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Income Taxes
9 Months Ended
Sep. 30, 2012
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes

Our quarterly income tax (provision) benefit for income taxes is measured using an estimated annual effective tax rate for the period, adjusted for discrete items that occurred within the periods presented.

For the three and nine months ended September 30, 2012, we recorded an income tax benefit of $6.6 million and $3.1 million, respectively, which represents an effective tax rate of 34.4% and (3.3)%, respectively. The effective tax rate for the three and nine months ended September 30, 2012 differs from the federal statutory rate of 35.0% primarily due to changes in recorded valuation allowances, the impact of state income taxes and changes in deferred tax liabilities related to the stock basis of subsidiaries and other adjustments related to the filing of our consolidated tax return.

The Debt Repurchases resulted in a tax gain of $141.5 million for the nine months ended September 30, 2012. Generally, the discharge of a debt obligation for an amount less than the adjusted issue price creates cancellation of debt income ("CODI"), which must be included in the taxpayer's taxable income. However, in accordance with Internal Revenue Code ("IRC") Section 108, in lieu of recognizing taxable income from CODI, the Company is required to reduce existing tax attributes. As a result, the Company recognized an estimated decrease in deferred tax assets relating to net operating losses and the basis of amortizable and depreciable property of approximately $3.1 million and $54.7 million for the three and nine months ended September 30, 2012, respectively. These decreases were offset by a decrease in recorded valuation allowance during the three and nine months ended September 30, 2012.

The estimated annual effective tax rate for the current year includes an estimate of the change in the valuation allowance expected to be necessary at the end of the year. The Company recorded a decrease in the valuation allowance during the three and nine months ended September 30, 2012 as a result of the Debt Repurchases (discussed above). In addition, the valuation allowance was decreased during the nine months ended September 30, 2012 as a result of the reduction in estimated useful lives of certain intangible assets as discussed in Note 2, "Summary of Significant Accounting Policies - Identifiable Intangible Assets," which was a change in circumstances that resulted in a change in judgment about the Company's ability to realize deferred tax assets in future years. The resulting change in income tax expense allocated to the three and nine months ended September 30, 2012 relating to the changes in valuation allowance is an increase of $2.8 million and a decrease of $40.0 million, respectively, which reduces our effective tax rate for the three and nine months ended September 30, 2012 by approximately 14.3% and 42.2%, respectively.

For the three months ended September 30, 2011, we recorded an income tax (provision) of $(0.7) million, which represented an effective tax rate of 3.1%. For the nine months ended September 30, 2011, we recorded an income tax benefit of $142.8 million, which represented an effective tax rate of 21.4%. The effective tax rate for the three months ended September 30, 2011 differs from the federal statutory rate of 35.0% primarily due to changes in deferred tax liabilities related to the stock basis of subsidiaries, changes in recorded valuation allowances, increases in the liability for unrecognized tax benefits and tax planning associated with IRC Section 108 and other adjustments related to the filing of our consolidated federal income tax return. The effective tax rate for the nine months ended September 30, 2011 differs from the federal statutory rate of 35.0% primarily due to non-deductible goodwill impairment, changes in deferred tax liabilities related to the stock basis of subsidiaries, changes in recorded valuation allowances, decreases in the liability for unrecognized tax benefits and tax planning associated with IRC Section 108 and other adjustments related to the filing of our consolidated federal income tax return.

The Company recorded a goodwill impairment charge of $801.1 million during the second quarter of 2011, of which $457.2 million related to non-deductible goodwill. Impairment of non-deductible goodwill reduced the income tax benefit of the impairment by $174.1 million and reduced our effective tax rate by approximately 26.1% for the nine months ended September 30, 2011.

Upon emergence from bankruptcy, the Company recorded deferred tax liabilities related to the excess of the financial statement carrying amount over the tax basis of investments in certain subsidiaries. The estimated annual effective tax rate for 2011 included an estimate of the change in these deferred tax liabilities. The goodwill impairment charge recorded during the second quarter of 2011 reduced the financial statement carrying amount of investments in certain subsidiaries, which also caused a reduction in these deferred tax liabilities. The resulting reduction in income tax expense for the three and nine months ended September 30, 2011 related to the change in these deferred tax liabilities was $6.3 million and $85.1 million, respectively, which (decreased) increased the effective tax rate for the three and nine months ended September 30, 2011 by approximately (27.3)% and 12.8%, respectively.

The estimated annual effective tax rate for 2011 included an estimate of the valuation allowance expected to be necessary at the end of the year for originating deferred tax assets. The goodwill impairment charge recorded during the second quarter of 2011 gave rise to a deferred tax asset whose realization did not meet a more-likely-than-not threshold, requiring a valuation allowance. In addition, changes in deferred tax assets and liabilities primarily related to the filing of our consolidated federal tax return resulted in increases to the valuation allowance during the three months ended September 30, 2011. The resulting increase in income tax expense for the three and nine months ended September 30, 2011 was $14.1 million and $60.7 million, respectively, which increased (decreased) the effective tax rate for the three and nine months ended September 30, 2011 by approximately 61.6% and (9.1)%, respectively.

With the filing of our consolidated federal income tax return for the year ended December 31, 2010, the Company recorded an income tax benefit of $23.6 million for both the three and nine months ended September 30, 2011 primarily related to tax planning associated with IRC Section 108 and other adjustments associated with the filing of our consolidated tax return, which resulted in a (decrease) increase in our effective tax rate of (103.1)% and 3.5% for the three and nine months ended September 30, 2011, respectively.

On June 15, 2011, the federal statute of limitations closed for a tax year in which a prior uncertain tax position related to revenue recognition was established. As a result, the Company decreased its liability for unrecognized tax benefits associated with this federal and state uncertain tax position by $28.2 million and recorded a tax benefit of $24.0 million for the nine months ended September 30, 2011, which resulted in an increase to our effective tax rate of 3.6% for the nine months ended September 30, 2011.

The Company increased its liability for unrecognized tax benefits during the three months ended September 30, 2011 by $7.4 million, which resulted in an increase (decrease) to our effective tax rate of 29.6% and (1.0)% for the three and nine months ended September 30, 2011, respectively, primarily related to uncertainty in the realization of certain tax attributes available for reduction under IRC Section 108. The increase also related to the exclusion of non-business income under audit in the state of Illinois.