The Company's effective income tax rate may be impacted by: (1) changes in the level of income in any of the Company's taxing jurisdictions; (2) changes in the statutes and rules applicable to taxable income in the jurisdictions in which the Company operates; (3) changes in the expected outcome of income tax audits; (4) changes in the estimate of expenses that are not deductible for tax purposes; (5) income taxes in certain states where the states' current taxable income is dependent on factors other than the Company's consolidated net income; (6) the effect of recording changes in the Company's liabilities for uncertain tax positions; and (7) adding facilities in states that on average have different income tax rates from states in which we currently operate and the resulting effect on previously reported temporary differences between the tax and financial reporting bases of our assets and liabilities.

An impairment loss will result in an income tax benefit during the period incurred as the amortization of broadcasting licenses and goodwill is deductible for income tax purposes.

Income tax expense (benefit) computed using the United States federal statutory rates is reconciled to the reported income tax expense (benefit) as follows:

		Years Ended December 31,
			2011	2010		2009
			(amounts in thousands)

Federal statutory income tax rate			35%		35%		35%

Computed tax expense (benefit) at federal statutory
	rates on income (loss) before income taxes (benefit)	$	18,223	$	23,461	$	59
State income tax expense (benefit), net of federal benefit			(1,037)		2,572		552
Federal tax expense associated with non-amortizable assets			-		19,246		-
Non recognition of expense due to full valuation allowance			-		(22,842)		(1,047)
Valuation allowance current year activity			(37,505)		-		-
Reversal of net tax on derivative liability			2,547		-		-
Decrease in valuation allowance for change in federal net
operating loss carryback rules			-		(149)		(6,696)
Change in uncertain tax positions			-		(2,458)		433
Nondeductible expenses and other			1,328		765		1,170
Income taxes (benefit)		$	(16,444)	$	20,595	$	(5,529)

The effective income tax rate (benefit) was (31.6%). The difference between the federal statutory rate of 35.0% and the effective tax rate was primarily due to a reversal of the full valuation allowance against the Company's deferred tax assets for the reasons as described below under Valuation Allowance For Deferred Tax Assets.

The effective income tax rate was 30.7%. The difference between the federal statutory rate of 35.0% and the effective tax rate was primarily due to: (1) tax expense associated with non-amortizable assets such as broadcasting licenses and goodwill; (2) non-recognition of tax expense due to a full valuation allowance; (3) a decrease in the liability for uncertain tax positions for the reasons described below under Liabilities For Uncertain Tax Positions; and (3) permanent differences that are not fully deductible for tax purposes.

The Company's tax benefit as a percentage of pre-tax loss from continuing operations was not numerically relevant. The difference between the federal statutory tax rate of 35% and the effective tax rate is primarily due to: (1) a valuation allowance; (2) state tax provisions; and (3) permanent differences that are not fully deductible for tax purposes.

The effective income tax benefit of $5.5 million primarily resulted from a change in tax legislation during the fourth quarter of 2009 that allowed net operating losses to be carried back for up to five years rather than two years. As a result, the Company applied for a tax refund in excess of $7.0 million using its 2008 net operating loss. Included in the tax refund was the realization of $0.3 million in dividend equivalent payments, which were recorded as an increase to paid-in capital. Due to the expected refund from the Internal Revenue Service, the Company's full valuation allowance against this deferred tax asset was reversed. The Company also recorded the expected refund from the Internal Revenue Service as prepaid and refundable income taxes as of December 31, 2010.

In connection with the recording of a $67.7 million impairment loss during the year ended December 31, 2010, the Company recorded an income tax benefit of $26.7 million and a full valuation allowance.

Income tax expense (benefit) for the years ended December 31, 2011, 2010 and 2009 is summarized as follows:

				Years Ended December 31,
				2011		2010		2009

	Current:
		Federal		$	-	$	(2,608)	$	(6,378)
		State			(1,643)		150		849
			Total current		(1,643)		(2,458)		(5,529)

	Deferred:
		Federal			(16,286)		19,246		-
		State			1,485		3,807		-
			Total deferred		(14,801)		23,053		-

Total income taxes (benefit)				$	(16,444)	$	20,595	$	(5,529)

The income tax accounting process, to determine the deferred tax assets and deferred tax liabilities, involves estimating all temporary differences between the tax and financial reporting bases of the Company's assets and liabilities based on tax laws and statutory tax rates applicable to the period in which the differences are expected to affect taxable income.

