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INCOME TAXES (Block) | 12 Months Ended
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Dec. 31, 2017
Income Tax Disclosure Abstract |
Income Tax Disclosure Text Block | 15. INCOME TAXES Effective Tax Rate - Overview 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, rules and tax rates 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 in come is dependent on factors other than the Company’s consolidated net income; and (6) adding facilities in states that on average have different income tax rates from states in which the Company currently operates and the resulting effect on previously re ported temporary differences between the tax and financial reporting bases of the Company’s assets and liabilities. The Company’s annual effective tax rate may also be materially impacted by tax expense associated with non-amortizable assets such as broadc asting licenses and goodwill and changes in the deferred tax valuation allowance. An impairment loss for financial statement purposes will result in an income tax benefit during the period incurred as the amortization of broadcasting licenses and goodwil l is deductible for income tax purposes. Expected a nd Reported Income Taxes (Benefit) Income tax expense (benefit) from continuing operations computed using the United States federal statutory rates is reconciled to the reported income tax expense (benefit) from continuing operations as follows:
|  |  | Years Ended December 31,
|  |  |  | 2017 |  | 2016 |  | 2015
|  |  |  | (amounts in thousands)
Federal statutory income tax rate |  |  | 35% |  |  | 35% |  |  | 35%
Computed tax expense at federal statutory rates on income |  |  |  |  |  |  |  |  |
| before income taxes |  | $ | (8,425) |  | $ | 18,501 |  | $ | 16,667
State income tax expense, net of federal benefit |  |  | 23,045 |  |  | (5,202) |  |  | 1,333
Non-recognition of expense due to full valuation allowance |  |  | - |  |  | - |  |  | (244)
Valuation allowance current year activity | 2,395 |  |  | - |  |  | -
Tax impact of share-based awards |  |  | 1,383 |  |  | - |  |  | -
Transaction costs |  |  | 8,477 |  |  | - |  |  | -
Recognized gain on Exchange Transactions |  |  | 6,435 |  |  | - |  |  | -
U.S. federal income tax reform |  |  | (291,497) |  |  | - |  |  | -
Tax benefit shortfall associated with share-based awards |  |  | - |  |  | 286 |  |  | 12
Nondeductible expenses and other |  |  | 1,102 |  |  | 1,209 |  |  | 669
Income taxes |  | $ | (257,085) |  | $ | 14,794 |  | $ | 18,437
For 2017 The effective income tax rate was significantly impacted by an income tax benefit resulting from the Tax Cuts and Jobs Act (“TCJA”) that was enacted on December 22, 2017, which reduced the U.S. federal corporate tax rate from the previous rate of 35% to 21%. The Company’s deferred tax balances were re-measured using the new federal income tax rate. For 2016 T he effective income tax rate was 28.0%. This rate was lower than the federal statutory rate of 35% primarily due to th e combination of: (1) tax benefits associated with legislative changes in certain single member states; (2) a reduction in our valuation allowances against net operating losses in certain single member states as a result of internal restructuring; and (3) the reliance more on share-based awards issued to senior management that are fully deductible for tax purposes. For 2015 T he effective income tax rate was 38.7%. This rate was higher t han the federal statutory rate of 35% primarily due to the combination of: (1) an increase in net deferred tax liabilities associated with non-amortizable assets such as broadcasting licenses and goodwill; (2) an adjustment for expenses that are not deductible for tax purposes; and (3) a tax benefit shortfall associated with share-based awards. The income tax rate has been trending down as expenses not deductible for tax purposes have decreased due to the issuance to senior management of a higher percentage of awards that were full y deductible for tax purposes. Effective during the second half of 2015, the estimated annual income tax rate increased due to the impact of acquisitions on the Company’s state income apportionments to states with higher income tax rates. This increase wa s offset by a discrete state income tax credit due to recent legislation that allowed for the release of a partial valuation allowance in a certain single member state. Income Tax Expense Income tax expense (benefit) for each year is summarized in the table below. The table does not include income tax expense from discontinued opera tions of $0.5 million in 2017.
