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Income Taxes (Tables) | 12 Months Ended
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Dec. 31, 2014
Income Tax Disclosure |
Income taxes receivable (payable) |
December 31, | 2014 |  | 2013 |
(Dollars in thousands) |  |  |  |  |  |
Federal income taxes receivable (payable) | $ | 108,820 |  | $ | (20,288) |
Net state income taxes receivable (payable) |  | 4,391 |  |  | 2,397 |
Income tax expense (benefit) |
Income tax expense (benefit) is summarized as follows:
Year Ended December 31, | 2014 |  | 2013 |  | 2012
(Dollars in thousands) |  |  |  |  |  |  |  |
Current |  |  |  |  |  |  |  |
| Federal | $ | (87,736) |  | $ | 181,579 |  | $ | 9,705
| State |  | 11,091 |  |  | 11,614 |  |  | 5,092
Deferred |  |  |  |  |  |  |  |
| Federal |  | 41,851 |  |  | (65,970) |  |  | 61,113
| Federal - valuation allowance adjustment |  | (10,816) |  |  | - |  |  | -
| State |  | 2,208 |  |  | (1,180) |  |  | (2,328)
| State - valuation allowance adjustment |  | 38,470 |  |  | - |  |  | -
|  |  | $ | (4,932) |  | $ | 126,043 |  | $ | 73,582
Income tax reconciliation |
Year Ended December 31, | 2014 |  | 2013 |  | 2012
|  | Amount |  | Rate |  | Amount |  | Rate |  | Amount |  | Rate
(Dollars in millions) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Statutory federal income tax expense and rate | $ | (53.3) |  | 35.0 | % |  | $ | 102.5 |  | 35.0 | % |  | $ | 68.7 |  | 35.0 | %
State income taxes, net of federal benefit (1) |  | 42.8 |  | (28.1) |  |  |  | 10.5 |  | 3.6 |  |  |  | 8.4 |  | 4.2 |
Effect of noncontrolling interests |  | (5.8) |  | 3.8 |  |  |  | (1.0) |  | (0.4) |  |  |  | - |  | - |
Gains (losses) on investments and sale of assets (2) |  | - |  | - |  |  |  | 14.9 |  | 5.1 |  |  |  | - |  | - |
Correction of deferred taxes (3) |  | - |  | - |  |  |  | - |  | - |  |  |  | (6.1) |  | (3.1) |
Change in federal valuation allowance (4) |  | (8.7) |  | 5.7 |  |  |  | - |  | - |  |  |  | - |  | - |
Goodwill impairment (5) |  | 18.3 |  | (12.0) |  |  |  | - |  | - |  |  |  | - |  | - |
Other differences, net |  | 1.8 |  | (1.2) |  |  |  | (0.9) |  | (0.3) |  |  |  | 2.6 |  | 1.4 |
Total income tax expense and rate | $ | (4.9) |  | 3.2 | % |  | $ | 126.0 |  | 43.0 | % |  | $ | 73.6 |  | 37.5 | %
(1) | State income taxes, net of federal benefit, include changes in unrecognized tax benefits as well as adjustments to the valuation allowance. During the third quarter of 2014 TDS recorded a $38.5 million increase to income tax expense related to a valuation allowance recorded against certain state deferred tax assets. In each interim period, TDS evaluates the available positive and negative evidence to assess whether deferred tax assets are realizable, on a more likely than not basis. During the year ended December 31, 2014, based on revised forecasts of future state income, TDS concluded that the negative evidence related to the realization of certain state deferred tax assets outweighed the positive evidence. Accordingly, TDS determined that such deferred tax assets related to certain states were not realizable, on a more likely than not basis.
(2) | Gains (losses) on investments and sale of assets represents 2013 tax expense related to the NY1 & NY2 Deconsolidation and the Divestiture Transaction.
(3) | Correction of deferred taxes reflects immaterial adjustments to correct deferred tax balances in 2012 related to tax basis and law changes that related to periods prior to 2012.
