Clearwire 2010 Annual Report Download - page 94

Components of deferred tax assets and liabilities as of December 31, 2010 and 2009 were as follows (in
thousands):
2010 2009
December 31,
Noncurrent deferred tax assets:
Net operating loss carryforward ............................... $932,818 $ 718,853
Capital loss carryforward. ................................... 6,620 6,230
Other assets ............................................. 7,307 13,573
Total deferred tax assets . . . ................................... 946,745 738,656
Valuation allowance ......................................... (696,887) (573,165)
Net deferred tax assets ....................................... 249,858 165,491
Noncurrent deferred tax liabilities:
Investment in Clearwire Communications........................ 238,286 142,434
Spectrum licenses ......................................... 16,164 19,437
Other intangible assets. . . ................................... 659 9,937
Other .................................................. 313 36
Total deferred tax liabilities . ................................... 255,422 171,844
Net deferred tax liabilities . . ................................... $ 5,564 $ 6,353
We determine deferred income taxes based on the estimated future tax effects of differences between the
financial statement and tax bases of assets and liabilities using the tax rates expected to be in effect when any
temporary differences reverse or when the net operating loss, capital loss or tax credit carryforwards are utilized.
Pursuant to the Transactions, the assets of Old Clearwire and its subsidiaries were combined with the spectrum
and certain other assets of the Sprint WiMAX Business. In conjunction with the acquisition of Old Clearwire by the
Sprint WiMAX Business, these assets along with the $3.2 billion of capital from the Investors were contributed to
Clearwire Communications. Clearwire is the sole holder of voting interests in Clearwire Communications. As such,
Clearwire controls 100% of the decision making of Clearwire Communications and consolidates 100% of its
operations. Clearwire Communications is treated as a partnership for United States federal income tax purposes and
therefore does not pay income tax in the United States and any current and deferred tax consequences arise at the
partner level, including Clearwire. Other than balances associated with the timing of deductions for prepaid
expenses and those associated with the non-United States operations, the only temporary difference for Clearwire
after the Closing is the basis difference associated with our investment in the partnership. Consequently, we
recorded a deferred tax liability for the difference between the financial statement carrying value and the tax basis
we hold in our interest in Clearwire Communications as of the date of the Transactions.
We have recorded a valuation allowance against our deferred tax assets to the extent that we determined that it
is more likely than not that these items will either expire before we are able to realize their benefits or that future
deductibility is uncertain. As it relates to the United States tax jurisdiction, we determined that our temporary
taxable difference associated with our investment in Clearwire Communications will not fully reverse within the
carryforward period of the net operating losses and accordingly represents relevant future taxable income.
We file income tax returns for Clearwire and our subsidiaries in the United States Federal jurisdiction and
various state and foreign jurisdictions. As of December 31, 2010, the tax returns for Clearwire for the years 2003
through 2009 remain open to examination by the Internal Revenue Service and various state tax authorities. In
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CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)