
Note 10.	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 June 30,
	2016			2015
	(in millions)
Income tax benefit at the federal statutory rate	$	86		$	13
Effect of:
State income taxes, net of federal income tax effect	3			(1		)
State law changes, net of federal income tax effect	—			21
Change in federal and state valuation allowance	(142		)	(22		)
Other, net	(3		)	6
Income tax (expense) benefit	$	(56	)	$	17
Effective income tax rate	(22.8		)%	45.9		%

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 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 income tax expense to increase the valuation allowance by $142 million and $22 million during the three-month periods ended June 30, 2016 and June 30, 2015, respectively, on deferred tax assets primarily related to losses incurred during the period that were not currently realizable and expenses recorded during the period that were not currently deductible for income tax purposes. We do not expect to record significant tax benefits on future net operating losses until our circumstances justify the recognition of such benefits.

We believe it is more likely than not that our remaining deferred income tax assets, net of the valuation allowance, will be realized based on current income tax laws and expectations of future taxable income stemming from the reversal of existing deferred tax liabilities. Uncertainties surrounding income tax law changes, shifts in operations between state taxing jurisdictions and future operating income levels may, however, affect the ultimate realization of all or some of these deferred income tax assets.

Income tax expense of $56 million for the three-month period ended June 30, 2016 was primarily attributable to taxable temporary differences from the tax 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. These temporary differences result in net deferred income tax expense since they cannot be scheduled to reverse during the loss carryforward period. Income tax benefit of $17 million for the three-month period ended June 30, 2015 was primarily attributable to tax benefits recorded as a result of changes in state income tax laws.

As of June 30, 2016 and March 31, 2016, we maintained unrecognized tax benefits of $167 million and $166 million, respectively. Cash paid for income taxes, net, was $21 million and $26 million for the three-month periods ended June 30, 2016 and 2015, respectively.

In March 2016, the FASB issued authoritative guidance on Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting which, in part, eliminates the additional paid-in capital pools and requires excess tax benefits and tax deficiencies to be recorded in the income statement when the awards vest or are settled. The company has elected to early adopt this guidance effective April 1, 2016. The early adoption of this guidance did not have a material effect on our consolidated financial statements.