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INCOME TAXES | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES On December 20, 2024, the company closed on a debt exchange transaction that is discussed in detail in Note 6, Long-Term Debt. In connection with the debt exchange transaction the Company recognized cancellation of debt income (“CODI”) for US tax purposes of $744.7 million. Pursuant to Internal Revenue Code (“IRC”) Section 108, an insolvent debtor may exclude CODI from taxable income to the extent of the debtor’s insolvency (liabilities greater than the fair value of its assets) but must reduce its tax attributes, subject to certain limitations and according to prescribed ordering rules, based on the amount of CODI excluded from taxable income. The company currently estimates that the level of its insolvency (as defined for US Tax purposes) exceeds the amount of CODI resulting from the debt exchange transactions, such that all of the resulting CODI will be excluded from the company’s taxable income. For purposes of determining the tax provision for the year ended December 31, 2024, the company estimates that $744.7 million of its federal capital loss carryforwards and certain of its states net operating loss and capital loss carryforwards will be eliminated as a result of tax attribute reduction for excluded CODI. For the year ended December 31, 2024, the company recorded an income tax benefit of $118.2 million related to the net effects of the debt exchange transaction, including excluded CODI, federal and state tax attribute reduction, and resulting changes in valuation allowance. Pillar Two – Global Minimum Tax The Organization for Economic Co-operation and Development has published model rules, which include the implementation of a global minimum tax rate of 15%, commonly referred to as Pillar Two. Certain countries in which we operate have enacted legislation implementing the Pillar Two model rules, effective January 1, 2024. The provisions effective in 2024 did not have a material impact on our financial results and we do not expect a material impact in future years. Significant components of the provision for income tax benefit (expense) are as follows:
(In thousands) | Year Ended December 31,
| 2024 |  | 2023 |  | 2022
Current – Federal | $ | (66,510) |  |  | $ | (67,856) |  |  | $ | (54,934) |
Current – foreign | (4,845) |  |  | (3,001) |  |  | (4,891) |
Current – state | (7,106) |  |  | (11,393) |  |  | (19,312) |
Total current expense | (78,461) |  |  | (82,250) |  |  | (79,137) |
Deferred – Federal | 220,078 |  |  | 91,658 |  |  | 65,553 |
Deferred – foreign | 1,682 |  |  | 1,714 |  |  | 1,659 |
Deferred – state | 15,103 |  |  | 51,216 |  |  | 7,206 |
Total deferred benefit | 236,863 |  |  | 144,588 |  |  | 74,418 |
Income tax benefit (expense) | $ | 158,402 |  |  | $ | 62,338 |  |  | $ | (4,719) |
The current tax expenses recorded for the years ended December 31, 2024, 2023, and 2022 were primarily related to federal, state, and local tax expenses incurred due to taxable income in excess of available net operating losses during those years, as well as expenses recorded for unrecognized tax benefits reserves during the period. The deferred tax benefits of $236.9 million and $144.6 million recorded in the years ended December 31, 2024 and 2023, respectively, related primarily to the difference of book in excess of tax amortization expense during the years and the disallowance of interest expense deductions under Section 163(j) of the Internal Revenue Code. The 2024 book amortization expense included the FCC license non-cash impairment charge recorded during the second quarter of 2024 discussed in Note 4, Property, Plant and Equipment, Intangible Assets and Goodwill. In addition, the 2024 deferred tax benefits include the net benefit recorded from the debt exchange transaction discussed above. These deferred tax benefits were partially offset by the utilization of net operating loss carryforwards during the current period and the recording of valuation allowance adjustments against certain federal and state deferred tax assets for disallowed interest carryforwards and net operating losses due to the uncertainty of the ability to realize those assets in future years. Significant components of the Company's deferred tax liabilities and assets are as follows:
| December 31,
(In thousands) | 2024 |  | 2023
Deferred tax liabilities: |  |  |
Intangibles | $ | 429,054 |  |  | $ | 548,872 |
Fixed Assets | 25,344 |  |  | 57,800 |