|  |  |  |  | Years Ended December 31,
|  |  |  |  | 2017 |  | 2016 |  | 2015
| Current: |  |  |  |  |  |  |  |  |
|  | Federal |  | $ | 5,178 |  | $ | (33) |  | $ | 25
|  | State |  |  | 1,289 |  |  | 139 |  |  | 90
|  |  | Total current |  |  | 6,467 |  |  | 106 |  |  | 115
| Deferred: |  |  |  |  |  |  |  |  |
|  | Federal |  |  | (295,466) |  |  | 19,980 |  |  | 17,042
|  | State |  |  | 31,915 |  |  | (5,292) |  |  | 1,280
|  |  | Total deferred |  |  | (263,551) |  |  | 14,688 |  |  | 18,322
Total income taxes (benefit) |  | $ | (257,084) |  | $ | 14,794 |  | $ | 18,437
Deferred Tax Assets a nd Deferred Tax Liabilities The income tax accounting process to determine the Company’s deferred tax assets and 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. These estimates include assessing the likely future tax consequences of events that have been recognized in the Company’s financial statements or tax returns. C hanges to these estimates could have a future impact on the Company’s financial positio n or results of operations. At December 31, 2017, the Company has calculated the accounting for the tax effects of enactment of TCJA as written, and made a reasonable estimate of the effects on the existing deferred tax balances. The Company recorded an estimated income tax benefit from continuing operations of $291.5 million to adjust the Company’s deferred income tax balances as a result of the reduced corporate income tax rate. The estimated amounts are included as components of income tax e xpense from continuing operations. To determine the Company’s estimated amounts, the Company re-measured its deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally a 21% federal tax rate and its related impact on the state tax rate. The Company is continuing to analyze certain aspects of the new legislation and refining its calculations, which could potentially affect the measurement of these balances or potentia lly give rise to new deferred tax amounts. In addition, the Company’s estimates may also be affected as further legislative guidance is published, including those related to the deductibility of purchased assets, state tax treatment, and amounts related t o employee compensation. The estimated amounts will be subject to adjustment during a measurement period of up to one year. This re-measurement in 2017 resulted in a reduction in the Company’s net deferred tax liability, as noted by the change in feder al statutory tax rate above. The components of deferred tax assets and liabilities as of December 31, 2017 and 2016, are as detailed below.
|  |  |  |  | December 31,
|  |  |  |  | 2017 |  | 2016
|  |  |  |  | (amounts in thousands)
Deferred tax assets: |  |  |  |  |  |
| Federal and state income tax loss carryforwards |  |  | 96,334 |  |  | 126,278
| Share-based compensation |  |  | 4,174 |  |  | 3,145
| Investments - impairments |  |  | 348 |  |  | 499
| Lease rental obligations |  |  | 13,910 |  |  | 3,504
| Deferred compensation |  |  | 11,601 |  |  | 5,307
| Deferred gain on tower transaction |  |  | 1,897 |  |  | 3,035
| Debt fair value adjustment |  |  | 5,162 |  |  | -
| Reserves |  |  | 7,442 |  |  | -
| Property, equipment and certain intangibles (other |  |  |  |  |  |
| than broadcasting licenses and goodwill) |  |  | - |  |  | 4,036
| Advertiser broadcasting obligations |  |  | - |  |  | 47
| Employee benefits |  |  | 543 |  |  | 944
| Provision for doubtful accounts |  |  | 4,383 |  |  | 795
| Other non-current |  |  | 1,614 |  |  | 1,532
| Total deferred tax assets before valuation allowance |  |  | 147,408 |  |  | 149,122
| Valuation allowance |  |  | (37,154) |  |  | (12,861)
| Total deferred tax assets |  | $ | 110,254 |  | $ | 136,261
Deferred tax liabilities: |  |  |  |  |  |
| Advertiser broadcasting obligations |  | $ | (7,172) |  | $ | -
| Deferral of gain recognition on the extinguishment of debt |  |  | - |  |  | (3,031)
| Property, equipment and certain intangibles |  |  | (55,922) |  |  | -
| Broadcasting licenses and goodwill |  |  | (656,949) |  |  | (226,128)
