Sprint - Nextel 2015 Annual Report Download - page 122

Table of Contents
Index to Consolidated Financial Statements
SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Predecessor 191-day period ended July 10, 2013 and unaudited three-month period ended March 31, 2013, respectively, on deferred tax assets primarily related to
losses incurred during the period that are not currently realizable and expenses recorded during the period that are not currently deductible for income tax purposes.
The remaining increase of $272 million in the carrying amount of the valuation allowance for the Successor year ended March 31, 2015 is primarily related to
amounts recorded to other comprehensive (loss) income related to the pension net actuarial loss and net impacts of acquisition accounting for the SoftBank Merger
and Clearwire Acquisition. We do not expect to record significant tax benefits on future net operating losses until our circumstances justify the recognition of such
benefits.
We believe it is more likely than not that our remaining deferred income tax assets, net of the valuation allowance, will be realized based on current
income tax laws and expectations of future taxable income stemming from the reversal of existing deferred tax liabilities. Uncertainties surrounding income tax
law changes, shifts in operations between state taxing jurisdictions and future operating income levels may, however, affect the ultimate realization of all or some
of these deferred income tax assets.
Income tax expense of $141 million for the Successor year ended March 31, 2016 was primarily attributable to tax expense resulting from taxable
temporary differences from amortization of FCC licenses, partially offset by tax benefits from the reversal of state income tax valuation allowance on deferred tax
assets and changes in state income tax laws enacted during the year. As a result of organizational restructuring, which drove a sustained increase in the profitability
of specific legal entities, we revised our estimate regarding the realizability of the involved entities' deferred state tax assets and recorded a state tax benefit of $90
million . Income tax benefit of $574 million for the Successor year ended March 31, 2015 was primarily attributable to recognition of a tax benefit on the $1.9
billion Sprint trade name impairment loss partially offset by tax expense on taxable temporary differences from the amortization of FCC licenses during the period.
Income tax expense of $56 million and $45 million for the Successor three-month transition period ended March 31, 2014, and year ended December 31, 2013,
respectively, and $38 million for the Predecessor unaudited three-month period ended March 31, 2013 was primarily attributable to taxable temporary differences
from amortization of FCC licenses. Income tax expense of $1.6 billion for the Predecessor 191-day period ended July 10, 2013, was primarily attributable to
taxable temporary differences from the $2.9 billion gain on the previously-held equity interests in Clearwire. The gain on the previously-held equity interests in
Clearwire was principally attributable to the increase in the fair value of FCC licenses held by Clearwire. FCC licenses are amortized over 15 years for income tax
purposes but, because these licenses have an indefinite life, they are not amortized for financial statement reporting purposes. These temporary differences result in
net deferred income tax expense since they cannot be scheduled to reverse during the loss carryforward period.
During the Successor years ended March 31, 2016 and 2015 , three-month transition period ended March 31, 2014 and year ended December 31, 2013,
and Predecessor 191-day period ended July 10, 2013 and unaudited three-month period ended March 31, 2013, we generated $343 million , $398 million , $110
million , $263 million , $238 million , and $96 million , respectively, of foreign income, which is included in (loss) income before income taxes on the
consolidated statements of operations. We have no material unremitted earnings of foreign subsidiaries.
As of March 31, 2016 , we had federal operating loss carryforwards of $19.6 billion , state operating loss carryforwards of $20.8 billion and foreign net
operating loss carryforwards of $821 million . Related to these loss carryforwards, we have recorded federal tax benefits of $6.9 billion , net state tax benefits of
$969 million and foreign tax benefits of $273 million before consideration of the valuation allowances. Approximately $1.1 billion of the federal net operating loss
carryforwards expire between fiscal years 2016 and 2020. The remaining $18.5 billion expire in varying amounts between fiscal years 2021 and 2034. The state
operating loss carryforwards expire in varying amounts through fiscal year 2035. Foreign operating loss carryforwards of $427 million do not expire. The
remaining foreign operating loss carryforwards expire in varying amounts starting in fiscal year 2016.
In addition, we had available, for income tax purposes, federal alternative minimum tax net operating loss carryforwards of $20.6 billion and state
alternative minimum tax net operating loss carryforwards of $4.8 billion . The loss carryforwards expire in varying amounts through fiscal year 2034. We also had
available capital loss carryforwards of $217 million . Related to these capital loss carryforwards are tax benefits of $83 million . Approximately $213 million of the
capital loss carryforwards expire prior to fiscal year 2017. The remaining $4 million expire in varying amounts between fiscal years 2017 and 2018.
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