Dish Network 2007 Annual Report Download - page 120

Table of Contents
ECHOSTAR COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued
Our income tax policy is to record the estimated future tax effects of temporary differences between the tax bases of assets and liabilities and
amounts reported in our Consolidated Balance Sheets, as well as probable operating loss, tax credit and other carryforwards. We follow the
guidelines set forth in SFAS 109 regarding the recoverability of any tax assets recorded on the balance sheet and provide any necessary
valuation allowances as required. In accordance with SFAS 109, we periodically evaluate our need for a valuation allowance. Determining
necessary valuation allowances requires us to make assessments about historical financial information as well as the timing of future events,
including the probability of expected future taxable income and available tax planning opportunities. During the second quarter of 2005, we
concluded the recoverability of certain of our deferred tax assets was more likely than not and accordingly reversed the portion of the valuation
allowance which was no longer required. As of December 31, 2006, there remains $4.0 million of valuation allowance which relates to deferred
tax assets for credit carryforwards and state income tax net operating losses which begin to expire in the year 2010.
As of December 31, 2006 and 2005, the Federal NOL includes amounts related to tax deductions for exercised options that have been allocated
directly to contributed capital for exercised stock options totaling $284.1 million and $274.7 million, respectively.
Stock option compensation expenses for which an estimated deferred tax benefit was previously recorded exceeded the actual tax deductions
allowed during 2006 and 2005. Tax charges associated with the reversal of the prior tax benefit have been reported in “Additional paid-in
capital” in accordance with APB 25 and SFAS 123R. During 2006 and 2005, charges of $0.9 million and $10.4 million, respectively, were
made to additional paid-in capital.
The components of the (provision for) benefit from income taxes are as follows:
The actual tax provisions for 2006, 2005 and 2004 reconcile to the amounts computed by applying the statutory Federal tax rate to income
before taxes as follows:
F-33
For the Years Ended December 31,
2006 2005 2004
(In thousands)
Current (provision) benefit:
Federal
$
(23,027
)
$
(15,864
)
$
(523
)
State
(29,502
)
(14,958
)
(5,824
)
Foreign
(2,818
)
(1,614
)
(428
)
(55,347
)
(32,436
)
(6,775
)
Deferred (provision) benefit:
Federal
(304,896
)
(363,457
)
(75,306
)
State
38,467
(11,692
)
(6,313
)
Foreign
(291
)
247
—
Decrease (increase) in valuation allowance
7,324
914,787
76,785
(259,396
)
539,885
(4,834
)
Total benefit (provision)
$
(314,743
)
$
507,449
$
(11,609
)