to losses of foreign subsidiaries, reduce our pre-tax income without a corresponding reduction in our tax expense, and therefore increase our effective tax rate. We have recorded valuation allowances against the deferred tax assets associated with losses for which we may not realize a related tax benefit. We generated income in lower tax jurisdictions primarily related to our European operations, which are headquartered in Luxembourg. 

Our provision for income taxes in 2014 was higher than in 2013 primarily due to the increased losses in certain foreign subsidiaries for which we may not realize a tax benefit and audit-related developments, partially offset by the favorable impact of earnings in lower tax rate jurisdictions. Losses for which we may not realize a related tax benefit were primarily generated by our foreign subsidiaries. Income earned in lower tax jurisdictions was primarily related to our European operations. 

We have tax benefits relating to excess stock-based compensation deductions and accelerated depreciation deductions that are being utilized to reduce our U.S. taxable income. In December 2015, U.S. legislation was enacted that extended accelerated depreciation deductions on qualifying property through 2019 and made permanent the U.S. federal research and development credit. As of December 31, 2015 , our federal net operating loss carryforward was approximately $1.1 billion and we had 

approximately $622 million of federal tax credits potentially available to offset future tax liabilities. Our federal tax credits are primarily related to the U.S. federal research and development credit, which was made permanent in 2015. 

See Item 8 of Part II, “Financial Statements and Supplementary Data—Note 10—Income Taxes” for additional information. 

Equity-Method Investment Activity, Net of Tax 

Equity-method investment activity, net of tax, was $(22) million , $37 million , and $(71) million in 2015 , 2014 , and 2013 , and is primarily related to our investment in LivingSocial. The primary component of this activity during 2014 was our share of a gain recorded by LivingSocial related to the sale of its Korean operations. This gain was partially offset by operating losses incurred by LivingSocial during the period. 

Non-GAAP Financial Measures 

Regulation G, Conditions for Use of Non-GAAP Financial Measures, and other SEC regulations define and prescribe the conditions for use of certain non- GAAP financial information. Our measures of free cash flows, operating expenses with and without stock-based compensation, and the effect of foreign exchange rates on our consolidated statements of operations, meet the definition of non-GAAP financial measures. 

We provide multiple measures of free cash flows because we believe these measures provide additional perspective on the impact of acquiring property and equipment with cash and through capital and finance leases. 

Free Cash Flow 

Free cash flow is cash flow from operations reduced by “Purchases of property and equipment, including internal-use software and website development, net” which is included in cash flow from investing activities. 

Free Cash Flow Less Lease Principal