Income Taxes

3 Months Ended

Mar. 31, 2013

Income Tax Disclosure [Abstract]

Income Taxes

Note 11. 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,
	2013			2012
	(in millions)
Income tax benefit at the federal statutory rate	$	212		$	289
Effect of:
State income taxes, net of federal income tax effect	16			25
Change in valuation allowance	(265		)	(348		)
Other, net	(1		)	(3		)
Income tax expense	$	(38	)	$	(37	)
Effective income tax rate	(6.3		)%	(4.5		)%

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 history of consecutive annual losses 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 $265 million and $348 million for the three-month periods endedMarch 31, 2013 and 2012, respectively, on deferred tax assets primarily related to federal and state net operating loss carryforwards generated during the periods. The valuation allowance was $5.9 billion and $5.7 billion as of March 31, 2013 and December 31, 2012, 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 $38 million and $37 million for the three-month periods endedMarch 31, 2013 and 2012, respectively, 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, 2013 and December 31, 2012, we maintained a liability related to unrecognized tax benefits of $180 million and $171 million, respectively. Cash received or paid for income taxes was insignificant during the three-month periods endedMarch 31, 2013 and 2012.