Comcast 2007 Annual Report Download - page 65

Our income tax expense differs from the federal statutory amount
because of the effect of the following items:
Year ended December 31 (in millions) 2007 2006 2005
Federal tax at statutory rate $ (1,522) $ (1,258) $ (602)
State income taxes, net of
federal benefit (153) (132) (105)
Nondeductible losses from
joint ventures and equity in
net (losses) income of
affiliates, net 318 (24)
Adjustments to uncertain and
effectively settled tax positions (35) 93 (35)
Accrued interest on uncertain
and effectively settled
tax positions (110) 64 (70)
Other 17 (132) (37)
Income tax expense $ (1,800) $ (1,347) $ (873)
The components of our net deferred tax liability are presented in
the table below:
December 31 (in millions) 2007 2006
Deferred tax assets:
Net operating loss carryforwards $ 252 $ 309
Differences between book and tax basis
of long-term debt 163 177
Nondeductible accruals and other 1,225 742
1,640 1,228
Deferred tax liabilities:
Differences between book and tax basis
of property and equipment and
intangible assets 25,935 25,527
Differences between book and tax basis
of investments 1,542 2,633
Differences between book and tax basis
of indexed debt securities 829 720
28,306 28,880
Net deferred tax liability $ 26,666 $ 27,652
Other changes in net deferred income tax liabilities in 2007 not
recorded as deferred income tax expense relate to a $224 million
reduction in deferred income tax liabilities associated with acquisition
related purchase price allocations, a $53 million reduction of de-
ferred income tax liabilities associated with items included in other
comprehensive income and a $960 million reclassification adjust-
ment to long-term income taxes payable related to the adoption of
FIN 48 (see below).
Net deferred tax assets included in current assets are related pri-
marily to our current investments and current liabilities. In 2007, we
made an adjustment of $249 million from noncurrent to current
deferred income tax liabilities to correct the 2006 consolidated
balance sheet. As of December 31, 2007, we had federal net
operating loss carryforwards of $170 million and various state net
operating loss carryforwards that expire in periods through 2027.
The determination of the state net operating loss carryforwards is
dependent on our subsidiaries’ taxable income or loss, appor-
tionment percentages and other respective state laws that can
change from year to year and impact the amount of such
carryforwards.
In 2007, 2006 and 2005, income tax benefits attributable to share-
based compensation of approximately $49 million, $60 million and
$35 million, respectively, were allocated to stockholders’ equity.
Uncertain Tax Positions
We adopted the provisions of FIN 48 on January 1, 2007. FIN 48
prescribes the recognition threshold and measurement attribute
for the financial statement recognition and measurement of un-
certain tax positions taken or expected to be taken in a tax return.
As a result of this adoption, we recognized a $35 million decrease
in our reserves for uncertain tax positions, a $25 million increase in
goodwill, a $60 million increase in retained earnings and a re-
classification of approximately $960 million between deferred
income taxes and other noncurrent liabilities to conform with the
balance sheet presentation requirements of FIN 48. Our total un-
certain tax positions as of December 31, 2007 were $1.9 billion,
excluding the federal benefits on state tax positions that have been
recorded as deferred income taxes; this amount includes a $469
million tax payment for which we are seeking a refund. Currently, if
we were to recognize the tax benefit for such positions, approx-
imately $580 million would impact our effective tax rate with the
remaining amount impacting deferred income tax and goodwill.
Upon our adoption of SFAS 141R in 2009, all tax benefits subse-
quently recognized that otherwise would have impacted goodwill
will impact our effective tax rate.
A reconciliation of our unrecognized tax benefits for 2007 is pre-
sented in the table below:
(in millions)
Balance as of January 1, 2007 $ 2,099
Additions based on tax positions related to the
current year 65
Additions based on tax positions related to prior years 18
Reductions for tax positions of prior years (157)
Reductions due to expiration of statute of limitations (3)
Settlements with taxing authorities (101)
Balance as of December 31, 2007 $ 1,921
As of December 31, 2007, we had accrued approximately $766
million of interest associated with our uncertain tax positions.
63 Comcast 2007 Annual Report on Form 10-K