Table of Contents WEWORK COMPANIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2018 The Company’s provision (benefit) for income taxes is as follows: Year Ended December 31, (Amounts in thousands) 2016 2017 2018 Current tax expense (benefit): Federal $ — $ — $ — State and local — — — Foreign 16 2,302 9,263 Total current tax expense 16 2,302 9,263 Deferred tax expense (benefit): Federal — (6,834) (1,741) State and local — (1,097) (6,777) Foreign — (98) (1,595) Total deferred tax expense (benefit) — (8,029) (10,113) Income tax expense (benefit) $ 16 $ (5,727) $ (850) The Company’s effective income tax rate differed from the U.S. Federal statutory rate of 21% primarily because of the following: Year Ended December 31, (Amounts in thousands) 2016 2017 2018 Income tax expense at the U.S. Federal tax rate (35% for 2016 & 2017, 21% for 2018) $ (150,386) $ (328,728) $ (404,937) State income taxes, inclusive of valuation allowance — (237) (5,354) Effect of foreign operations 19,944 23,524 (14,355) Stock-based compensation 4,734 82,752 4,251 Non-deductible expenses — — 16,196 Non-deductible financial instrument expense — — 27,768 Other, net 2,760 (5,485) 3,463 Effect of U.S. tax law changes — 149,096 — Valuation allowance 122,964 73,351 372,118 Income tax provision (benefit) $ 16 $ (5,727) $ (850) F-44