The tax effects of significant temporary differences that comprise the net deferred tax assets and liabilities are as follows:

			December 31,
			2011		2010
			(amounts in thousands)
Deferred tax assets:
	Employee benefits		$	910	$	860
	Deferred compensation			547		438
	Provision for doubtful accounts			1,304		1,235
	Derivative financial instruments			529		1,169
	Other			256		336
	Total current deferred tax assets before valuation allowance			3,546		4,038
	Valuation allowance			(428)		(3,261)
	Total current deferred tax assets - net			3,118		777
	Federal and state income tax loss carryforwards			66,129		46,723
	Share-based compensation			2,579		3,292
	Investments - impairments			450		450
	Lease rental obligations			2,201		1,343
	Deferred compensation			2,856		2,735
	Other			1,292		3,019
	Total non-current deferred tax assets before valuation allowance			75,507		57,562
	Valuation allowance			(9,114)		(47,929)
	Total non-current deferred tax assets - net			66,393		9,633
	Total deferred tax assets		$	69,511	$	10,410

Deferred tax liabilities:
	Advertiser broadcasting obligations		$	(83)	$	(126)
	Total current deferred tax liabilities			(83)		(126)
	Deferral of gain recognition on the extinguishment of debt			(7,645)		(7,635)
	Property, equipment and certain intangibles (other
		than broadcasting licenses and goodwill)		(955)		(2,649)
	Broadcasting licenses and goodwill			(69,110)		(23,053)
	Total non-current deferred tax liabilities			(77,710)		(33,337)
	Total deferred tax liabilities		$	(77,793)	$	(33,463)

	Total net deferred tax liabilities		$	(8,282)	$	(23,053)

The Company was impacted by the economic downturn which resulted in impairments to its broadcast licenses and goodwill in 2008 and 2007. Due to these impairment losses and their impact on cumulative three-year income, the Company established a deferred tax asset valuation allowance in 2008.

During the second quarter of 2011, management determined that on a more likely than not realization basis, this full valuation allowance was no longer required. Contributing to this assessment were sufficient positive indicators such as, but not limited to, the then present economic conditions (as compared to the economic conditions when the valuation allowance was established), recent profitability, management's expectation of future profitability, including available future taxable income under the current tax law to realize all of the tax benefits for deductible temporary differences and carryforwards. In addition, the Company does not have a history of its federal and certain state net operating loss carryforwards expiring unused.

The recoverability of the Company's net deferred tax assets has been assessed utilizing projections based on the Company's current operations. The projections show a significant decrease in tax amortization in the early years of the carryforward period as a significant portion of the Company's intangible assets will be fully amortized during that time. Accordingly, the recoverability of the net deferred tax assets is not dependent on material improvements to operations, material asset sales or other non-routine transactions. Based on this assessment, management determined that it is more likely than not that such assets will be realized, which resulted in a reversal of the full valuation allowance during 2011. The Company decreased its valuation allowance by $41.7 million to $9.5 million as of December 31, 2011 from $51.2 million as of December 31, 2010.

The following table presents the changes in the deferred tax asset valuation allowance for the periods indicated:

Increase

(Decrease)

Increase

Charged/

(Decrease)

Increase

(Credited)

Charged/

(Decrease)

Balance At

To Income

(Credited)

Balance At

Beginning

Taxes

Balance

End Of

Year Ended

Year

(Benefit)

OCI

Sheet

Year

(amounts in thousands)

December 31, 2011

51,190

(38,876)

(2,772)

9,542

December 31, 2010

56,887

(3,239)

(2,458)

51,190

December 31, 2009

72,169

(5,444)

(1,181)

(8,657)

56,887

The Company classifies interest related to income tax liabilities as income tax expense, and penalties are recognized as a component of income tax expense. The income tax liabilities and accrued interest and penalties are presented as non-current liabilities, as payments are not anticipated within one year of the balance sheet date. These non-current income tax liabilities are recorded in other long-term liabilities in the consolidated balance sheets.

The Company's liabilities for uncertain tax positions, which amounts were recorded as long-term liabilities in the balance sheets, are reflected in the following table as of the periods indicated:

The decrease in liabilities for uncertain tax positions for the years ended December 31, 2011 primarily reflects the expiration of statutes of limitation for certain tax jurisdictions. The Company reviews its estimates on a quarterly basis and any change in its liabilities for uncertain tax positions will result in an adjustment to its income tax expense in the statement of operations in each period measured.

The amounts for interest and penalties expense reflected in the statements of operations were eliminated in the statements of cash flows as no cash payments were made during these periods.

The following table presents, for the periods indicated, the expense (income) for uncertain tax positions, which amounts were reflected in the consolidated statements of operations as an increase (decrease) to income tax expense:

The decrease in liabilities for uncertain tax positions for the years ended December 31, 2011 and 2010 primarily reflects the expiration of statutes of limitation for certain tax jurisdictions and in 2010, the conclusion of an audit with the Internal Revenue Service (the “IRS”).