| Total deferred tax liabilities |  | $ | (720,043) |  | $ | (229,159)
| Total net deferred tax liabilities |  | $ | (609,789) |  | $ | (92,898)
Valuation Allowance f or Deferred Tax Assets Judgment is required in estimating valuation allowances for deferred tax assets. Deferred tax assets are reduced by a valuation allowance if an assessment of their components indicates that it is more likely than not that all or some portion of these assets will not be realized. The realization of a deferred tax asset ultimately depends on the existence of sufficient taxable income in the carryforward periods under tax law. The Company periodically assess es th e need for valuation allowances for deferred tax assets based on more-likely-than-not realization threshold criteria. In the Company’s assessment, appropriate consideration is given to all positive and negative evidence related to the realization of the de ferred tax assets. This assessment considers, among other matters, forecasts of future profitability, the duration of statutory carryforward periods and any ownership change limitations under Internal Revenue Code Section 382 on the Company’s future income that can be used to offset historic losses. For 2018, the Company’s ability to utilize net operating loss carryforwards (“NOLs”) will be limited under Internal Revenue Code Section 382 as a result of the acquisition of CBS Radio. For federal income tax purposes, the acquisition of CBS Radio was treated as a reverse acquisition which caused the C ompany to undergo an ownership change under Internal Revenue Code (“IRC”) Section 382. The utilization of these NOLs in future years will be subject to an annual limitation. In addition, CBS Radio has federal NOLs that are subject to a separate IRC Section 382 annual limitation. As changes occur in the Company’s assessments regarding its ability to recover its deferred tax assets, the Company’s tax provision is increased in any period in which the Company determines that the recovery is not probable. The following table presents the changes in the deferred tax asset valuation allowance for the periods indicated:
|  |  |  |  | Increase |  | Increase |  |  |  |  |  |
|  |  |  |  | (Decrease) |  | (Decrease) |  |  |  |  |  |
|  |  |  |  | Charged |  | Charged |  |  |  |  |
|  |  |  |  | (Credited) |  | (Credited) |  |  |  |  |
|  | Balance at |  | to Income |  | to |  |  |  | Balance At
|  | Beginning |  | Taxes |  | Balance |  | Purchase |  | End Of
Year Ended |  | of Year |  | (Benefit) |  | Sheet |  | Accounting |  | Year
|  |  | (amounts in thousands)
December 31, 2017 |  | $ | 12,861 |  | $ | 17,785 |  | $ | 151 |  | $ | 6,357 |  | $ | 37,154
December 31, 2016 |  |  | 20,638 |  |  | (7,777) |  |  | - |  |  | - |  |  | 12,861
December 31, 2015 |  |  | 20,766 |  |  | (165) |  |  | 37 |  |  | - |  |  | 20,638
Lia b ilities f or Uncertain Tax Positions The Company recognizes liabilities for uncertain tax positions based on whether evidence indicates that it is more likely than not that the position will be sustained on audit. It is inherently difficult and subjective to estimate such amounts, as this requires the Company to estimate the probability of various possible outcomes. The Company reevaluates these uncertain tax positions on a quarterly basis. Changes in assumptions may result in the recognition of a tax benefit or an additional charge to the tax provision. The Company classifies interest and penalties that are related to income tax liabilities as a component of income tax expense. T he 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 uncertai n tax positions are reflected in the following table:
|  |  | December 31,
|  |  | 2017 |  | 2016
|  |  | (amounts in thousands)
Liabilities for uncertain tax positions |  |  |  |  |  |
| Tax |  | $ | 711 |  | $ | -
| Total |  | $ | 711 |  | $ | -
The follo wing table presents 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:
|  | Years Ended December 31,
|  | 2017 |  | 2016 |  | 2015
|  | (amounts in thousands)
Tax expense (income) |  | $ | - |  | $ | (67) |  | $ | -
