Income Taxes and Accounting for Uncertainty in Income Taxes (Tables)

12 Months Ended

Dec. 31, 2017

Income Taxes and Accounting for Uncertainty in Income Taxes

Schedule of components of the (provision for) benefit from income taxes

	For the Years Ended December 31,
	2017		2016		2015
	(In thousands)
Current (benefit) provision:
Federal	$	(71,141)	$	317,010	$	147,771
State		38,058		31,160		20,045
Foreign		3,736		10,840		(3,089)
Total current (benefit) provision		(29,347)		359,010		164,727
Deferred (benefit) provision:
Federal		(547,575)		469,927		197,441
State		69,076		35,418		19,963
Foreign		—		—		—
Increase (decrease) in valuation allowance		(7,474)		1,463		11,039
Total deferred (benefit) provision		(485,973)		506,808		228,443
Total (benefit) provision	$	(515,320)	$	865,818	$	393,170

Schedule of reconciliation of amounts computed by applying the statutory Federal tax rate to income before taxes

	For the Years Ended December 31,
	2017	2016	2015
	% of pre-tax income/(loss)
Statutory rate	35.0	35.0	35.0
State income taxes, net of federal benefit	3.0	2.5	3.5
Reversal of uncertain tax positions	—	(0.8)	(0.3)
Amounts reclassified from accumulated other comprehensive income (loss) (1)	—	—	(5.1)
Tax Reform Act (2)	(72.6)	—	—
Nondeductible/Nontaxable items (3)	5.9	—	—
Other, net	(2.5)	(0.9)	(1.3)
Total (benefit) provision for income taxes	(31.2)	35.8	31.8

(1) Our effective tax rate for the year ended December 31, 2015 was favorably impacted by a  $63 million credit that was previously recorded in “Accumulated other comprehensive income (loss)” and was released to our income tax provision during the year ended December 31, 2015.Prior to December 31, 2012, we had established a valuation allowance against all deferred tax assets that were capital in nature.  At December 31, 2012, it was determined that these deferred tax assets were realizable and the valuation allowance was released, including the valuation allowance related to a specific portfolio of available-for-sale securities for which changes in fair value had historically been recognized as a separate component of “Accumulated other comprehensive income (loss).”  Under the intra-period tax allocation rules, a credit of $63 million was recorded in “Accumulated other comprehensive income (loss)” on our Consolidated Balance Sheets related to the release of this valuation allowance.  We elected to use the aggregate portfolio method to determine when the $63 million would be released from “Accumulated other comprehensive income (loss)” to “Income tax (provision) benefit, net” on our Consolidated Statements of Operations and Comprehensive Income (Loss).  Under the aggregate portfolio approach, the intra-period tax allocation remaining in “Accumulated other comprehensive income (loss)” is not released to “Income tax (provision) benefit, net” until such time that the specific portfolio of available-for-sale securities that generated the original intra-period allocation is liquidated.  During the first quarter 2015, this specific available-for-sale security portfolio was liquidated and the $63 million credit that was previously recorded in “Accumulated other comprehensive income (loss)” was released to “Income tax (provision) benefit, net.”

(2) On December 22, 2017, the Tax Reform Act was enacted, which, among other things, lowered the federal statutory corporate tax rate effective for us in future periods from 35% to 21%.  Consequently, we remeasured our deferred tax assets and liabilities as of December 31, 2017 which positively impacted our “Income tax (provision) benefit, net” by approximately $1.2 billion. 

(3) During the year ended December 31, 2017, we recorded $255 million of “Litigation expense” related to the FTC Action on our Consolidated Statements of Operations and Comprehensive Income (Loss).  Any eventual payments made with respect to the FTC Action may not be deductible for tax purposes, which had a negative impact on our effective tax rate for the year ended December 31, 2017.  The tax deductibility of any eventual payments made with respect to the FTC Action may change, based upon, among other things, further developments in the FTC Action, including final adjudication of the FTC Action.  See Note 14 in the Notes to our Consolidated Financial Statements in this Annual Report on Form 10-K for further information.

Schedule of deferred tax assets and liabilities

	As of December 31,
	2017		2016
		(In thousands)
Deferred tax assets:
NOL, credit and other carryforwards	$	55,505	$	60,840
Accrued expenses		41,439		58,701
Stock-based compensation		14,904		17,705
Unrealized (gains) losses on available for sale and other investments		5,001		10,827
Deferred revenue		15,236		19,064
Total deferred tax assets		132,085		167,137
Valuation allowance		(18,642)		(26,116)
Deferred tax asset after valuation allowance		113,443		141,021
Deferred tax liabilities:
Depreciation		(496,873)		(854,317)
FCC authorizations and other intangible amortization		(1,220,421)		(1,361,742)
Bases difference in partnerships and cost method investments (1)		(328,735)		(241,193)
Discount on convertible notes and convertible note hedge transaction, net		(81,346)		(47,908)
Other liabilities		(5,606)		(21,386)
Total deferred tax liabilities		(2,132,981)		(2,526,546)
Net deferred tax asset (liability)	$	(2,019,538)	$	(2,385,525)

(1) Included in this line item are deferred taxes related to, among other things, our non-controlling investments in Northstar Spectrum and SNR HoldCo, including deferred taxes created by the tax amortization of the Northstar Licenses and SNR Licenses. 

Schedule of reconciliation of the beginning and ending amount of unrecognized tax benefits

	For the Years Ended December 31,
Unrecognized tax benefit	2017		2016		2015
		(In thousands)
Balance as of beginning of period	$	358,023	$	336,586	$	208,328
Additions based on tax positions related to the current year		12,798		40,492		135,937
Additions based on tax positions related to prior years		30,596		21,797		22,483
Reductions based on tax positions related to prior years		(2,754)		(34,106)		(22,697)
Reductions based on tax positions related to settlements with taxing authorities		(1,634)		(3,628)		(2,648)
Reductions based on tax positions related to the lapse of the statute of limitations		(3,113)		(3,118)		(4,817)
Balance as of end of period	$	393,916	$	358,023	$	336,586