Deferred Income | — |  |  | 22,163 |
Operating lease right-of-use assets | 168,976 |  |  | 178,173 |
Total deferred tax liabilities | 623,374 |  |  | 807,008 |
Deferred tax assets: |  |  |
Accrued expenses | 18,159 |  |  | 12,141 |
Net operating loss carryforwards | 119,495 |  |  | 124,388 |
Interest expense carryforwards | 453,166 |  |  | 389,236 |
Long-term debt | 190,935 |  |  | — |
Operating lease liabilities | 198,823 |  |  | 211,412 |
Capital loss carryforwards | 5,119 |  |  | 1,653,021 |
Investments | 13,747 |  |  | 17,284 |
Bad debt reserves | 11,991 |  |  | 12,452 |
Other | 1,265 |  |  | 3,539 |
Total gross deferred tax assets | 1,012,700 |  |  | 2,423,473 |
Less: Valuation allowance | 492,224 |  |  | 1,956,233 |
Total deferred tax assets | 520,476 |  |  | 467,240 |
Net deferred tax liabilities | $ | 102,898 |  |  | $ | 339,768 |
The deferred tax liability related to intangibles primarily relates to the difference in book and tax basis of FCC licenses and other intangible assets which in accordance with ASC 350-10, the Company does not amortize for financial reporting purposes. As a result, this deferred tax liability will not reverse over time unless the Company recognizes future impairment charges or sells its FCC licenses. As the Company continues to amortize its tax basis in its FCC licenses, the deferred tax liability will increase over time. The Company’s net foreign deferred tax liabilities for the years ended December 31, 2024 and 2023 were $8.6 million and $10.3 million, respectively. At December 31, 2024, the Company had recorded net operating loss and tax credit carryforwards (tax effected) for federal and state income tax purposes of approximately $119.5 million, expiring in various amounts through 2044 or in some cases with no expiration date. Internal Revenue Code Section 163(j), as amended, generally limits the deduction for business interest expense to thirty percent of adjusted taxable income, and provides that any disallowed interest expense may be carried forward indefinitely. The Company recorded deferred tax assets for federal and state interest limitation carryforwards of $453.2 million as of December 31, 2024. In connection with the taxable separation of the Outdoor division as part of the bankruptcy restructuring in 2019, the Company realized a $7.2 billion capital loss (gross after attribute reduction calculations). For federal tax purposes (and in most state jurisdictions) capital losses can be carried forward 5 years and only be used to offset capital gains. During 2024, a portion of our federal and state capital loss carryforwards were eliminated through attribute reduction due to the excluded CODI arising from the debt exchange transaction discussed above. Following the attribute reduction, most of our remaining federal and state capital loss carryforwards expired unused as of December 31, 2024. The Company has recorded a full valuation allowance against the remaining deferred tax asset associated with the federal and state capital loss carryforward as it is not expected to be realized. As of December 31, 2024, the Company had recorded a valuation allowance of $492.2 million against a portion of these U.S. federal and state deferred tax assets which it does not expect to realize, relating primarily to disallowed interest carryforwards, certain state net operating loss carryforwards and the remaining capital loss carryforwards. The Company's U.S. federal and state deferred tax valuation allowance decreased by $1.5 billion during the year ended December 31, 2024 primarily due to expiration of capital loss carryforwards. Any deferred tax liabilities associated with acquired FCC licenses and tax-deductible goodwill intangible assets are relied upon as sources of future taxable income for purposes of realizing deferred tax assets attributed to carryforwards that have an indefinite life such as the Section 163(j) interest carryforward. At December 31, 2024, net deferred tax liabilities include a deferred tax asset of $7.0 million relating to stock-based compensation expense under ASC 718-10, Compensation—Stock Compensation. Full realization of this deferred tax asset requires stock options to be exercised at a price equal to or exceeding the sum of the grant price plus the fair value of the option at the grant date and restricted stock to vest at a price equaling or exceeding the fair market value at the grant date. Accordingly, there can be no assurance that the stock price of the Company’s common stock will rise to levels sufficient to realize the entire deferred tax benefit currently reflected in its balance sheet. The reconciliations of income tax on income (loss) computed at the U.S. federal statutory tax rates to the recorded income tax benefit (expense) for the Company are:
