Income Taxes

12 Months Ended

Dec. 31, 2015

Note 15: Income Taxes

Components of Income Tax Expense
Year ended December 31 (in millions)			2015		2014		2013
Current Expense (Benefit):
	Federal	$	3,210	$	2,392	$	3,183
	State		570		174		581
	Foreign		221		142		200
			4,001		2,708		3,964
Deferred Expense (Benefit):
	Federal		890		1,000		(76)
	State		66		173		108
	Foreign		2		(8)		(16)
			958		1,165		16
Income tax expense		$	4,959	$	3,873	$	3,980

Our income tax expense differs from the federal statutory amount because of the effect of the items detailed in the table below.

Year ended December 31 (in millions)		2015		2014		2013
Federal tax at statutory rate	$	4,680	$	4,363	$	3,890
State income taxes, net of federal benefit		326		329		319
Foreign income taxes, net of federal credit		13		-		15
Nontaxable income attributable to noncontrolling interests		(69)		(62)		(103)
Adjustments to uncertain and effectively settled tax positions, net		15		(408)		58
Accrued interest on uncertain and effectively settled tax positions, net		73		(235)		114
Other		(79)		(114)		(313)
Income tax expense	$	4,959	$	3,873	$	3,980

We base our provision for income taxes on our current period income, changes in our deferred income tax assets and liabilities, income tax rates, changes in estimates of our uncertain tax positions, and tax planning opportunities available in the jurisdictions in which we operate. We recognize deferred tax assets and liabilities when there are temporary differences between the financial reporting basis and tax basis of our assets and liabilities and for the expected benefits of using net operating loss carryforwards. When a change in the tax rate or tax law has an impact on deferred taxes, we apply the change based on the years in which the temporary differences are expected to reverse. We record the change in our consolidated financial statements in the period of enactment.

The determination of the income tax consequences of a business combination includes identifying the tax basis of assets and liabilities acquired and any contingencies associated with uncertain tax positions assumed or resulting from the business combination. Deferred tax assets and liabilities related to temporary differences of an acquired entity are recorded as of the date of the business combination and are based on our estimate of the ultimate tax basis that will be accepted by the various tax authorities. We record liabilities for contingencies associated with prior tax returns filed by the acquired entity based on criteria set forth in the appropriate accounting guidance. We adjust the deferred tax accounts and the liabilities periodically to reflect any revised estimated tax basis and any estimated settlements with the various tax authorities. The effects of these adjustments are recorded to income tax expense.

From time to time, we engage in transactions in which the tax consequences may be subject to uncertainty. In these cases, we evaluate our tax positions using the recognition threshold and the measurement attribute in accordance with the accounting guidance related to uncertain tax positions. Examples of these transactions include business acquisitions and dispositions, including consideration paid or received in connection with these transactions, certain financing transactions, and the allocation of income among state and local tax jurisdictions. Significant judgment is required in assessing and estimating the tax consequences of these transactions. We determine whether it is more likely than not that a tax position will be sustained on examination, including the resolution of any related appeals or litigation processes, based on the technical merits of the position. A tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of benefit to be recognized in our consolidated financial statements. We classify interest and penalties, if any, associated with our uncertain tax positions as a component of income tax expense.

NBCUniversal

For U.S. federal income tax purposes, NBCUniversal Holdings is treated as a partnership and NBCUniversal is disregarded as an entity separate from NBCUniversal Holdings. Accordingly, neither NBCUniversal Holdings nor NBCUniversal and its subsidiaries incur any material current or deferred domestic income taxes. Following the close of the NBCUniversal redemption transaction in March 2013, the taxable income of NBCUniversal Holdings and NBCUniversal is allocable entirely to us.

We are indemnified by GE for any income tax liability attributable to the NBCUniversal contributed businesses for periods prior to the close of the NBCUniversal transaction in January 2011 and also for any income tax liability attributable to NBCUniversal Enterprise for periods prior to the date of the NBCUniversal redemption transaction. We have indemnified GE for any income tax liability attributable to the businesses we contributed to NBCUniversal for periods prior to the close of the NBCUniversal transaction.

Current and deferred foreign income taxes are incurred by NBCUniversal’s foreign subsidiaries. In 2015, 2014 and 2013, NBCUniversal had foreign income before taxes of $704 million, $385 million and $524 million, respectively, on which foreign income tax expense was recorded. We recorded U.S. income tax expense on our allocable share of NBCUniversal’s income before domestic and foreign taxes, which was reduced by a U.S. tax credit equal to our allocable share of NBCUniversal’s foreign income tax expense.

Components of Net Deferred Tax Liability
December 31 (in millions)				2015		2014
Deferred Tax Assets:
	Net operating loss carryforwards		$	551	$	448
	Differences between book and tax basis of long-term debt			115		116
	Differences between book and tax basis of investments			101		-
	Nondeductible accruals and other			3,589		3,383
	Less: Valuation allowance			342		375
				4,014		3,572
Deferred Tax Liabilities:
	Differences between book and tax basis of property and equipment and intangible assets			36,392		35,112
	Differences between book and tax basis of investments			-		186
	Differences between book and tax basis of indexed debt securities			457		534
	Differences between book and tax basis of foreign subsidiaries and undistributed foreign
		earnings		731		504
				37,580		36,336
Net deferred tax liability			$	33,566	$	32,764

Changes in our net deferred tax liability in 2015 that were not recorded as deferred income tax expense are primarily related to decreases of $28 million associated with items included in other comprehensive income (loss) and decreases of $132 million related to acquisitions made in 2015. Our net deferred tax liability includes $23 billion related to cable franchise rights that will remain unchanged unless we recognize an impairment or dispose of a cable franchise.