The following table presents the gross amount of changes in unrecognized tax benefits for the periods indicated:

		Years Ended December 31,
		2011		2010		2009
		(amounts in thousands)

Beginning of year balance		$	(7,738)	$	(9,548)	$	(7,375)
Prior year positions
	Gross Increases		-		-		(1,185)
	Gross Decreases		708		2,489		-
Current year positions
	Gross Increases		(1,431)		(1,017)		(1,386)
	Gross Decreases		-		-		-
Settlements with tax authorities			-		-		-
Reductions due to statute lapse			281		338		398
End of year balance		$	(8,180)	$	(7,738)	$	(9,548)

Ending liability balance included above that was
	reflected as an offset to deferred tax assets	$	(7,495)	$	(6,064)	$	(5,047)

The gross amount of the Company's unrecognized tax benefits is reflected in the above table which, if recognized, would impact the Company's effective income tax rate in the period of recognition. The total amount of unrecognized tax benefits could increase or decrease within the next 12 months for a number of reasons including the expiration of statutes of limitations, audit settlements and tax examination activities.

As of December 31, 2011, there are certain unrecognized net tax benefits of $0.4 million (exclusive of interest and penalties) that over the next 12 months are subject to the expiration of various statutes of limitation. The Company believes that the total amount of unrecognized tax benefits will decrease by this amount over the next twelve months. Interest and penalties accrued on these uncertain tax positions will also be released upon the expiration of statutes of limitations.

The Company is subject to federal and state income tax audits from time to time that could result in proposed assessments. The Company cannot predict with certainty how these audits will be resolved and whether the Company will be required to make additional tax payments, which may include penalties and interest. During the fourth quarter of 2010, the Company concluded an audit by the Internal Revenue Service with no proposed adjustment for the tax years of 2004 through 2008. For most states where the Company conducts business, the Company is subject to examination for the preceding three to six years. In certain states, the period could be longer.

Management believes that the Company has made sufficient tax provisions for tax periods that are within the statutory period of limitations not previously audited and that are potentially open for examination by the taxing authorities. Potential liabilities associated with these years will be resolved when an event occurs to warrant closure, primarily through the completion of audits by the taxing jurisdictions, or if the statute of limitations expires. To the extent audits or other events result in a material adjustment to the accrued estimates, the effect would be recognized during the period of the event. There can be no assurance, however, that the ultimate outcome of audits will not have a material adverse impact on the Company's financial position, results of operations or cash flows.

The following table provides the amount of income tax payments and income tax refunds for the periods indicated:

(1) Tax refunds in 2011 and 2010 were primarily comprised of refunds resulting from federal tax legislation during the fourth quarter of 2009 that allowed the Company to carryback its 2008 net operating loss for five years rather than for two years.

The Company reversed a full valuation allowance against its deferred tax assets during the second quarter of 2011. The Company has recorded a valuation allowance, however, for certain of its state net operating losses (“ NOLs”) as the Company does not expect to obtain a benefit in future periods. For further discussion, see Valuation Allowance For Deferred Tax Assets under this note. Utilization in future years of the NOL carryforwards may be subject to limitations due to the changes in ownership provisions under Section 382 of the Internal Revenue Code and similar state provisions.

Windfall tax benefits will be recognized for book purposes and recorded to paid-in capital only when realized. The Company does not recognize a deferred tax asset for unrealized tax benefits associated with the tax deductions in excess of the compensation recorded (excess tax benefit). The Company applies the “with and without” approach for utilization of tax attributes upon realization of NOLs in the future. This method allocates stock-based compensation benefits last among other tax benefits recognized.

In 2009, the Company utilized $5.2 million of capital loss carryovers, which was scheduled to expire in 2013. As a result, the Company's 2009 NOL increased by the same amount.

Included in the year ended December 31, 2011 is a prior period correction for the year ended December 31, 2008 of $6.0 million that was made to record an income tax benefit to other comprehensive income (loss) and to increase deferred income tax expense by the same amount. The prior period financial statements were not restated as this correction was considered to be immaterial to both our previously reported and current results of operations and financial position and had no impact on previously reported cash flows from operating, financing or investing activities.

In addition, during the year ended December 31, 2011, the Company noted errors related to its deferred tax expense for the three month periods ended September 30, 2011 and June 30, 2011 of $0.4 million and $1.6 million, respectively. These errors were primarily due to the netting of deferred tax liabilities from the amortization of tax deductible goodwill and FCC licenses, against its deferred tax assets. Since the deferred tax liabilities have indefinite lives, they should not have been netted against deferred tax assets with definite lives. The Company has corrected these errors during the three months and year ended December 31, 2011 by recognizing an additional $1.5 million in deferred tax expense in the periods, which includes a prior year adjustment of $0.5 million related to its liabilities for uncertain tax positions. The Company recorded the correction of these errors to the financial statements for the three months ended December 31, 2011 as these errors were not material to the financial statements for the three months ended June 30, 2011, September 30, 2011 and December 31, 2011.