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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Income taxes receivable (payable)

TDS’ current income taxes balances at December 31, 2020 and 2019, were as follows:

December 31,			2020						2019
(Dollars in millions)
Federal income taxes receivable			$	180					$	31
Net state income taxes receivable			7						5

Income tax expense (benefit)

Income tax expense (benefit) is summarized as follows:

Year Ended December 31,			2020						2019						2018
(Dollars in millions)
Current
Federal			$	(175)					$	15					$	10
State			4						15						3
Deferred
Federal			179						36						24
State			11						(2)						9
Total income tax expense (benefit)			$	19					$	64					$	46

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,			2020												2019												2018
			Amount						Rate						Amount						Rate						Amount						Rate
(Dollars in millions)
Statutory federal income tax expense and rate			$	60					21.0		%				$	44					21.0		%				$	46					21.0		%
State income taxes, net of federal benefit1			11						4.0						12						5.5						11						4.9
Federal income tax rate change2			—						—						—						—						(16)						(7.1)
Change in federal valuation allowance3			—						—						7						3.1						(1)						(0.3)
Loss carryback benefit of CARES Act4			(60)						(21.0)						—						—						—						—
Nondeductible compensation			9						3.0						4						1.9						9						4.1
Tax credits			(2)						(0.6)						(4)						(1.9)						(1)						(0.6)
Other differences, net			1						—						1						0.7						(2)						(1.0)
Total income tax expense (benefit) and rate			$	19					6.4		%				$	64					30.3		%				$	46					21.0		%

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

2The Tax Act reduced the federal income tax rate from 35% to 21% for years after 2017, 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, pursuant to FASB Accounting Standards Update 2018-05, Income Taxes: Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118.

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

4The CARES Act provides a 5-year carryback of net operating losses generated in years 2018-2020. As the statutory federal tax rate applicable to certain years within the carryback period is 35%, carryback to those years provides a tax benefit in excess of the current federal statutory rate of 21%.

Deferred income tax assets and liabilities

Significant components of TDS’ deferred income tax assets and liabilities at December 31, 2020 and 2019, were as follows:

December 31,			2020						2019
(Dollars in millions)
Deferred tax assets
Net operating loss (NOL) carryforwards			$	183					$	168
Lease liabilities			257						251
Asset retirement obligation			81						74
Other			109						106
Total deferred tax assets			630						599
Less valuation allowance			(158)						(152)
Net deferred tax assets			472						447
Deferred tax liabilities
Property, plant and equipment			652						481
Licenses/intangibles			287						261
Partnership investments			144						132
Lease assets			235						226
Other			17						22
Total deferred tax liabilities			1,335						1,122
Net deferred income tax liability			$	863					$	675

Deferred tax valuation allowance

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

			2020						2019						2018
(Dollars in millions)
Balance at beginning of year			$	152					$	135					$	147
Charged to Income tax expense			6						17						(5)
Charged to Retained earnings			—						—						(7)
Balance at end of year			$	158					$	152					$	135

Income tax unrecognized benefits summary

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

			2020						2019						2018
(Dollars in millions)
Unrecognized tax benefits balance at beginning of year			$	49					$	49					$	46
Additions for tax positions of current year			8						8						8
Additions for tax positions of prior years			3						—						2
Reductions for tax positions of prior years			(1)						(7)						(1)
Reductions for settlements of tax positions			—						(1)						—
Reductions for lapses in statutes of limitations			(5)						—						(6)
Unrecognized tax benefits balance at end of year			$	54					$	49					$	49

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