Income Taxes

12 Months Ended

Dec. 31, 2019

Note 5: Income Taxes



Income Before Income Taxes
Year ended December 31 (in millions)	2019		2018		2017
Domestic	$	16,646	$	14,387	$	14,331
Foreign	350		855		1,022
	$	16,996	$	15,242	$	15,353



Components of Income Tax (Expense) Benefit
Year ended December 31 (in millions)	2019			2018			2017
Current (Expense) Benefit:
Federal	$	(2,085	)	$	(2,026	)	$	(2,411	)
State	(425		)	(639		)	(277		)
Foreign	(600		)	(425		)	(389		)
	(3,110		)	(3,090		)	(3,077		)
Deferred (Expense) Benefit:
Federal	(902		)	(546		)	10,651
State	15			167			(11		)
Foreign	324			89			6
	(563		)	(290		)	10,646
Income tax (expense) benefit	$	(3,673	)	$	(3,380	)	$	7,569

Our income tax (expense) benefit differs from the federal statutory amount because of the effect of the items detailed in the table below.



Year ended December 31 (in millions)	2019			2018			2017
Federal tax at statutory rate	$	(3,569	)	$	(3,201	)	$	(5,374	)
State income taxes, net of federal benefit	(306		)	(212		)	(299		)
Foreign income taxed at different rates	(126		)	(147		)	(70		)
Nontaxable income attributable to noncontrolling interests	51			20			45
Adjustments to uncertain and effectively settled tax positions, net	(3		)	(144		)	62
Accrued interest and penalties on uncertain and effectively settled tax positions, net	13			(29		)	(3		)
Excess tax benefits recognized on share-based compensation	196			75			297
Tax legislation	31			120			12,682
Other	40			138			229
Income tax (expense) benefit	$	(3,673	)	$	(3,380	)	$	7,569

We base our provision for income taxes on our current period income, changes in our deferred income tax assets and liabilities, income tax rates, changes in estimates of our uncertain tax positions, tax planning opportunities available in the jurisdictions in which we operate and excess tax benefits or deficiencies that arise when the tax consequences of share-based compensation differ from amounts previously recognized in the statement of income. We recognize deferred tax assets and liabilities when there are temporary differences between the financial reporting basis and tax basis of our assets and liabilities and for the expected benefits of using net operating loss carryforwards. When a change in the tax rate or tax law has an impact on deferred taxes, we apply the change based on the years in which the temporary differences are expected to reverse. We record the change in our consolidated financial statements in the period of enactment.

The determination of the income tax consequences of a business combination includes identifying the tax basis of assets and liabilities acquired and any contingencies associated with uncertain tax positions assumed or resulting from the business combination. Deferred tax assets and liabilities related to temporary differences of an acquired entity are recorded as of the date of the business combination and are based on our estimate of the ultimate tax basis that will be accepted by the various tax authorities. We record liabilities for contingencies associated with prior tax returns filed by the acquired entity based on criteria set forth in the appropriate accounting guidance. We adjust the deferred tax accounts and the liabilities periodically to reflect any revised estimated tax basis and any estimated settlements with the various tax authorities. The effects of these adjustments are recorded to income tax (expense) benefit.

From time to time, we engage in transactions in which the tax consequences may be subject to uncertainty. In these cases, we evaluate our tax position using the recognition threshold and the measurement attribute in accordance with the accounting guidance related to uncertain tax positions. Examples of these transactions include business acquisitions and dispositions, including consideration paid or received in connection with these transactions, certain financing transactions, and the allocation of income among state and local tax jurisdictions. Significant judgment is required in assessing and estimating the tax consequences of these transactions. We determine whether it is more likely than not that a tax position will be sustained on examination, including the resolution of any related appeals or litigation processes, based on the technical merits of the position. A tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of benefit to be recognized in our consolidated financial statements. We classify interest and penalties, if any, associated with our uncertain tax positions as a component of income tax (expense) benefit.

Tax Reform

On December 22, 2017, new federal tax reform legislation was enacted in the United States, resulting in significant changes from previous tax law. The new legislation reduced the federal corporate income tax rate to 21% from 35% effective January 1, 2018, which resulted in a $12.7 billion net income tax benefit to us for 2017, primarily related to the remeasurement of deferred taxes at the new tax rate. Our federal income tax expense for periods beginning in 2018 is based on the new rate.



Components of Net Deferred Tax Liability
December 31 (in millions)	2019		2018
Deferred Tax Assets:
Net operating loss and other loss carryforwards	$	2,017	$	1,926
Nondeductible accruals and other	2,779		2,656
Less: Valuation allowance	1,906		632
	2,890		3,950
Deferred Tax Liabilities:
Differences between book and tax basis of property and equipment and intangible assets	29,387		29,139
Differences between book and tax basis of investments	702		491
Differences between book and tax basis of long-term debt	751		604
Differences between book and tax basis of foreign subsidiaries and undistributed foreign earnings	143		85
	30,983		30,319
Net deferred tax liability	$	28,093	$	26,369

Changes in our net deferred tax liability in 2019 that were not recorded as deferred income tax benefit (expense) are primarily related to an increase of $118 million associated with items included in other comprehensive income (loss) and an increase in net deferred tax liabilities of $1.0 billion as a result of the finalization of acquisition accounting for Sky. Our net deferred tax liability includes $15.4 billion related to cable franchise rights that will remain unchanged unless we recognize an impairment or dispose of a cable franchise or there is a change in the tax law.

