XM Radio 2010 Annual Report Download - page 126

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and
deferred tax liabilities are presented below:
2010 2009
December 31,
Deferred tax assets:
Net operating loss carryforwards ........................... $3,091,869 $ 3,086,067
GM payments and liabilities............................... 308,776 311,235
Deferred revenue ....................................... 346,221 226,763
Severance accrual ...................................... 266 1,821
Accrued bonus......................................... 16,599 16,130
Expensed costs capitalized for tax .......................... 44,149 59,999
Loan financing costs .................................... 1,568 17,288
Investments ........................................... 62,742 61,643
Stock based compensation ................................ 118,507 155,754
Other ............................................... 53,260 49,538
Total deferred tax assets ................................ 4,043,957 3,986,238
Deferred tax liabilities:
Depreciation of property and equipment ...................... (379,180) (126,240)
FCC license........................................... (773,850) (771,407)
Other intangible assets ................................... (209,489) (251,360)
Other ............................................... — (89,441)
Net deferred tax liabilities .............................. (1,362,519) (1,238,448)
Net deferred tax assets before valuation allowance ................ 2,681,438 2,747,790
Valuation allowance....................................... (3,551,288) (3,615,332)
Net deferred tax liability ............................... $ (869,850) $ (867,542)
The difference in the net deferred tax liability of $869,850 and $867,542 at December 31, 2010 and 2009,
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 is not anticipated to reverse in the same period.
At December 31, 2010, we had net operating loss (“NOL”) carryforwards of approximately $8,052,000 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.
As of December 31, 2010 and 2009, we recorded $942 and $0, respectively, for uncertain state tax positions in
other long term liabilities. We do not currently anticipate that our existing reserves related to uncertain tax positions
as of December 31, 2010 will significantly increase or decrease during the twelve-month period ending
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SIRIUS XM RADIO INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)