Clearwire 2009 Annual Report Download - page 51

account t
h
e NOL
d
e
d
uct
i
ons an
d
ot
h
er tax
b
ene
fi
ts reasona
bl
y expecte
d
to
b
eava
il
a
bl
etoC
l
earw
i
re. See t
he
s
ections titled “Risk Factors — Mandator
y
tax distributions ma
y
deprive Clearwire Communications of funds tha
t
are required in its business” and “Certain Relationships and Related Transactions, and Director Independence”
b
eg
i
nn
i
ng on pages 38 an
d
127, respect
i
ve
l
y, o
f
t
hi
s report.
Sales of certain former Clearwire assets by Clearwire Communications may trigger taxable gain t
o
C
learwire.
I
f Clearwire Communications sells, in a taxable transaction, an Old Clearwire asset that had built-in
g
ain at th
e
t
ime of its contribution to Clearwire Communications, then, under Section 704(c) of the Code, the tax gain on th
e
s
a
l
eo
f
t
h
e asset
g
enera
lly
w
ill b
ea
ll
ocate
dfi
rst to C
l
earw
i
re
i
n an amount up to t
h
e rema
i
n
i
n
g
(unamort
i
ze
d)
p
ort
i
on o
f
t
h
e
b
u
il
t-
i
n
g
a
i
nont
h
eO
ld
C
l
earw
i
re asset. Un
d
er t
h
e Operat
i
n
g
A
g
reement, un
l
ess C
l
earw
i
r
e
Communications has a bona fide non-tax business need (as defined in the Operatin
g
A
g
reement), Clearwire
Commun
i
cat
i
ons w
ill
not enter
i
nto a taxa
bl
esa
l
eo
f
O
ld
C
l
earw
i
re assets t
h
at are
i
ntang
ibl
e property an
d
t
h
a
t
would cause Clearwire to be allocated under Section 704(c) more than
$
10 million of built-in
g
ains durin
g
an
y
3
6-month
p
eriod. For this
p
ur
p
ose, Clearwire Communications will have a bona fide non-tax business need with
r
espect to t
h
esa
l
eo
f
O
ld
C
l
earw
i
re assets,
if
(1) t
h
e taxa
bl
esa
l
eo
f
t
h
eO
ld
C
l
earw
i
re assets w
ill
serve a
b
ona
fid
e
b
us
i
ness nee
d
o
f
C
l
earw
i
re Commun
i
cat
i
ons’ w
i
re
l
ess
b
roa
db
an
db
us
i
ness an
d(
2
)
ne
i
t
h
er t
h
e taxa
bl
esa
l
e nor t
he
r
einvestment or other use of the proceeds is si
g
nificantl
y
motivated b
y
the desire to obtain increased income tax
b
ene
fi
ts
f
or t
h
e mem
b
ers or to
i
mpose
i
ncome tax costs on C
l
earw
i
re. Accor
di
ng
l
y, C
l
earw
i
re may recogn
i
ze
b
u
il
t-
i
n gain on the sale of Old Clearwire assets (1) in an amount up to
$
10 million, in any 36-month period, and (2) in
g
reater amounts, if the standard of bona fide non-tax business need is satisfied. If Clearwire Communications sells
O
ld Clearwire assets with unamortized built-in gain, then Clearwire is likely to be allocated a share of the taxable
i
ncome o
f
C
l
earw
i
re Commun
i
cat
i
ons t
h
at excee
d
s
i
ts proport
i
onate econom
i
c
i
nterest
i
nC
l
earw
i
re Commun
i-
c
at
i
ons, an
d
ma
yi
ncur a mater
i
a
lli
a
bili
t
yf
or taxes. However, su
bj
ect to t
h
eex
i
st
i
n
g
an
d
poss
ibl
e
f
uture
li
m
i
tat
i
ons
on the use of Clearwire’s NOLs under Section 382 and Section 384 of the Code, Clearwire’s NOLs are generally
e
xpecte
d
to
b
eava
il
a
bl
etoo
ff
set, to t
h
e extent o
f
t
h
ese NOLs,
i
tems o
fi
ncome an
dg
a
i
na
ll
ocate
d
to C
l
earw
i
re
by
C
l
earw
i
re Commun
i
cat
i
ons. See t
h
e sect
i
on t
i
t
l
e
d
“R
i
s
k
Factors — T
h
ea
