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Income Taxes | 12 Months Ended
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Dec. 31, 2015
Disclosure Text Block |
Income Taxes | Note 4 Income Taxes TDS’ current income taxes balances at December 31, 2015 and 2014 were as follows:
December 31, | 2015 |  | 2014
(Dollars in thousands) |  |  |  |  |
Federal income taxes receivable | $ | 66,785 |  | $ | 108,820
Net state income taxes receivable |  | 3,309 |  |  | 4,391
Income tax expense (benefit) is summarized as follows:
Year Ended December 31, | 2015 |  | 2014 |  | 2013
(Dollars in thousands) |  |  |  |  |  |  |  |
Current |  |  |  |  |  |  |  |
| Federal | $ | 92,887 |  | $ | (87,736) |  | $ | 181,579
| State |  | 8,256 |  |  | 11,091 |  |  | 11,614
Deferred |  |  |  |  |  |  |  |
| Federal |  | 60,939 |  |  | 41,851 |  |  | (65,970)
| Federal - valuation allowance adjustment |  | – |  |  | (10,816) |  |  | –
| State |  | 9,910 |  |  | 2,208 |  |  | (1,180)
| State - valuation allowance adjustment |  | – |  |  | 38,470 |  |  | –
|  | $ | 171,992 |  | $ | (4,932) |  | $ | 126,043
A reconciliation of TDS’ income tax expense computed at the statutory rate to the reported income tax expense, and the statutory federal income tax expense rate to TDS’ effective income tax expense rate is as follows:
Year Ended December 31, | 2015 |  | 2014 |  | 2013
|  | Amount |  | Rate |  | Amount |  | Rate |  | Amount |  | Rate
(Dollars in thousands) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Statutory federal income tax expense and rate | $ | 152,111 |  | 35.0 | % |  | $ | (53,278) |  | 35.0 | % |  | $ | 102,502 |  | 35.0 | %
State income taxes, net of federal benefit 1 |  | 11,002 |  | 2.5 |  |  |  | 42,834 |  | (28.1) |  |  |  | 10,548 |  | 3.6 |
Effect of noncontrolling interests |  | 2,791 |  | 0.6 |  |  |  | (5,777) |  | 3.8 |  |  |  | (1,034) |  | (0.4) |
Gains (losses) on investments and sale of assets 2 |  | – |  | – |  |  |  | – |  | – |  |  |  | 14,949 |  | 5.1 |
Change in federal valuation allowance 3 |  | 2,022 |  | 0.5 |  |  |  | (8,697) |  | 5.7 |  |  |  | – |  | – |
Goodwill impairment 4 |  | – |  | – |  |  |  | 18,260 |  | (12.0) |  |  |  | – |  | – |
Other differences, net |  | 4,066 |  | 1.0 |  |  |  | 1,726 |  | (1.2) |  |  |  | (922) |  | (0.3) |
Total income tax expense (benefit) and rate | $ | 171,992 |  | 39.6 | % |  | $ | (4,932) |  | 3.2 | % |  | $ | 126,043 |  | 43.0 | %
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.
2 | Gains (losses) on investments and sale of assets represents 2013 tax expense related to the NY1 & NY2 Deconsolidation and the Divestiture Transaction. See Note 6 — Acquisitions, Divestitures and Exchanges and Note 8 — Investments in Unconsolidated Entities for additional information.
3 | Change in federal valuation allowance in 2015 relates primarily to losses incurred by certain entities where realization of deferred tax assets is not "more likely than not." The decrease to income tax expense in 2014 was due to a valuation allowance reduction for federal net operating losses previously limited under loss utilization rules.
4 | 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 nonde ductible for income tax purposes. See Note 7 — Intangible Assets for additional information related to the goodwill impairment.