As of December 31, 2015, we had federal net operating loss carryforwards of $135 million and various state net operating loss carryforwards that expire in periods through 2035. As of December 31, 2015, we also had foreign net operating loss carryforwards of $700 million that are related to the foreign operations of NBCUniversal, the majority of which expire in periods through 2025. The determination of the realization of the state and foreign net operating loss carryforwards is dependent on our subsidiaries’ taxable income or loss, apportionment percentages, and state and foreign laws that can change from year to year and impact the amount of such carryforwards. We recognize a valuation allowance if we determine it is more likely than not that some portion, or all, of a deferred tax asset will not be realized. As of December 31, 2015 and 2014, our valuation allowance was primarily related to state and foreign net operating loss carryforwards.

Uncertain Tax Positions

Our uncertain tax positions as of December 31, 2015 totaled $1.1 billion, which exclude the federal benefits on state tax positions that were recorded as deferred income taxes. Included in our uncertain tax positions was $220 million related to tax positions of NBCUniversal and NBCUniversal Enterprise for which we have been indemnified by GE. If we were to recognize the tax benefit for our uncertain tax positions in the future, $592 million would impact our effective tax rate and the remaining amount would increase our deferred income tax liability. The amount and timing of the recognition of any such tax benefit is dependent on the completion of examinations of our tax filings by the various tax authorities and the expiration of statutes of limitations. In 2014, we reduced our accruals for uncertain tax positions and the related accrued interest on these tax positions and, as a result, our income tax expense decreased by $759 million. It is reasonably possible that certain tax contests could be resolved within the next 12 months that may result in a decrease in our effective tax rate.

Reconciliation of Unrecognized Tax Benefits
(in millions)		2015		2014		2013
Balance, January 1	$	1,171	$	1,701	$	1,573
Additions based on tax positions related to the current year		67		63		90
Additions based on tax positions related to prior years		98		111		201
Additions from acquired subsidiaries		-		-		268
Reductions for tax positions of prior years		(84)		(220)		(141)
Reductions due to expiration of statutes of limitations		(41)		(448)		(3)
Settlements with tax authorities		(75)		(36)		(287)
Balance, December 31	$	1,136	$	1,171	$	1,701

As of December 31, 2015 and 2014, our accrued interest associated with tax positions was $510 million and $452 million, respectively. As of December 31, 2015 and 2014, $49 million and $44 million, respectively, of these amounts were related to tax positions of NBCUniversal and NBCUniversal Enterprise for which we have been indemnified by GE.

During 2015, the IRS completed its examination of our income tax returns for the year 2013. Various states are examining our tax returns, with most of the periods relating to tax years 2000 and forward. The tax years of our state tax returns currently under examination vary by state.

NBCUniversal Media LLC [Member]

Income Taxes

Note 14: Income Taxes

Components of Income Tax Expense
Year ended December 31 (in millions)		2015		2014		2013
Foreign
	Current income tax expense	$	81	$	33	$	77
	Deferred income tax expense		2		(8)		(16)
	Withholding tax expense		139		108		123
U.S. domestic tax expense			5		10		22
Income tax expense		$	227	$	143	$	206

We are a limited liability company, and our company is disregarded for U.S. federal income tax purposes as an entity separate from NBCUniversal Holdings, a tax partnership. NBCUniversal and our subsidiaries are not expected to incur any significant current or deferred U.S. domestic income taxes. Our tax liability is comprised primarily of withholding tax on foreign licensing activity and income taxes on foreign earnings. As a result of our tax status, the deferred tax assets and liabilities included in our consolidated balance sheet at December 31, 2015 and 2014 were not material.

In jurisdictions in which we are subject to income taxes, we base our provision for income taxes on our current period income, changes in our deferred income tax assets and liabilities, income tax rates, changes in estimates of our uncertain tax positions, and tax planning opportunities available in the jurisdictions in which we operate. We recognize deferred tax assets and liabilities when there are temporary differences between the financial reporting basis and tax basis of our assets and liabilities and for the expected benefits of using net operating loss carryforwards. When a change in the tax rate or tax law has an impact on deferred taxes, we apply the change based on the years in which the temporary differences are expected to reverse. We record the change in our consolidated financial statements in the period of enactment.

We classify interest and penalties, if any, associated with our uncertain tax positions as a component of income tax expense.

Uncertain Tax Positions

We retain liabilities for uncertain tax positions where we are the tax filer of record. GE and Comcast have indemnified NBCUniversal Holdings and us with respect to our income tax obligations attributable to periods prior to the close of the joint venture transaction, including indemnification of uncertain tax positions for these periods. The liabilities for uncertain tax positions included in our consolidated balance sheet were not material as of December 31, 2015 and 2014.

Various domestic and foreign tax authorities are examining our tax returns through 2014. The majority of the periods under examination relate to tax years 2005 and forward.