XM Radio 2014 Annual Report Download - page 141

(18) Income Taxes
There is no current U.S. federal income tax provision, as all federal taxable income was offset
by utilizing U.S. federal net operating loss carryforwards. The current state income tax provision is
primarily related to taxable income in certain states that have suspended the ability to use net
operating loss carryforwards or where net operating losses have been fully utilized. The current
foreign income tax provision is primarily related to foreign withholding taxes on dividend distributions
between us and our Canadian affiliate. For the year ended December 31, 2013, the current foreign
income tax provision related to reimbursement of foreign withholding taxes. Income tax expense is
the sum of current income tax plus the change in deferred tax assets and liabilities.
We file a consolidated federal income tax return with our wholly-owned subsidiaries. Income tax
(expense) benefit consisted of the following:
2014 2013 2012
For the Years Ended December 31,
Current taxes:
Federal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $ — $ —
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7,743) (5,359) (1,319)
Foreign. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,341) 5,269 (2,265)
Total current taxes. . . . . . . . . . . . . . . . . . . . . . . . . (10,084) (90) (3,584)
Deferred taxes:
Federal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (302,350) (211,044) 2,729,823
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (25,111) (48,743) 271,995
Total deferred taxes . . . . . . . . . . . . . . . . . . . . . . . (327,461) (259,787) 3,001,818
Total income tax (expense) benefit . . . . . $(337,545) $(259,877) $2,998,234
The following table indicates the significant elements contributing to the difference between the
federal tax (expense) benefit at the statutory rate and at our effective rate:
2014 2013 2012
For the Years Ended December 31,
Federal tax expense, at statutory rate . . . . . . . . . . . . . . . $(290,775) $(222,982) $ (166,064)
State income tax expense, net of federal benefit. . . . . (32,067) (19,031) (16,606)
State income rate changes . . . . . . . . . . . . . . . . . . . . . . . . . 5,334 (8,666) (2,251)
Non-deductible expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . (13,914) (9,545) (477)
Change in valuation allowance. . . . . . . . . . . . . . . . . . . . . . 2,836 4,228 3,195,651
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,959) (3,881) (12,019)
Income tax (expense) benefit . . . . . . . . . . . . . . . . . . . $(337,545) $(259,877) $2,998,234
Deferred income taxes are recognized for the tax consequences related to temporary
differences between the carrying amount of assets and liabilities for financial reporting purposes and
the amounts used for tax purposes at each year-end, based on enacted tax laws and statutory tax
rates applicable to the periods in which the differences are expected to affect taxable income. In
determining the period in which related tax benefits are realized for book purposes, excess share-
based compensation deductions included in net operating losses are realized after regular net
operating losses are exhausted; excess tax compensation benefits are recorded off balance-sheet
as a memo entry until the period the excess tax benefit is realized through a reduction of taxes
payable. A valuation allowance is recognized when, based on the weight of all available evidence, it
is considered more likely than not that all, or some portion, of the deferred tax assets will not be
realized.
F-35
SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollar amounts in thousands, unless otherwise stated)