Income Taxes |
9 Months Ended | |
|---|---|---|
Sep. 30, 2020 | ||
| Income Tax Disclosure [Abstract] | ||
| Income Taxes |
NOTE 15. INCOME TAXES We recognize deferred tax assets and liabilities for future tax consequences attributable to differences between our consolidated financial statement carrying amount of assets and liabilities and their respective tax bases. We measure these deferred tax assets and liabilities using enacted tax rates expected to apply in the years in which these 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. We continue to evaluate the impact of the CARES Act, including the modifications on the limitation of business interest for tax years beginning in 2019 and 2020 that we have considered in our analysis. The amortization of our indefinite-lived intangible assets for tax purposes, but not for book purposes, creates deferred tax liabilities. A reversal of deferred tax liabilities may occur when indefinite-lived intangibles: (1) become impaired; or (2) are sold, which would typically only occur in connection with the sale of the assets of a station or groups of stations or the entire company in a taxable transaction. Due to the amortization for tax purposes and not book purposes of our indefinite-lived intangible assets, we expect to continue to generate deferred tax liabilities in future periods exclusive of any impairment losses in future periods. These deferred tax liabilities and net operating loss carryforwards result in differences between our provision for income tax and cash paid for taxes. At December 31, 2019, we had net operating loss carryforwards for federal income tax purposes of approximately $136.1 million that expire in years 2021 through 2038 and for state income tax purposes of approximately $793.7 million that expire in years 2020 through 2039. For financial reporting purposes at December 31, 2019, we had a valuation allowance of $8.9 million, net of federal benefit, to offset the deferred tax assets related to the state net operating loss carryforwards along with a valuation allowance of $4.1 million to offset the deferred tax assets related to the federal net operating loss carryforwards. As a result of our adjusted cumulative three-year pre-tax book loss as of September 30 , 2020, we performed quarterly assessments of positive and negative evidence with respect to the realization of our net deferred tax assets. This assessment includes the evaluation of scheduled reversals of deferred tax liabilities, the availability of carryforwards and estimates of projected future taxable income. The economic uncertainty from the COVID-19 pandemic provided additional negative evidence that outweighed positive evidence resulting in our conclusion that additional deferred tax assets of $
million related to federal and state net operating loss carryforwards are more likely than not to be not realized. As such, an additional valuation allowance of million was recorded in the period ended March 31, 2020, which was reduced by million in the period ended June 30, 2020, for a total valuation allowance of $49.8 million for the period ended September 30, 2020 .
We recognized a tax provision from income taxes of $0.4
million for the three- month period ended September 30, 2020 compared to a tax provision of $1.1
million for the same period of the prior year. For the nine-month period ended September 30, 2020, we recognized a tax provision of $31.2
million compared to a tax provision of $0.7 million for the same period of the prior year. The provision for (benefit from) income taxes as a percentage of income before income taxes, or the effective tax rate, was 54.9% for the three
-month period ended September 30, 2020 compared to (5.9)% for the same period of the prior year. The provision for (benefit from) income taxes as a percentage of income before income taxes, or the effective tax rate was (119.0)% for the
nine-month period ended
September 30, 2020 compared to 3.1% for the same period of the prior year. The effective tax rate for each period differs from the federal statutory income rate of 21.0% due to the effect of the sale of business assets in various states, state income taxes, certain expenses that are not deductible for tax purposes, and changes in the valuation allowance. The effective tax rate of (
119.0 %) is driven by increases in the valuation allowance of $24.5 million recorded against federal deferred tax assets relating to federal net operating loss carryforwards and $12.3 million of additional valuation allowance relating to state net operating loss carryforwards. We recorded an
out-of-period quarter ended Valuation Allowance (Deferred Taxes) For financial reporting purposes a valuation allowance of $49.8 million offsets deferred tax assets at
September pre-tax book loss as of September 30 quarterly assessments includes COVID-19 pandemic provided additional negative evidence that outweighed positive evidence resulting in our conclusion that additional deferred tax assets of $36.8 million related to federal and state net operating loss carryforwards are more likely than not to be not realized. As such, an additional valuation allowance of $37.1 million was recorded in the period ended March 31, 2020, which was reduced by $0.3 million in the period ended June 30, 2020, for a total valuation allowance of $49.8 million for the period ended September |