
Note 9.	Income Taxes

The differences that caused our effective income tax rates to vary from the 35% U.S. federal statutory rate for income taxes were as follows:



	Three Months Ended
	March 31,
	2012			2011
	(in millions)
Income tax benefit at the federal statutory rate	$	289		$	141
Effect of:
State income taxes, net of federal income tax effect	25			9
Change in valuation allowance	(348		)	(196		)
Other, net	(3		)	9
Income tax expense	$	(37	)	$	(37	)
Effective income tax rate	(4.5		)%	(9.2		)%

The realization of deferred tax assets, including net operating loss carryforwards, is dependent on the generation of future taxable income sufficient to realize the tax deductions, carryforwards and credits. However, our recent history of consecutive annual losses, in addition to the uncertainty concerning the forecasted income for 2012 and beyond, reduces our ability to rely on expectations of future income in evaluating the ability to realize our deferred tax assets. Valuation allowances on deferred tax assets are recognized if it is determined that it is more likely than not that the asset will not be realized. As a result, the Company recognized an increase in the valuation allowance of $348 million and $196 million for the three-month periods ended March 31, 2012 and 2011, respectively, on deferred tax assets primarily related to federal and state net operating loss carryforwards generated during the periods. The valuation allowance was $4.2 billion and $3.9 billion as of March 31, 2012 and December 31, 2011, respectively. We do not expect to record significant tax benefits on future net operating losses until our circumstances justify the recognition of such benefits.

Income tax expense of $37 million for each of the three-month periods ended March 31, 2012 and 2011 is primarily attributable to taxable temporary differences from amortization of FCC licenses. FCC licenses are amortized over 15 years for income tax purposes but, because these licenses have an indefinite life, they are not amortized for financial statement reporting purposes. This difference results in net deferred income tax expense since the taxable temporary difference cannot be scheduled to reverse during the loss carryforward period.

As of March 31, 2012 and December 31, 2011, we maintained a liability related to unrecognized tax benefits of $224 million and $225 million, respectively. Cash paid or received for net income tax was insignificant during the three-month periods ended March 31, 2012 and 2011.