Income Taxes

We recognize deferred tax assets and liabilities for future tax consequences attributable to differences between our financial statement carrying amounts of existing assets and liabilities and their respective tax bases. We measure deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. We recognize the effect on deferred tax assets and liabilities resulting from a change in tax rates in income in the period that includes the date of the change.

Under certain circumstances, we recognize liabilities in our financial statements for positions taken on uncertain tax issues.

When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others

may

be subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, we believe it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than

percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits on the balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest and penalties associated with unrecognized tax benefits are classified as income tax expense in the statement of operations.

Federal and state and local income tax expense (benefit) is summarized as follows (in thousands):

	Year Ended December 31,
	2016			2015			2014
Current:
Federal	$	-		$	-		$	-
State and local		2,730			1,259			996
State and local - reserve for uncertain tax positions		(698	)		(581	)		(198	)
Current income tax expense (benefit)		2,032			678			798
Deferred:
Federal		38,214			24,067			28,231
State and local		3,172			1,703			2,707
Deferred income tax expense		41,386			25,770			30,938
Total income tax expense	$	43,418		$	26,448		$	31,736

Significant components of our deferred tax liabilities and assets are as follows (in thousands):

	December 31,
	2016			2015
Deferred tax liabilities:
Net book value of property and equipment	$	26,620		$	20,986
Broadcast licenses, goodwill and other intangibles		369,275			350,647
Total deferred tax liabilities		395,895			371,633

Deferred tax assets:
Liability for accrued vacation		2,232			2,172
Liability for accrued bonus		5,483			4,786
Loan acquisition costs		336			391
Allowance for doubtful accounts		1,168			700
Liability under health and welfare plan		1,201			1,108
Liability for pension plan		13,278			14,172
Federal operating loss carryforwards		20,401			38,466
State and local operating loss carryforwards		4,555			5,867
Alternative minimum tax carryforwards		386			386
Unearned income		3			73
Stock options		174			163
Acquisition costs		3,140			1,129
Restricted stock		1,950			1,875
Other		109			172
Total deferred tax assets		54,416			71,460
Valuation allowance for deferred tax assets		(1,532	)		(1,683	)
Net deferred tax assets		52,884			69,777

Deferred tax liabilities, net of deferred tax assets	$	343,011		$	301,856

We have approximately

$61.5

million in federal operating loss carryforwards, which expire during the years

2029

through

2031.

Additionally, we have an aggregate of approximately

$122.4

million of various state operating loss carryforwards. We project to have taxable income in the carryforward periods. Therefore, we believe that it is more likely than not that the federal net operating loss carryforwards will be fully utilized.

A valuation allowance has been provided for a portion of the state net operating loss carryforwards. We believe that we will not meet the more likely than not threshold in certain states due to the uncertainty of generating sufficient income. Therefore, the state valuation allowance at

December

31,

2016

and

2015

was

$1.5

million and

$1.7

million, respectively.

Our total valuation allowance provided for deferred income tax assets decreased

$0.2

million for the year ended

December

31,

2016

due to changes in estimated utilization of state operating loss carryforwards. Our total valuation allowance provided for deferred income tax assets decreased

$0.4

million for the year ended

December

31,

2015

due to changes in estimated utilization of state operating loss carryforwards.

A reconciliation of income tax expense at the statutory federal income tax rate and income taxes as reflected in the consolidated financial statements for the years ended

December

31,

2016,

2015

and

2014

is as follows (in thousands):

	Year Ended December 31,
	2016			2015			2014
Statutory federal rate applied to income before income tax expense	$	36,992		$	23,012		$	27,929
Current year permanent items		1,830			1,192			849
State and local taxes, net of federal tax benefit		5,056			2,831			4,050
Change in valuation allowance		(151	)		(369	)		(696	)
Reserve for uncertain tax positions		(698	)		(581	)		(198	)
Other items, net		389			363			(198	)
Income tax expense as recorded	$	43,418		$	26,448		$	31,736

Effective income tax rate		41.1	%		40.2	%		39.8	%

As of each year end, we are required to adjust our pension liability to an amount equal to the funded status of our pension plans with a corresponding adjustment to other comprehensive income on a net of tax basis. During

2016,

we decreased our recorded non-current pension liability by

$0.6

million and recognized other comprehensive income of

$0.4

million, net of a

$0.2

million tax expense. During

2015,

we decreased our recorded non-current pension liability by

$5.8

million and recognized other comprehensive income of

$3.5

million, net of a

$2.3

million tax expense. During

2014,

we increased our recorded non-current pension liability by

$17.1

million and recognized other comprehensive loss of

$10.4

million, net of a

$6.7

million tax benefit.

2016,

2015

and

2014,

we made income tax payments (net of refunds) of

$14.6

million,

$1.8

million and

$0.4

million, respectively. At

December

31,

2016,

we had current prepaid income taxes of approximately

$14.6

million and at

December

31,

2015,

we had current income taxes payable of approximately

$0.8

million.

We prescribe a recognition threshold and measurement attribution for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities.

We file income tax returns in the U.S. federal and multiple state jurisdictions. With few exceptions, we are no longer subject to U.S. federal, or state and local tax examinations by tax authorities for years prior to

2007.

This extended open adjustment period is due to material amounts of net operating loss carryforwards, which exist at the federal level and in multiple-state jurisdictions arising from the

2009

and

2011

tax years.