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Note 10 - Income Taxes | 12 Months Ended
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Dec. 31, 2019
Notes to Financial Statements |
Income Tax Disclosure [Text Block] |
10. | Income Taxes
We recognize deferred tax assets and liabilities for future tax consequences attributable to differences between our financial statement carrying amounts of existing assets and liabilities and their respective tax bases. We measure deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. We recognize the effect on deferred tax assets and liabilities resulting from a change in tax rates in income in the period that includes the date of the change. Under certain circumstances, we recognize liabilities in our financial statements for positions taken on uncertain tax issues. When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others may be subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, we believe it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50% likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits on the balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest and penalties associated with unrecognized tax benefits are classified as income tax expense in the statement of operations. Federal and state and local income tax expense (benefit) is summarized as follows (in millions):
|  | Year Ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 8 |  |  | $ | 43 |  |  | $ | 5 |
State and local |  |  | 13 |  |  |  | 11 |  |  |  | 3 |
State and local - reserve for uncertain tax positions |  |  | - |  |  |  | - |  |  |  | 1 |
Current income tax expense |  |  | 21 |  |  |  | 54 |  |  |  | 9 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal(1) |  |  | 54 |  |  |  | 17 |  |  |  | (82 | )
State and local |  |  | 1 |  |  |  | 6 |  |  |  | 4 |
Deferred income tax expense (benefit) |  |  | 55 |  |  |  | 23 |  |  |  | (78 | )
Total income tax expense (benefit) |  | $ | 76 |  |  | $ | 77 |  |  | $ | (69 | )
| (1) | Includes a federal tax benefit of $146.0 million in 2017 from the restatement of deferred taxes resulting from the reduction of the corporate tax rate due to the enactment of the TCJA.
Significant components of our deferred tax liabilities and assets are as follows (in millions):
|  | December 31, |
|  | 2019 |  |  | 2018 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Net book value of property and equipment |  | $ | 83 |  |  | $ | 21 |
Broadcast licenses, goodwill and other intangibles |  |  | 869 |  |  |  | 286 |
Total deferred tax liabilities |  |  | 952 |  |  |  | 307 |
Deferred tax assets: |  |  |  |  |  |  |  |
Liability for accrued vacation |  |  | 3 |  |  |  | 2 |
Liability for accrued bonus |  |  | 7 |  |  |  | 4 |
Allowance for doubtful accounts |  |  | 3 |  |  |  | 1 |
Liability under health and welfare plan |  |  | - |  |  |  | 1 |
Liability for pension plan |  |  | 10 |  |  |  | 8 |
Federal operating loss carryforwards |  |  | 87 |  |  |  | - |
State and local operating loss carryforwards |  |  | 31 |  |  |  | 2 |
Acquisition costs |  |  | 2 |  |  |  | 2 |
Restricted stock |  |  | 4 |  |  |  | 2 |
Investments |  |  | 4 |  |  |  | - |
Interest expense limitation |  |  | 4 |  |  |  | - |
Other |  |  | 1 |  |  |  | - |
Total deferred tax assets |  |  | 156 |  |  |  | 22 |
Valuation allowance for deferred tax assets |  |  | (14 | ) |  |  | - |
Net deferred tax assets |  |  | 142 |  |  |  | 22 |
Deferred tax liabilities, net of deferred tax assets |  | $ | 810 |  |  | $ | 285 |
As of December 31, 2019, we have approximately $438 million of federal operating loss carryforwards, which expire during the years 2023 through 2037. We expect to have federal taxable income in the carryforward periods, therefore we believe that it is more likely than not that these federal operating loss carryforwards will be fully utilized. Additionally, we have an aggregate of approximately $677 million of various state operating loss carryforwards, of which we expect that approximately half will be utilized. A reconciliation of income tax expense at the statutory federal income tax rate and income taxes as reflected in the consolidated financial statements for the years ended December 31, 2019, 2018 and 2017 is as follows (in millions):
|  | Year Ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Statutory federal rate applied to income before income tax expense |  | $ | 53 |  |  | $ | 60 |  |  | $ | 68 |
Current year permanent items |  |  | 13 |  |  |  | 3 |  |  |  | 2 |
State and local taxes, net of federal tax benefit |  |  | 13 |  |  |  | 14 |  |  |  | 8 |
Change in valuation allowance |  |  | (2 | ) |  |  | - |  |  |  | (2 | )
Reserve for uncertain tax positions |  |  | - |  |  |  | - |  |  |  | 1 |
Rate change due to enactment of tax reform |  |  | - |  |  |  | - |  |  |  | (146 | )
Other items, net |  |  | (1 | ) |  |  | - |  |  |  | - |
Income tax expense (benefit) as recorded |  | $ | 76 |  |  | $ | 77 |  |  | $ | (69 | )
Effective income tax rate |  |  | 30 | % |  |  | 27 | % |  |  | (36 | )%
As of each year end, we are required to adjust our pension liability to an amount equal to the funded status of our pension plans with a corresponding adjustment to other comprehensive income on a net of tax basis. During 2019, we increased our recorded non-current pension liability by $7 million and recognized other comprehensive income of $5 million, net of a $2 million tax expense. During 2018, we decreased our recorded non-current pension liability by $1 million and recognized other comprehensive income of $1 million. During 2017, we increased our recorded non-current pension liability by $7 million and recognized other comprehensive loss of $4 million, net of a $3 million tax benefit. In 2019, 2018 and 2017, we made income tax payments (net of refunds) of $23 million, $34 million and $2 million, respectively. We prescribe a recognition threshold and measurement attribution for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. As of December 31, 2019, we had approximately $15 million of unrecognized tax benefits. These unrecognized tax benefits would impact our effective tax rate if recognized. The liability for unrecognized tax benefits is recorded net of any federal tax benefit that would result from payment. We have accrued estimates of interest and penalties related to unrecognized tax benefits in income tax expense. As of December 31, 2019, we had recorded a liability for potential penalties and interest of approximately $1 million related to uncertain tax positions. While it is difficult to calculate with any certainty, we estimate no change, exclusive of interest and penalties, will be recorded for uncertain tax positions over the next twelve months. We file income tax returns in the United States federal and multiple state jurisdictions. We have net operating losses (historic and acquired, through recent business combinations) that extend our open adjustment period related to federal and state tax audits from 2000 through 2018. The open years vary by entity and jurisdiction.

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- 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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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