bili
t
y
o
f
C
l
earw
i
re to use
i
ts net operat
i
n
g
losses to offset its income and
g
ain is sub
j
ect to limitation If use of its NOLs is limited, there is an increased
lik
e
lih
oo
d
t
h
at C
l
earw
i
re Commun
i
cat
i
ons w
ill b
e requ
i
re
d
to ma
k
e a tax
di
str
ib
ut
i
on to C
l
earw
i
re”
b
eg
i
nn
i
ng on
p
age 39 o
f
t
hi
s report. C
l
earw
i
re Commun
i
cat
i
ons
i
s requ
i
re
d
to ma
k
e
di
str
ib
ut
i
ons to C
l
earw
i
re
i
n amounts
n
ecessar
y
to pa
y
all taxes reasonabl
y
determined b
y
Clearwire to be pa
y
able with respect to its distributive share o
f
th
e taxa
bl
e
i
ncome o
f
C
l
earw
i
re Commun
i
cat
i
ons, a
f
ter ta
ki
ng
i
nto account t
h
e NOL
d
e
d
uct
i
ons an
d
ot
h
er tax
b
ene
fi
ts reasona
bl
y expecte
d
to
b
eava
il
a
bl
etoC
l
earw
i
re. See t
h
e sect
i
ons t
i
t
l
e
d
“R
i
s
k
Factors — Man
d
atory tax
distributions ma
y
deprive Clearwire Communications of funds that are required in its business” and “Certain
Re
l
at
i
ons
hi
ps an
d
Re
l
ate
d
Transact
i
ons, an
d
D
i
rector In
d
epen
d
ence”
b
eg
i
nn
i
ng on pages 38 an
d
127, respect
i
ve
l
y,
o
f
t
hi
s report
.
S
p
rint an
d
t
h
e Investors ma
y
s
h
i
f
ttoC
l
earwire t
h
e tax
b
ur
d
en o
f
a
dd
itiona
lb
ui
l
t-in gain t
h
roug
ha
h
olding company exchange.
Un
d
er t
h
e Operat
i
n
g
A
g
reement, Spr
i
nt or an Investor ma
y
a
ff
ect an exc
h
an
g
eo
f
C
l
earw
i
re Commun
i
cat
i
ons
Class B Common Interests and Class B Common Stock for Class A Common Stock b
y
transferrin
g
to Clearwire a
h
o
ldi
ng company t
h
at owns t
h
eC
l
earw
i
re Commun
i
cat
i
ons C
l
ass B Common Interests an
d
C
l
ass B Common Stoc
k
i
n a transact
i
on
i
nten
d
e
d
to
b
e tax-
f
ree
f
or Un
i
te
d
States
f
e
d
era
li
ncome tax purposes (w
hi
c
h
t
h
e Operat
i
n
g
Ag
reement refers to as a holdin
g
compan
y
exchan
g
e). In particular, if Clearwire, as the mana
g
in
g
member o
f
C
l
earw
i
re Commun
i
cat
i
ons,
h
as approve
d
a taxa
bl
esa
l
e
b
yC
l
earw
i
re Commun
i
cat
i
ons o
ff
ormer Spr
i
nt assets t
h
a
t
are
i
ntang
ibl
e property an
d
t
h
at wou
ld
cause Spr
i
nt to
b
ea
ll
ocate
d
un
d
er Sect
i
on 704(c) o
f
t
h
eCo
d
e more t
h
an
$10 million of built-in
g
ain durin
g
an
y
36-month period, then, durin
g
a specified 15-business-da
y
period, Clearwire
Commun
i
cat
i
ons w
ill b
e prec
l
u
d
e
df
rom enter
i
ng
i
nto any
bi
n
di
ng contract
f
or t
h
e taxa
bl
esa
l
eo
f
t
h
e
f
ormer Spr
i
nt
assets, an
d
Spr
i
nt w
ill h
ave t
h
er
i
g
h
t to trans
f
er C
l
earw
i
re Commun
i
cat
i
ons C
l
ass B Common Interests an
d
C
l
ass
B
Common Stock to one or more holdin
g
companies, and to transfer those holdin
g
companies to Clearwire in holdin
g
c
ompany exchanges. In any holding company exchange, Clearwire will succeed to all of the built-in gain and other
t
ax c
h
aracter
i
st
i
cs assoc
i
ate
d
w
i
t
h
t
h
e trans
f
erre
d
C
l
earw
i
re Commun
i
cat
i
ons C
l
ass B Common Interests,
i
nc
l
u
di
ng
(1)
i
nt
h
e case o
f
a trans
f
er
by
Spr
i
nt, an
y
rema
i
n
i
n
g
port
i
on o
f
t
h
e
b
u
il
t-
i
n
g
a
i
nex
i
st
i
n
g
at t
h
e
f
ormat
i
on o
f
4
1