Income Taxes:

The provision (benefit) for taxes on income consisted of the following (in thousands):



	2011		2010		2009
Current:
Federal	$	—	$	—	$	(1,191	)
State	3,729		3,401		(22,135		)
	3,729		3,401		(23,326		)
Deferred:
Federal	162,695		105,090		95,377
State	11,922		10,388		14,784
	174,617		115,478		110,161
Provision for income taxes	$	178,346	$	118,879	$	86,835

A reconciliation of income taxes computed at the United States federal statutory income tax rate (35%) to the provision for income taxes reflected in the consolidated statements of income and comprehensive income for the years ended December 31, 2011, 2010 and 2009 is as follows (in thousands):



	2011			2010			2009
U.S. federal income tax provision at statutory rate	$	167,880		$	109,303		$	92,288
Increase (decrease) in income taxes resulting from:
State income taxes, net of federal income tax impact	14,408			15,319			11,500
Change in valuation allowance	652			—			816
Provision (benefit) for tax uncertainties	434			267			(16,279		)
Permanent items	330			710			1,087
Tax credits	(4,809		)	(6,893		)	(2,076		)
Other	(549		)	173			(501		)
Provision for income taxes	$	178,346		$	118,879		$	86,835

Deferred taxes are provided for those items reported in different periods for income tax and financial reporting purposes. The Company's net deferred tax liability consisted of the following deferred tax assets and liabilities (in thousands):



	2011			2010
Deferred tax assets:
Net operating loss carryforward	$	604,402		$	361,617
Deferred revenue	17,065			19,050
Allowance for uncollectible accounts	—			1,154
Deferred rent	38,963			33,420
Deferred compensation	57,594			56,157
Asset retirement obligation	6,479			4,770
Credit carryforwards	18,081			12,747
Other comprehensive loss	7,493			3,171
Capital loss limitation	7,388			7,410
Transaction taxes	3,896			5,498
Unrealized loss on investments	39,751			39,871
Other	13,126			14,779
Gross deferred tax assets	814,238			559,644
Valuation allowance	(47,810		)	(47,158		)
Total deferred tax assets, net	766,428			512,486
Deferred tax liabilities:
Depreciation	(1,030,016		)	(655,566		)
Deferred costs	(28,976		)	(32,332		)
FCC licenses	(370,082		)	(326,954		)
Partnership interest	(142,439		)	(130,679		)
Other	(4,807		)	(3,723		)
Deferred tax liabilities	(1,576,320		)	(1,149,254		)
Net deferred tax liability	$	(809,892	)	$	(636,768	)

Deferred tax assets and liabilities at December 31, 2011 and 2010 are as follows (in thousands):



	2011			2010
Current deferred tax asset	$	7,214		$	6,290
Non-current deferred tax liability	(817,106		)	(643,058		)
Net deferred tax liability	$	(809,892	)	$	(636,768	)

At December 31, 2011 the Company has approximately $1.7 billion and $344.6 million of financial reporting net operating loss carryforwards for federal and state income tax purposes, respectively. The Company has no current federal income tax liability as of December 31, 2011 and 2010. The Company's net operating loss carryforwards for federal and state tax purposes were approximately $133.1 million and $87.3 million, respectively, greater than its net operating loss carryforwards for financial reporting purposes due to the Company's inability to realize excess tax benefits under ASC 718 until such benefits reduce income taxes payable. The federal net operating loss will begin to expire in 2023. The state net operating losses will begin to expire in 2013. At December 31, 2011 the Company has approximately $0.1 million of alternative minimum tax credit carryforwards for state income tax purposes. These alternative minimum tax credits carryforward indefinitely.

Financial statement deferred tax assets must be reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company believes that realization of the deferred tax assets is more likely than not based on the future reversal of existing temporary differences which give rise to the deferred tax liabilities, with the exception of the deferred tax asset related to the unrealized loss on investments. During 2009, an impairment of investments was recorded for financial statement purposes resulting in an unrealized loss on investments. Recognition of this unrealized loss for tax purposes would result in a capital loss. The Company has not generated capital gains within the carryback period and does not anticipate, at this time, generating sufficient capital gains within the carryforward period to realize this deferred tax asset. Therefore, the Company has a valuation allowance of $47.8 million and $47.2 million, respectively, as of December 31, 2011 and 2010.

Audits and Uncertain Tax Positions

The Company files income tax returns in the U.S. federal and certain state jurisdictions and is subject to examinations by the Internal Revenue Service (the “IRS”) and other taxing authorities. These audits can result in adjustments of taxes due or adjustments of the net operating losses which are available to offset future taxable income. The Company's estimate of the potential outcome of any uncertain tax issue prior to audit is subject to management's assessment of relevant risks, facts, and circumstances existing at that time. An unfavorable result under audit may reduce the amount of federal and state net operating losses the Company has available for carryforward to offset future taxable income, or may increase the amount of tax due for the period under audit, resulting in an increase to the effective rate in the year of resolution.

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits are as follows (in thousands):



	2011		2010		2009
Balance at beginning of period	$	6,084	$	6,084	$	19,328
Increases for tax provisions taken during a prior period	—		—		—
Increases for tax provisions taken during the current period	—		—		—
Decreases relating to settlements	—		—		—
Decreases resulting from the expiration of the statute of limitations	—		—		(13,244		)
Balance at end of period	$	6,084	$	6,084	$	6,084

The net amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is $4.0 million and $4.0 million as of December 31, 2011 and 2010, respectively. Additionally, the net interest and penalties which would affect the effective tax rate is $5.8 million and $5.3 million as of December 31, 2011 and 2010, respectively. The Company continues to recognize both interest and penalties related to unrecognized tax benefits as a component of income tax expense. The Company recognized gross interest and penalties of $0.6 million, $0.4 million and $0.8 million during the years ended December 31, 2011, 2010 and 2009, respectively. Accrued gross interest and penalties were $7.6 million and $6.9 million as of December 31, 2011 and 2010, respectively.

There is a state income tax examination currently in progress for the Company and/or certain of its subsidiaries for various tax years. Management does not believe this examination will have a significant effect on the Company's tax position. In January 2012, the Company finalized a settlement agreement with a state to resolve a disputed tax position. The position was fully reserved as of December 31, 2011 and the settlement will result in an income tax benefit of $4.0 million during the quarter ending March 31, 2012.