As of December 31, 2019, we had federal net operating loss carryforwards of $274 million, and various state net operating loss carryforwards, the majority of which expire in periods through 2039. As of December 31, 2019, we also had foreign net operating loss carryforwards of $5.6 billion related to the foreign operations of Sky and NBCUniversal, the majority of which can be carried forward indefinitely. The determination of the realization of the state and foreign net operating loss carryforwards is dependent on our subsidiaries’ taxable income or loss, apportionment percentages, redetermination from taxing authorities, and state and foreign laws that can change from year to year and impact the amount of such carryforwards. We recognize a valuation allowance if we determine it is more likely than not that some portion, or all, of a deferred tax asset will not be realized. As of December 31, 2019 and 2018, our valuation allowance was primarily related to foreign and state net operating loss carryforwards. In 2019, in conjunction with the finalization of acquisition accounting for Sky, we recorded an additional valuation allowance of approximately $1.2 billion associated with our assessment of the realization of Sky’s deferred tax assets, primarily related to net operating losses.

Uncertain Tax Positions

Our liability for uncertain tax positions as of December 31, 2019 totaled $1.0 billion, which excludes the federal benefits on state tax positions that were recorded as deferred income taxes.



Reconciliation of Unrecognized Tax Benefits
(in millions)	2019			2018			2017
Gross unrecognized tax benefits, January 1	$	1,543		$	1,497		$	1,443
Additions based on tax positions related to the current year	230			229			121
Additions based on tax positions related to prior years	133			125			319
Additions from acquired subsidiaries	1			130			—
Reductions for tax positions of prior years	(344		)	(346		)	(251		)
Reductions due to expiration of statutes of limitations	(117		)	(75		)	(70		)
Settlements with tax authorities	(24		)	(17		)	(65		)
Gross unrecognized tax benefits, December 31	1,422			1,543			1,497
Positions paid	(409		)	(531		)	(688		)
Liability for uncertain tax positions	$	1,013		$	1,012		$	809

Our liability for uncertain tax positions represents the amounts recorded for potential payment obligations. Our gross unrecognized tax benefits also include amounts related to positions for which tax has been assessed and paid. If we were to recognize our gross unrecognized tax benefits in the future, $1.1 billion would impact our effective tax rate and the remaining amount would increase our deferred income tax liability. The amount and timing of the recognition of any such tax benefit is dependent on the completion of examinations of our tax filings by the various tax authorities and the expiration of statutes of limitations. It is reasonably possible that certain tax contests could be resolved within the next 12 months that may result in a decrease in our effective tax rate.

As of December 31, 2019 and 2018, our accrued interest associated with our liability for uncertain tax positions was $186 million and $203 million, respectively.

The IRS has completed its examination of our income tax returns for all years through 2016. Various states are examining our state tax returns and the tax years of those tax returns currently under examination vary by state, with most of the periods relating to tax years 2000 and forward. Various foreign jurisdictions are examining our tax returns and the tax years of those tax returns currently under examination vary by country, with most of the periods relating to tax years 2010 and forward.

NBCUniversal Media LLC [Member]

Income Taxes [Line Items]

Income Taxes

Note 5: Income Taxes



Components of Income Tax Expense
Year ended December 31 (in millions)	2019			2018			2017
Foreign
Current income tax expense	$	(184	)	$	(230	)	$	(201	)
Deferred income tax expense	44			31			7
Withholding tax expense	(145		)	(163		)	(187		)
U.S. domestic tax expense	(35		)	11			(11		)
Income tax expense	$	(320	)	$	(351	)	$	(392	)

We are a limited liability company and are disregarded for U.S. federal income tax purposes as an entity separate from NBCUniversal Holdings, a tax partnership. For U.S. federal and state income tax purposes, our income is included in tax returns filed by Comcast and its subsidiaries, and therefore we are not expected to incur any significant current or deferred U.S. domestic income taxes. Our tax liability is comprised primarily of withholding tax on foreign licensing activity and income taxes on foreign earnings. As a result of our tax status, the deferred tax assets and liabilities included in our consolidated balance sheet at December 31, 2019 and 2018 were not material.

In jurisdictions in which we are subject to income taxes, we base our provision for income taxes on our current period income, changes in our deferred income tax assets and liabilities, income tax rates, changes in estimates of our uncertain tax positions, and tax planning opportunities available in the jurisdictions in which we operate. We recognize deferred tax assets and liabilities when there are temporary differences between the financial reporting basis and tax basis of our assets and liabilities and for the expected benefits of using net operating loss carryforwards. When a change in the tax rate or tax law has an impact on deferred taxes, we apply the change based on the years in which the temporary differences are expected to reverse. We record the change in our consolidated financial statements in the period of enactment.

The liabilities for uncertain tax positions included in our consolidated balance sheet were not material as of December 31, 2019 and 2018. Various domestic and foreign tax authorities are examining our tax returns through tax year 2017. The majority of the periods under examination relate to tax years 2010 and forward.