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Income Taxes (Tables) | 12 Months Ended
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Dec. 31, 2019
Income Tax Disclosure [Abstract] |
Summary of Our Domestic and Foreign Income Before Income Taxes | The following table presents a summary of our domestic and foreign income before income taxes:
|  | Year Ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
|  | (in millions) |
Domestic |  | $ | 92 |  |  | $ | 104 |  |  | $ | 81 |
Foreign |  |  | 102 |  |  |  | 69 |  |  |  | 29 |
Total |  | $ | 194 |  |  | $ | 173 |  |  | $ | 110 |
Summary of the Components of Our Provision for Income Taxes | The following table presents a summary of the components of our provision for income taxes:
|  | Year Ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
|  | (in millions) |
Current income tax expense: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 31 |  |  | $ | 37 |  |  | $ | 93 |
State |  |  | 5 |  |  |  | 12 |  |  |  | 1 |
Foreign |  |  | 26 |  |  |  | 17 |  |  |  | 6 |
Current income tax expense |  |  | 62 |  |  |  | 66 |  |  |  | 100 |
Deferred income tax expense (benefit): |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | 25 |  |  |  | (10 | ) |  |  | 25 |
State |  |  | 7 |  |  |  | (1 | ) |  |  | 2 |
Foreign |  |  | (26 | ) |  |  | 5 |  |  |  | 2 |
Deferred income tax expense (benefit): |  |  | 6 |  |  |  | (6 | ) |  |  | 29 |
Provision for income taxes |  | $ | 68 |  |  | $ | 60 |  |  | $ | 129 |
Summary of Deferred Tax Assets and Deferred Tax Liabilities | The Company reduced its current income tax payable by $24 million, $15 million and $27 million for the years ended December 31, 2019, 2018 and 2017, respectively, for tax deductions attributable to the exercise or settlement of the Company’s stock-based awards. The significant components of our deferred tax assets and deferred tax liabilities as of December 31, 2019 and 2018 are as follows:
|  | December 31, |
|  | 2019 |  |  | 2018 |
|  | (in millions) |
Deferred tax assets: |  |  |  |  |  |  |  |
Stock-based compensation |  | $ | 47 |  |  | $ | 44 |
Net operating loss carryforwards |  |  | 49 |  |  |  | 38 |
Provision for accrued expenses |  |  | 6 |  |  |  | 6 |
Deferred rent |  |  | — |  |  |  | 3 |
Lease financing obligation |  |  | 24 |  |  |  | 22 |
Foreign advertising spend |  |  | 15 |  |  |  | 15 |
Deferred expense related to cost-sharing arrangement |  |  | - |  |  |  | 31 |
Interest carryforward |  |  | 20 |  |  |  | 14 |
Other |  |  | 14 |  |  |  | 10 |
Total deferred tax assets |  | $ | 175 |  |  | $ | 183 |
Less: valuation allowance |  |  | (72 | ) |  |  | (57 | )
Net deferred tax assets |  | $ | 103 |  |  | $ | 126 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Intangible assets |  | $ | (51 | ) |  | $ | (57 | )
Property and equipment |  |  | (27 | ) |  |  | (22 | )
Prepaid expenses |  |  | (2 | ) |  |  | (2 | )
Building - corporate headquarters |  |  | (22 | ) |  |  | (23 | )
Deferred income related to cost-sharing arrangement |  |  | — |  |  |  | (16 | )
Other |  |  | (2 | ) |  |  | — |
Total deferred tax liabilities |  | $ | (104 | ) |  | $ | (120 | )
Net deferred tax asset (liability) |  | $ | (1 | ) |  | $ | 6 |
Reconciliation of the Provision for Income Taxes | A reconciliation of the provision for income taxes to the amounts computed by applying the statutory federal income tax rate to income before income taxes is as follows:
|  | Year Ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
|  | (in millions) |
Income tax expense at the federal statutory rate |  | $ | 40 |  |  | $ | 36 |  |  | $ | 38 |
Foreign rate differential |  |  | (16 | ) |  |  | (17 | ) |  |  | (25 | )
State income taxes, net of effect of federal tax benefit |  |  | 9 |  |  |  | 9 |  |  |  | 5 |
Unrecognized tax benefits and related interest |  |  | 11 |  |  |  | 15 |  |  |  | 12 |
Change in cost-sharing treatment of stock-based compensation |  |  | 15 |  |  |  | (3 | ) |  |  | (5 | )
FDII, GILTI and other provisions |  |  | (3 | ) |  |  | (5 | ) |  |  | — |
Impacts related to the 2017 Tax Act |  |  | — |  |  |  | — |  |  |  | 73 |
Research tax credit |  |  | (11 | ) |  |  | (9 | ) |  |  | (8 | )
Stock-based compensation |  |  | 4 |  |  |  | 8 |  |  |  | 13 |
Change in valuation allowance |  |  | 6 |  |  |  | 9 |  |  |  | 25 |
Local income tax on intercompany transaction (1) |  |  | 7 |  |  |  | 10 |  |  |  | — |
Executive compensation |  |  | 3 |  |  |  | 2 |  |  |  | 1 |
Other, net |  |  | 3 |  |  |  | 5 |  |  |  | — |
Provision for income taxes |  | $ | 68 |  |  | $ | 60 |  |  | $ | 129 |
| (1) | 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.
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, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
|  | (in millions) |
Balance, beginning of year |  | $ | 136 |  |  | $ | 123 |  |  | $ | 105 |
Increases to tax positions related to the current year |  |  | 11 |  |  |  | 11 |  |  |  | 17 |
Increases to tax positions related to the prior year |  |  | 1 |  |  |  | 2 |  |  |  | 1 |
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 |  | $ | 140 |  |  | $ | 136 |  |  | $ | 123 |

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