(4) | Change in federal valuation allowance relates primarily to a decrease to income tax expense in the third quarter of 2014 due to a valuation allowance reduction for federal net operating losses previously limited under loss utilization rules. Due to the shutdown of Airadigm’s consumer wireless business and resulting intercompany sale of certain assets by Airadigm to U.S. Cellular during the year (as described in Note 6 — Acquisitions, Divestitures and Exchanges), Airadigm is expected to recognize sufficient taxable income for TDS to utilize the previously limited net operating losses.
(5) | Goodwill impairment reflects an adjustment to increase income tax expense by $18.3 million related to a portion of the goodwill impairment of Suttle-Straus and the HMS reporting unit recorded in 2014 which is nondeductible for income tax purposes. See Note 7 — Intangible Assets for additional information related to the goodwill impairment.
Temporary income tax differences |
December 31, | 2014 |  | 2013 |
(Dollars in thousands) |  |  |  |  |  |
Deferred tax assets |  |  |  |  |  |
| Current deferred tax assets | $ | 113,402 |  | $ | 114,532 |
| Net operating loss (“NOL”) carryforwards |  | 135,676 |  |  | 121,651 |
| Stock-based compensation |  | 54,789 |  |  | 50,563 |
| Compensation and benefits - other |  | 11,014 |  |  | 12,681 |
| Deferred rent |  | 19,604 |  |  | 20,500 |
| Other |  | 35,523 |  |  | 32,444 |
Total deferred tax assets |  | 370,008 |  |  | 352,371 |
| Less valuation allowance |  | (113,553) |  |  | (79,064) |
Net deferred tax assets |  | 256,455 |  |  | 273,307 |
Deferred tax liabilities |  |  |  |  |  |
| Property, plant and equipment |  | 667,540 |  |  | 637,090 |
| Licenses/intangibles |  | 259,865 |  |  | 251,578 |
| Partnership investments |  | 151,123 |  |  | 136,581 |
| Other |  | 9,724 |  |  | 4,956 |
| Total deferred tax liabilities |  | 1,088,252 |  |  | 1,030,205 |
Net deferred income tax liability | $ | 831,797 |  | $ | 756,898 |
Deferred tax valuation allowance |
A summary of TDS' deferred tax asset valuation allowance is as follows:
|  |  | 2014 |  | 2013 |  | 2012
(Dollars in thousands) |  |  |  |  |  |  |  |
Balance at January 1, | $ | 79,064 |  | $ | 70,502 |  | $ | 49,686
| Charged to income tax expense |  | 34,489 |  |  | 1,954 |  |  | 5,268
| Charged to other accounts |  | - |  |  | 6,608 |  |  | 15,548
Balance at December 31, | $ | 113,553 |  | $ | 79,064 |  | $ | 70,502
As of December 31, 2014, the valuation allowance reduced current deferred tax assets by $5.7 million and noncurrent deferred tax assets by $107.8 million.
Income tax unrecognized benefits summary |
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
|  |  | 2014 |  | 2013 |  | 2012
(Dollars in thousands) |  |  |  |  |  |  |  |
Unrecognized tax benefits balance at January 1, | $ | 30,390 |  | $ | 28,420 |  | $ | 28,841
| Additions for tax positions of current year |  | 7,610 |  |  | 6,388 |  |  | 7,027
| Additions for tax positions of prior years |  | 883 |  |  | 1,858 |  |  | 1,673
| Reductions for tax positions of prior years |  | (399) |  |  | (467) |  |  | (7)
| Reductions for settlements of tax positions |  | (312) |  |  | (1,337) |  |  | (21)
| Reductions for lapses in statutes of limitations |  | (356) |  |  | (4,472) |  |  | (9,093)
Unrecognized tax benefits balance at December 31, | $ | 37,816 |  | $ | 30,390 |  | $ | 28,420

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- Definition Tabular disclosure of the components of income tax expense attributable to continuing operations for each year presented including, but not limited to: current tax expense (benefit), deferred tax expense (benefit), investment tax credits, government grants, the benefits of operating loss carryforwards, tax expense that results from allocating certain tax benefits either directly to contributed capital or to reduce goodwill or other noncurrent intangible assets of an acquired entity, adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates or a change in the tax status of the entity, and adjustments of the beginning-of-the-year balances of a valuation allowance because of a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 + Details
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