
Deferred federal, state and foreign income taxes reflect the net tax impact of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and such amounts for tax purposes. The following table presents the significant components of our deferred tax assets and liabilities as of the dates presented (in millions):
| December 31,
| 2022 |  | 2021
Deferred tax assets: |  |  |
Federal and state net operating loss carryforwards | $ | 433 |  |  | $ | 524 |
Research and development credits | 164 |  |  | 133 |
Share-based compensation | 102 |  |  | 66 |
Capitalized research and development | 100 |  |  | — |
Lease liability | 43 |  |  | 41 |
Interest expense limitation | 28 |  |  | 58 |
Debt discount on convertible notes | 18 |  |  | — |
Accruals and reserves | 3 |  |  | 13 |
Depreciation and amortization | — |  |  | 1 |
Inventory | — |  |  | 69 |
Other deferred tax assets | 5 |  |  | 1 |
Total deferred tax assets | 896 |  |  | 906 |
Deferred tax liabilities: |  |  |
Right of use assets | (31) |  |  | (32) |
Intangible assets | (15) |  |  | (22) |
Goodwill | (5) |  |  | (5) |
Depreciation and amortization | (3) |  |  | — |
Debt discount on convertible notes | — |  |  | (60) |
Website and software development costs | — |  |  | (43) |
Total deferred tax liabilities | (54) |  |  | (162) |
Net deferred tax assets before valuation allowance | 842 |  |  | 744 |
Less: valuation allowance | (843) |  |  | (746) |
Net deferred tax liabilities | $ | (1) |  |  | $ | (2) |
Realization of deferred tax assets is dependent upon the generation of future taxable income, if any, the timing and amount of which are uncertain. We have provided a full valuation allowance against the net deferred tax assets as of December 31, 2022 and 2021 because, based on the weight of available evidence, it is more likely than not (a likelihood of more than 50%) that some or all of the deferred tax assets will not be realized. The valuation allowance increased by $97 million and $274 million, respectively, during the years ended December 31, 2022 and 2021. We have accumulated federal net operating losses of approximately $1.8 billion and $2.1 billion, as of December 31, 2022 and 2021, respectively, which are available to reduce future taxable income. We have accumulated state net operating losses of approximately $63 million and $73 million (tax effected) as of December 31, 2022 and 2021, respectively. Federal net operating losses generated in taxable periods on or before December 31, 2017 have a twenty year carryforward period and begin to expire in 2023. Federal net operating loss carryforwards generated in taxable years beginning after December 31, 2017 may be carried forward indefinitely, but the deductibility of such net operating loss carryforwards in taxable years beginning after December 31, 2020 is limited to 80% of taxable income. State net operating loss carryforward periods for the various state jurisdictions generally range from three years to indefinite-lived and begin to expire in 2025. Additionally, we have net research and development credit carryforwards of $164 million and $133 million as of December 31, 2022 and 2021, respectively, which are available to reduce future tax liabilities. The research and development credit carryforwards begin to expire in 2025. Under Sections 382 and 383 of the Internal Revenue Code, if a corporation undergoes an “ownership change”, the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes, such as research and development credits, to offset its post-change taxable income or income tax liability may be limited. In connection with our August 2013 public offering of our Class A common stock, we experienced an ownership change that triggered Sections 382 and 383, which may limit our ability to utilize our net operating loss and research and development credit carryforwards. In connection with our February 2015 acquisition of Trulia, Trulia experienced an ownership change that triggered Section 382 and 383, which may limit Zillow Group’s ability to utilize Trulia’s net operating loss and research and development credit carryforwards. Our primary income tax jurisdiction is the United States (federal). With limited exceptions for state taxing authorities, which are not material to the financial statements, all tax years for which the Company has filed a tax return remain subject to examination due to the existence of net operating loss carryforwards. Changes for unrecognized tax benefits for the periods presented are as follows (in millions):
Balance at January 1, 2020 | $ | 40 |
Gross increases—current period tax positions | 9 |
Balance at December 31, 2020 | $ | 49 |
Gross increases—current period tax positions | 17 |
Gross increases—prior period tax positions | 9 |
Balance at December 31, 2021 | $ | 75 |
Gross increases—current period tax positions | 17 |
Gross increases—prior period tax positions | 4 |
Gross decreases—prior period tax positions | (6) |
Balance at December 31, 2022 | $ | 90 |
At December 31, 2022, the total amount of unrecognized tax benefits of $90 million is recorded as a reduction to our deferred tax asset when available. We do not anticipate that the amount of existing unrecognized tax benefits will significantly increase or decrease within the next 12 months. Accrued interest and penalties related to unrecognized tax benefits are recorded as income tax expense and are not material.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI https://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration