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Note 10 - Income Taxes
12 Months Ended
Dec. 31, 2024
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

10.

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 50% 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 sheets 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 is summarized as follows (in millions):

 

  

Year Ended December 31,

 
  

2024

  

2023

  

2022

 

Current:

            

Federal

 $106  $73  $148 

State and local

  20   12   31 

Current income tax expense

  126   85   179 

Deferred:

            

Federal

  (6)  (76)  (21)

State and local

  (3)  (15)  1 

Deferred income tax benefit

  (9)  (91)  (20)

Total income tax (benefit) expense

 $117  $(6) $159 

 

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

 

  

December 31,

 
  

2024

  

2023

 

Deferred tax liabilities:

        

Net book value of property and equipment

 $135  $149 

Broadcast licenses, goodwill and other intangible assets

  1,340   1,338 

Other

  6   3 

Total deferred tax liabilities

  1,481   1,490 
         

Deferred tax assets:

        

Liability for compensated absences

  6   6 

Liability for accrued bonus

  12   13 

Liability under health and welfare plan

  2   3 

State and local operating loss carryforwards

  11   7 

Unearned income

  4   2 

Restricted stock

  3   2 

Investments

  7   3 

Interest expense limitation

  76   88 
Other comprehensive income  8   6 

Other

  12   10 

Total deferred tax assets

  141   140 

Valuation allowance for deferred tax assets

  (7)  (9)

Net deferred tax assets

  134   131 
  $1,347  $1,359 

 

As of December 31, 2024, we have an aggregate of approximately $252 million of various state operating loss carryforwards, of which we expect that approximately one-third will be utilized. We expect that the unutilized portion of these state net operating loss carryforwards will not be utilized due to Internal Revenue Code section 382 limitations and those that will expire prior to utilization. After applying our state effective tax rate, this amount is included in our valuation allowance for deferred tax assets.

 

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, 2024, 2023 and 2022 is as follows (in millions):

 

  

Year Ended December 31,

 
  

2024

  

2023

  

2022

 

Statutory federal rate applied to income before income tax expense

 $103  $(17) $129 

Current year permanent items

  6   11   5 

State and local taxes, net of federal tax benefit

  21   (4)  26 

Change in valuation allowance

  (1)  (1)  - 
Reserve for uncertain tax positions  (14)  1   - 

Other items, net

  2   4   (1)

Income tax (benefit) expense as recorded

 $117  $(6) $159 
             

Effective income tax rate

  24%  7%  26%

 

Each year-end, we adjust our other comprehensive income on a net of tax basis. During 2024, we increased our recorded non-current pension asset by $1 million; we recorded an adjustment of the fair value of our interest rate caps of $8 million; and together, we recorded a $2 million tax benefit. During 2023, we increased our recorded non-current pension asset by $7 million; we recorded an adjustment of the fair value of our interest rate caps of $23 million; and together, we recorded a $5 million tax benefit. During 2022, we decreased our recorded non-current pension liability by $20 million and recognized other comprehensive income of $15 million, net of a $5 million tax provision.

 

We made income tax payments (net of refunds) of $135 million, $50 million and $180 million during the years ended December 31, 2024, 2023 and 2022, respectively.

 

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 a federal consolidated income tax return in the United States and state or local consolidated income tax returns in various state or local jurisdictions. Certain of our subsidiaries file separate tax returns in other various state and local jurisdictions. With few exceptions, we are no longer subject to federal, state and local tax examinations by tax authorities for years before 2004.

 

The following table summarizes the activity related to our reserve for uncertain tax positions (in millions):

 

  

Year Ended December 31,

 
  

2024

  

2023

  

2022

 

Balance at beginning of period

 $14  $15  $15 

Statute expirations

  (14)  (1)  - 

Balance at end of period

 $-  $14  $15 

 

We recognize accrued interest and penalties related to uncertain tax positions in income tax expense in the accompanying Consolidated Statements of Operations and Consolidated Statements of Comprehensive (Loss) Income. During the years ended December 31, 2024, 2023 and 2022, our penalty and interest expense related to uncertain tax positions was not material. At December 31, 2024, 2023 and 2022, the total accrual for interest and penalties related to uncertain tax positions was not material.