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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2015

Income Tax Disclosure

Income taxes receivable (payable)

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)

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

Income tax reconciliation

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 benefit1			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 assets2			–		–				–		–				14,949		5.1
Change in federal valuation allowance3			2,022		0.5				(8,697)		5.7				–		–
Goodwill impairment4			–		–				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 nondeductible for income tax purposes.  See Note 7 — Intangible Assets for additional information related to the goodwill impairment.

Temporary income tax differences

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

Deferred tax valuation allowance

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

Income tax unrecognized benefits summary

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

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