Interest and penalties (income) |  |  | - |  |  | (170) |  |  | 20
Total income taxes (benefit) |  |  |  |  |  |  |  |  |
from uncertain tax positions |  | $ | - |  | $ | (237) |  | $ | 20
The increase in liabilities for uncertain tax positions for 2017 is related to the assumption of certain liabilities associated with the Merger. The following table presents the gross amount of changes in unrecognized tax benefits:
|  |  | Years Ended December 31,
|  |  | 2017 |  | 2016 |  | 2015
|  |  | (amounts in thousands)
Beginning of year balance |  | $ | (7,138) |  | $ | (7,690) |  | $ | (7,690)
Prior year positions |  |  |  |  |  |  |  |  |
| Gross Increases |  |  | (710) |  |  | - |  |  | -
| Gross Decreases |  |  | - |  |  | - |  |  | -
Current year positions |  |  |  |  |  |  |  |  |
| Gross Increases |  |  | - |  |  | - |  |  | -
| Gross Decreases |  |  | - |  |  | - |  |  | -
Settlements with tax authorities |  |  | - |  |  | - |  |  | -
Reductions due to statute lapse |  |  | 28 |  |  | 552 |  |  | -
End of year balance |  | $ | (7,820) |  | $ | (7,138) |  | $ | (7,690)
Ending liability balance included above that was |  |  |  |  |  |  |  |  |
| reflected as an offset to deferred tax assets |  | $ | (7,110) |  | $ | (7,138) |  | $ | (7,623)
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 increas e 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, 2017, there were no significant unrecognized net tax benefits (exclusive of interest and penalties) that over the next 12 months are subject to the expiration of various statutes of limitation. Interest and penalties accrued on uncertain tax positions are released upon the expiration of statutes of limitations. Federal a nd State Income Tax Audits The Company is subject to federal, state and local income tax audits from time to time that could result in proposed assessments. 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, prima rily 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 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. For most states where the Company condu cts business, the Company is subject to examination for the preceding three to six years. In certain states, the period could be longer. Net Operating Loss Carryforwards As a result of the Merger with CBS Radio on November 17, 2017, changes in the cumulative ownership percentages triggered a significant limitation in its NOL carryforward utilization. The Company’s ability to use its federal NOL and credit carryforwards is subject to annual limitations as defined in Section 382 of the IRC. CBS Radio also had federal NOLs that are subject to a separate IRS Section 382 limitation. As a result, the Company has recorded a valuation allowan ce against a portion of its federal NOLs as it anticipates utilizing $285.0 million of its NOL carryovers. The Company has recorded a valuation allowance for its state NOLs as the Company does not expect to obtain a benefit in future periods. In addition, u tilization 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. T he C ompany will continue t o assess the ability of these carryforwards to be realized in subsequent periods. Effective January 1, 2017 under new accounting guidance, the Company will recognize past and future unrealized tax benefits associated with the excess tax benefit in inc ome tax expense (benefit) on the consolidated statements of operations. The NOLs in the following table reflect an estimate of the NOLs for the 2017 tax filing year as these returns will not be filed until later in 2018:
|  | Net Operating Losses
|  | December 31, 2017
|  | NOLs |  | NOL Expiration Period
|  | (amounts in | (in years)
|  | thousands) |  |  |  |
Federal NOL carryforwards |  | $ | 298,178 |  | 2028 | to | 2033
State NOL carryforwards |  | $ | 595,234 |  | 2018 | to | 2033
State income tax credit |  | $ | 1,248 |  |  | to | 2018

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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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32537-109319 + Details
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