Income Taxes

9 Months Ended

Dec. 31, 2019

The differences that caused our effective income tax rates to differ from the 21% U.S. federal statutory rate for income taxes were as follows:



	Nine Months Ended December 31,
	2019			2018
	(in millions)
Income tax benefit (expense) at the federal statutory rate	$	212		$	(61	)
Effect of:
State income taxes, net of federal income tax effect	39			(40		)
State law changes, net of federal income tax effect	6			62
Increase deferred tax liability for organizational restructuring	(4		)	(12		)
Credit for increasing research activities	9			13
Change in federal and state valuation allowance	236			12
Increase in liability for unrecognized tax benefits	(4		)	(6		)
Non-deductible penalties	—			(29		)
Other, net	—			5
Income tax benefit (expense)	$	494		$	(56	)
Effective income tax rate	49.0		%	19.2		%

Income tax benefit of $494 million for the nine-month period ended December 31, 2019 represented a consolidated effective tax rate of 49%. During the period, we recognized a $236 million tax benefit for federal and state valuation allowance. Federal net operating losses generated after the enactment of the Tax Cuts and Jobs may be carried forward indefinitely until utilized. We recognized a deferred tax asset on the estimated net operating loss generated in the current period because we have sufficient sources of future taxable income from taxable temporary differences on indefinite-lived assets, such as FCC licenses, against which the loss carryforwards may be realized. In the current period, we transitioned into a net deferred tax liability position on our definite-lived temporary differences driven primarily by the full expensing of qualifying property for tax purposes. The net taxable temporary differences that gave rise to the net deferred tax liability are scheduled to reverse in the carryforward periods of our definite-lived net operating losses and serve as a source of future taxable income, against which our definite-lived loss carryforwards may be realized. We recorded a tax benefit of $304 million during the nine-month period ended December 31, 2019 to reduce our valuation allowance to the extent of the net taxable temporary differences generated and scheduled to reverse in the loss carryforward periods.

Income tax expense of $56 million for the nine-month period ended December 31, 2018 represented a consolidated effective tax rate of 19%. During the period, we recognized a $62 million tax benefit for the impact of state law changes enacted during the period, partially offset by a $12 million tax expense attributable to organizational restructuring. These adjustments were primarily driven by the change in carrying value of our deferred tax assets and liabilities on temporary differences. In addition, the rate was impacted by non-deductible penalties related to litigation with the State of New York that was settled during the period.

As of December 31, 2019 and March 31, 2019, we maintained unrecognized tax benefits of $249 million and $242 million, respectively. Cash paid for income taxes, net was $47 million and $62 million for the nine-month periods ended December 31, 2019 and 2018, respectively.