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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Income taxes receivable (payable)

TDS’ current income taxes balances at December 31, 2019 and 2018, were as follows:

December 31,	2019				2018
(Dollars in millions)
Federal income taxes receivable	$	31			$	6
Net state income taxes receivable	5				6

Income tax expense (benefit)

Income tax expense (benefit) is summarized as follows:

Year Ended December 31,	2019				2018				2017
(Dollars in millions)
Current
Federal	$	15			$	10			$	77
State	15				3				13
Deferred
Federal	36				24				(366		)
State	(2		)		9				(3		)
Total income tax expense (benefit)	$	64			$	46			$	(279	)

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 rate to TDS’ effective income tax rate is as follows:

Year Ended December 31,	2019							2018							2017
	Amount				Rate			Amount				Rate			Amount				Rate
(Dollars in millions)
Statutory federal income tax expense and rate	$	44			21.0	%		$	46			21.0	%		$	(43	)		35.0	%
State income taxes, net of federal benefit1	12				5.5			11				4.9			6				(5.2	)
Effect of noncontrolling interests	—				(0.1	)		(1		)		(0.4	)		(2		)		1.6
Federal income tax rate change2	—				—			(16		)		(7.1	)		(314		)		257.5
Change in federal valuation allowance3	7				3.1			(1		)		(0.3	)		(5		)		4.3
Goodwill impairment4	—				—			—				—			71				(58.2	)
Nondeductible compensation	4				1.9			9				4.1			10				(8.1	)
Tax credits	(4		)		(1.9	)		(1		)		(0.6	)		(1		)		0.8
Other differences, net	1				0.8			(1		)		(0.6	)		(1		)		1.4
Total income tax expense (benefit) and rate	$	64			30.3	%		$	46			21.0	%		$	(279	)		229.1	%

¹  State income taxes, net of federal benefit, include changes in unrecognized tax benefits as well as adjustments to the valuation allowance. 

²  Federal income tax rate change due to the Tax Act reducing the federal income tax rate from 35% to 21% resulting in a tax benefit in 2018 due primarily to an income tax accounting method change that accelerated tax depreciation on certain assets for the 2017 tax year. The $314 million tax benefit in 2017 related to adjusting the deferred tax liability to the lower tax rate upon enactment of the Tax Act.

³  Change in federal valuation allowance in 2019 is due primarily to interest expense carryforwards not expected to be realized. The 2018 change also includes a change in judgment related to net operating loss carryforwards that are now realizable due to an internal restructuring.

⁴ 

Goodwill impairment reflects an adjustment to increase 2017 income tax expense by $71 million related to a portion of the impaired goodwill that is not amortizable for income tax purposes. See Note 8 — Intangible Assets for additional information related to the goodwill impairment.

Deferred income tax assets and liabilities

Significant components of TDS’ deferred income tax assets and liabilities at December 31, 2019 and 2018, were as follows¹:

December 31,	2019				2018
(Dollars in millions)
Deferred tax assets
Net operating loss (NOL) carryforwards	$	168			$	159
Lease liabilities	251				—
Asset retirement obligation	74				67
Other	106				151
Total deferred tax assets	599				377
Less valuation allowance	(152		)		(135		)
Net deferred tax assets	447				242
Deferred tax liabilities
Property, plant and equipment	481				458
Licenses/intangibles	261				237
Partnership investments	132				134
Lease assets	226				—
Other	22				53
Total deferred tax liabilities	1,122				882
Net deferred income tax liability	$	675			$	640

Deferred tax valuation allowance

A summary of TDS' deferred tax asset valuation allowance is as follows:

	2019				2018				2017
(Dollars in millions)
Balance at beginning of year	$	135			$	147			$	122
Charged to income tax expense	17				(5		)		25
Charged to Retained earnings	—				(7		)		—
Balance at end of year	$	152			$	135			$	147

Income tax unrecognized benefits summary

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

	2019				2018				2017
(Dollars in millions)
Unrecognized tax benefits balance at beginning of year	$	49			$	46			$	42
Additions for tax positions of current year	8				8				6
Additions for tax positions of prior years	—				2				1
Reductions for tax positions of prior years	(7		)		(1		)		(1		)
Reductions for settlements of tax positions	(1		)		—				—
Reductions for lapses in statutes of limitations	—				(6		)		(2		)
Unrecognized tax benefits balance at end of year	$	49			$	49			$	46

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