Table of Contents WEWORK COMPANIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2018 Deferred income taxes reflect the effect of temporary differences between the carrying amounts of assets and liabilities recognized for financial reporting purposes and the amounts recognized for tax purposes. The tax effects of the temporary differences were as follows: December 31, (Amounts in thousands) 2017 2018 Deferred tax assets: Deferred rent $ 419,864 $ 630,481 Accrued expenses 1,066 6,773 Deferred stock-based compensation 10,356 24,256 Deferred financing obligation 27,164 29,370 Unrealized gain (loss) on foreign exchange — 14,859 Net operating loss 230,750 563,955 Interest — 1,880 Other 3,036 5,580 Total deferred tax assets 692,236 1,277,154 Valuation allowance (401,460) (848,421) Total net deferred tax assets 290,776 428,733 Deferred tax liabilities: Property and equipment (271,003) (390,240) Finite-lived intangibles (14,839) (38,896) Indefinite-lived intangibles (8,205) (2,164) Unrealized gain (loss) on foreign exchange (925) — Other (273) — Total deferred tax liabilities (295,245) (431,300) Net deferred tax liability $ (4,469) $ (2,567) The Company records a valuation allowance in jurisdictions where it is more likely than not that deferred tax assets will not be realized. The Company’s three-year cumulative loss in its operations was significant negative evidence for the Company to record a full valuation allowance in most jurisdictions; however in certain jurisdictions, the Company did not record a valuation allowance where the Company had profitable operations, or recorded only a partial valuation allowance due to the existence of deferred tax liabilities that will partially offset the Company’s net operating loss carryforwards in future years. During the year ended December 31, 2018, the Company released $8.5 million of U.S. valuation allowance due to taxable temporary differences related to U.S. acquisitions. As of December 31, 2018, the Company had U.S. federal income tax net operating loss carryforwards of $1.5 billion, of which $789.7 million may be carried forward indefinitely and $732.2 million will begin to expire starting in 2033 if not utilized. The Company had U.S. state income tax net operating loss carryforwards of $1.2 billion with varying expiration dates, which will begin to expire starting in 2028 if not utilized. As of December 31, 2018, the Company had foreign net operating loss carryforwards of $604.0 million (with various expiration dates), of which approximately $313.0 million have indefinite carryforward periods. Certain of these federal, state and foreign net operating loss carryforwards may be subject to Internal Revenue Code Section 382 or similar provisions, which impose limitations on their utilization amounts. F-45