Significant components of TDS’ deferred income tax assets and liabilities at December 31, 2015 and 2014 were as follows:
December 31, | 2015 |  | 2014
(Dollars in thousands) |  |  |  |  |
Deferred tax assets |  |  |  |  |
| Current deferred tax assets | $ | – |  | $ | 113,402
| Net operating loss (“NOL”) carryforwards |  | 137,574 |  |  | 135,676
| Stock-based compensation |  | 61,680 |  |  | 54,789
| Compensation and benefits - other |  | 37,744 |  |  | 11,014
| Deferred rent |  | 19,896 |  |  | 19,604
| Other |  | 92,787 |  |  | 35,523
Total deferred tax assets |  | 349,681 |  |  | 370,008
| Less valuation allowance |  | (112,357) |  |  | (113,553)
Net deferred tax assets |  | 237,324 |  |  | 256,455
Deferred tax liabilities |  |  |  |  |
| Property, plant and equipment |  | 672,473 |  |  | 667,540
| Licenses/intangibles |  | 300,669 |  |  | 259,865
| Partnership investments |  | 163,287 |  |  | 151,123
| Other |  | – |  |  | 9,724
| Total deferred tax liabilities |  | 1,136,429 |  |  | 1,088,252
Net deferred income tax liability | $ | 899,105 |  | $ | 831,797
TDS early adopted ASU 2015-17 as of December 31, 2015 using the prospective method. The change required by the guidance, whereby all deferred taxes are classified as non-current, simplifies processes by eliminating the need to separately identify the net current and net non-current deferred tax asset or liability in each jurisdiction and allocate valuation allowances. The prior year Consolidated Balance Sheet and the deferred tax disclosure above were not revised. At December 31, 2015, $900.1 million of net deferred income tax liability is included in Net deferred income tax liability and $1.0 million is i ncluded in Other assets and deferred charges in the Consolidated Balance Sheet. At December 31, 2014, $107.7 million of net current deferred income tax asset is included in Net deferred income tax asset and $941.5 million of net noncurrent deferred income tax liability is included in Net deferred income tax liability and $2.0 million is included in Other assets and deferred charges in the Consolidated Balance Sheet. At December 31, 2015, TDS and certain subsidiarie s had $2.4 billion of state NOL carryforwards (generating a $114.2 million deferred tax asset) available to offset future taxable income. The state NOL carryforwards expire between 2016 and 2035. Certain subsidiaries had federal NOL carryforwards (generating a $23.4 million deferred tax asset) available to offset their future taxable income. The federal NOL carryforwards expire between 2018 and 2035. A valuation allowance was established for certain state NOL carryforwards and federal NOL carryforwards since it is more likely than not that a portion of such carryforwards will expire before they can be utilized. A summary of TDS' deferred tax asset valuation allowance is as follows:
|  | 2015 |  | 2014 |  | 2013
(Dollars in thousands) |  |  |  |  |  |  |  |
Balance at beginning of year | $ | 113,553 |  | $ | 79,064 |  | $ | 70,502
| Charged (credited) to income tax expense |  | (1,196) |  |  | 34,489 |  |  | 1,954
| Charged to other accounts |  | – |  |  | – |  |  | 6,608
Balance at end of year | $ | 112,357 |  | $ | 113,553 |  | $ | 79,064
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
|  | 2015 |  | 2014 |  | 2013
(Dollars in thousands) |  |  |  |  |  |  |  |
Unrecognized tax benefits balance at beginning of year | $ | 37,816 |  | $ | 30,390 |  | $ | 28,420
| Additions for tax positions of current year |  | 7,382 |  |  | 7,610 |  |  | 6,388
| Additions for tax positions of prior years |  | 1,783 |  |  | 883 |  |  | 1,858
| Reductions for tax positions of prior years |  | (1,434) |  |  | (399) |  |  | (467)
| Reductions for settlements of tax positions |  | (1,225) |  |  | (312) |  |  | (1,337)
| Reductions for lapses in statutes of limitations |  | (5,448) |  |  | (356) |  |  | (4,472)
Unrecognized tax benefits balance at end of year | $ | 38,874 |  | $ | 37,816 |  | $ | 30,390
Unrecognized tax benefits are included in Accrued taxes and Other deferred liabilities and credits in the Consolidated Balance Sheet. If these benefits were recognized, they would have reduced income tax expense in 2015, 2014 and 2013 by $25.6 million, $24.6 million and $19.8 million, respectively, net of the federal benefit from state income taxes. As of December 31, 2015, it is reasonably possible that unrecognized tax benefits could decrease by approximately $10 million in the next twelve months. The nature of the uncertainty relates primarily to state income tax positions and their resolution or the expiration of statutes of limitation. TDS recognizes accrued interest and penalties related to unrecognized tax benefits in Income tax expense (benefit). The amounts charged to income tax expense related to interest and penalties resulted in an expense of $0.6 million, $3.4 million and $0.7 million in 2015, 2014 and 2013, respectively. Net accrued interest and penalties were $16.8 million and $16.2 million at December 31, 2015 and 2014, respectively. TDS and its subsidiaries file federal and state income tax returns. With only limited exceptions, TDS is no longer subject to federal income tax audits for the years prior to 2012. With only a few exceptions, TDS is no l onger subject to state income tax audits for years prior to 2011.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 4: 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 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 + Details
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