| Year Ended December 31,
(In thousands) | 2024 |  | 2023 |  | 2022
| Amount |  | Percent |  | Amount |  | Percent |  | Amount |  | Percent
Income tax benefit at statutory rates | $ | 245,258 |  |  | 21.0 | % |  | $ | 244,162 |  |  | 21.0 | % |  | $ | 54,170 |  |  | 21.0 | %
State income taxes, net of federal tax effect | 55,874 |  |  | 4.8 | % |  | 16,349 |  |  | 1.4 | % |  | (3,548) |  |  | (1.4) | %
Foreign income taxes | (1,982) |  |  | (0.2) | % |  | (583) |  |  | (0.1) | % |  | (1,615) |  |  | (0.6) | %
Nondeductible items | (10,885) |  |  | (0.9) | % |  | (10,425) |  |  | (0.9) | % |  | (7,497) |  |  | (2.9) | %
Changes in valuation allowance and other estimates | (2,639) |  |  | (0.2) | % |  | (69,722) |  |  | (6.0) | % |  | (52,293) |  |  | (20.3) | %
Impairment charges | (129,378) |  |  | (11.0) | % |  | (125,047) |  |  | (10.7) | % |  | — |  |  | — | %
Tax credits | 4,048 |  |  | 0.3 | % |  | 4,592 |  |  | 0.4 | % |  | 3,848 |  |  | 1.5 | %
Other, net | (1,894) |  |  | (0.2) | % |  | 3,012 |  |  | 0.3 | % |  | 2,216 |  |  | 0.9 | %
Income tax benefit (expense) | $ | 158,402 |  |  | 13.6 | % |  | $ | 62,338 |  |  | 5.4 | % |  | $ | (4,719) |  |  | (1.8) | %
The Company’s effective tax rates for the years ended December 31, 2024 and 2023 were 13.6% and 5.4%, respectively. The effective tax rates for both years were primarily impacted by the valuation allowance adjustments recorded during the years against certain federal and state deferred tax assets for disallowed interest carryforwards and state net operating losses due to the uncertainty of the ability to realize those assets in future periods. The 2024 valuation change was also impacted by the excluded CODI and attribute reduction from the debt exchange transaction described above. In addition, in both the 2024 and 2023 tax years, the Company recorded a GAAP impairment charge to its non-deductible goodwill as discussed in Note 4, Property, Plant and Equipment, Intangible Assets and Goodwill. The Company’s effective tax rate for the year ended December 31, 2022 was (1.8)%. The effective rate for the year was primarily impacted by the valuation allowance adjustments recorded during the year against certain federal and state deferred tax assets for disallowed interest carryforwards due to the uncertainty of the ability to realize those assets in future years. The Company continues to record interest and penalties related to unrecognized tax benefits in current income tax expense. The total amount of interest accrued at December 31, 2024 and 2023 was $18.2 million and $9.3 million, respectively. The total amount of unrecognized tax benefits including accrued interest and penalties at December 31, 2024 and 2023 was $166.6 million and $133.1 million, respectively, of which $166.4 million and $132.6 million is included in “Other long-term liabilities”. In addition, $0.2 million and $0.5 million of unrecognized tax benefits are recorded net with the Company’s deferred tax assets for its net operating losses as opposed to being recorded in “Other long-term liabilities” at December 31, 2024 and 2023, respectively. The total amount of unrecognized tax benefits at December 31, 2024 and 2023 that, if recognized, would impact the effective income tax rate is $40.9 million and $32.6 million, respectively. The potential reduction in unrecognized tax benefits during the next 12 months is not expected to be material.
(In thousands) | Year Ended December 31,
Unrecognized Tax Benefits | 2024 |  | 2023
Balance at beginning of period | $ | 123,822 |  |  | $ | 23,823 |
Increases for tax position taken in the current year | 10,436 |  |  | 52,856 |
Increases for tax positions taken in previous years | 16,521 |  |  | 48,194 |
Decreases for tax position taken in previous years | (933) |  |  | — |
Decreases due to lapse of statute of limitations | (1,445) |  |  | (1,051) |
Balance at end of period | $ | 148,401 |  |  | $ | 123,822 |
The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. All federal income tax matters through 2020 are closed. The majority of all material state, local, and foreign income tax matters have been concluded for years through 2020 with the exception of a current examination in Texas that covers the 2007-2016 tax years.

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