XM Radio 2009 Annual Report Download - page 191

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and
deferred tax liabilities are presented below:
2009 2008
December 31,
Deferred tax assets:
Net operating loss carryforwards ........................... $3,086,067 $ 2,608,038
GM payments and liabilities ............................... 311,235 506,106
Deferred revenue ....................................... 226,763 240,849
Severance accrual ...................................... 1,821 17,237
Accrued bonus......................................... 16,130 24,537
Expensed costs capitalized for tax .......................... 59,999 75,998
Loan financing costs .................................... 17,288 27,890
Investments ........................................... 61,643 63,786
Stock based compensation ................................ 155,754 138,840
Other ............................................... 49,538 100,205
Total deferred tax assets ................................ 3,986,238 3,803,486
Deferred tax liabilities:
Depreciation of property and equipment ...................... (126,240) (158,012)
FCC license........................................... (771,407) (766,935)
Other intangible assets ................................... (251,360) (265,138)
Other ............................................... (89,441) —
Net deferred tax liabilities .............................. (1,238,448) (1,190,085)
Net deferred tax assets before valuation allowance ................ 2,747,790 2,613,401
Valuation allowance....................................... (3,615,332) (3,476,583)
Net deferred tax liability ............................... $ (867,542) $ (863,182)
The difference in the net deferred tax liability of $867,542 and $863,182 at December 31, 2009 and 2008,
respectively, is primarily the result of the amortization of the FCC license which is amortized over 15 years for tax
purposes but not amortized for book purposes. This net deferred tax liability cannot be offset against our deferred
tax assets under GAAP since it relates to indefinite-lived assets and are not anticipated to reverse in the same period.
At December 31, 2009, we had net operating loss (“NOL”) carryforwards of approximately $8,016,000 for
federal and state income tax purposes available to offset future taxable income. These NOL carryforwards expire on
various dates beginning in 2014. We have had several ownership changes under Section 382 of the Internal Revenue
Code, which may limit our ability to utilize tax deductions.
As a result of the Merger, both SIRIUS and XM had a Section 382 ownership change. The ownership change
does not limit our ability to utilize future tax deductions and so no adjustments were made to gross deferred tax
assets as a result of the Merger.
Future changes in our ownership may limit our ability to utilize our deferred tax assets. Realization of our
deferred tax assets is dependent upon future earnings; accordingly, a full valuation allowance was recorded against
the assets.
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SIRIUS XM RADIO INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)