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Income Taxes (Tables) | 12 Months Ended
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Dec. 31, 2022
Income Tax Disclosure [Abstract] |
Income taxes receivable (payable) | TDS’ current income taxes balances at December 31, 2022 and 2021, were as follows:
December 31, | 2022 |  | 2021
(Dollars in millions) |  |  |
Federal income taxes receivable | $ | 56 |  |  | $ | 179 |
Net state income taxes receivable | 3 |  |  | 5 |
Income tax expense (benefit) | Income tax expense (benefit) is summarized as follows:
Year Ended December 31, | 2022 |  | 2021 |  | 2020
(Dollars in millions) |  |  |  |  |
Current |  |  |  |  |
Federal | $ | 1 |  |  | $ | 2 |  |  | $ | (175) |
State | 5 |  |  | (21) |  |  | 4 |
Deferred |  |  |  |  |
Federal | 32 |  |  | 59 |  |  | 179 |
State | 15 |  |  | (7) |  |  | 11 |
Total income tax expense (benefit) | $ | 53 |  |  | $ | 33 |  |  | $ | 19 |
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, | 2022 |  | 2021 |  | 2020
| Amount |  | Rate |  | Amount |  | Rate |  | Amount |  | Rate
(Dollars in millions) |  |  |  |  |  |  |  |  |  |  |
Statutory federal income tax expense and rate | $ | 26 |  |  | 21.0 | % |  | $ | 47 |  |  | 21.0 | % |  | $ | 60 |  |  | 21.0 | %
State income taxes, net of federal benefit 1 | 16 |  |  | 12.8 |  |  | (23) |  |  | (10.3) |  |  | 11 |  |  | 4.0 |
Change in federal valuation allowance 2 | 7 |  |  | 5.7 |  |  | 7 |  |  | 3.1 |  |  | — |  |  | — |
Loss carryback benefit of CARES Act 3 | — |  |  | — |  |  | — |  |  | — |  |  | (60) |  |  | (21.0) |
Nondeductible compensation | 7 |  |  | 5.6 |  |  | 6 |  |  | 2.9 |  |  | 9 |  |  | 3.0 |
Tax credits | (2) |  |  | (1.9) |  |  | (2) |  |  | (0.8) |  |  | (2) |  |  | (0.6) |
Other differences, net | (1) |  |  | (0.6) |  |  | (2) |  |  | (0.8) |  |  | 1 |  |  | — |
Total income tax expense (benefit) and rate | $ | 53 |  |  | 42.6 | % |  | $ | 33 |  |  | 15.1 | % |  | $ | 19 |  |  | 6.4 | %
1 State income taxes, net of federal benefit, include changes in unrecognized tax benefits as well as adjustments to state valuation allowances. State taxes increased in 2022 due primarily to valuation allowance adjustments. State taxes in 2021 are a net benefit due primarily to the reduction of tax accruals resulting from expirations of state statute of limitations for prior tax years. 2 Change in federal valuation allowance is due primarily to current year interest expense from partnership investments that carryforward but may not be realized. 3The CARES Act provided 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 provided 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, 2022 and 2021, were as follows:
December 31, | 2022 |  | 2021 1
(Dollars in millions) |  |  |
Deferred tax assets |  |  |
Net operating loss (NOL) carryforwards | $ | 250 |  |  | $ | 226 |
Lease liabilities | 265 |  |  | 277 |
Contract liabilities | 63 |  |  | 38 |
Interest expense carryforwards | 74 |  |  | 31 |
Asset retirement obligation | 116 |  |  | 101 |
Other | 129 |  |  | 122 |
Total deferred tax assets | 897 |  |  | 795 |
Less valuation allowance | (177) |  |  | (149) |
Net deferred tax assets | 720 |  |  | 646 |
Deferred tax liabilities |  |  |
Property, plant and equipment | 805 |  |  | 751 |
Licenses/intangibles | 419 |  |  | 364 |
Partnership investments | 173 |  |  | 155 |
Lease assets | 245 |  |  | 255 |
Other | 43 |  |  | 40 |
Total deferred tax liabilities | 1,685 |  |  | 1,565 |
Net deferred income tax liability | $ | 965 |  |  | $ | 919 |
Presented in the Consolidated Balance Sheet as: |  |  |
Deferred income tax liability, net | $ | 969 |  |  | $ | 921 |
Other assets and deferred charges | (4) |  |  | (2) |
Net deferred income tax liability | $ | 965 |  |  | $ | 919 |
1 Certain prior year deferred tax assets and liabilities have been reclassified to align with the current year presentation.
Deferred tax valuation allowance | A summary of TDS' deferred tax asset valuation allowance is as follows:
| 2022 |  | 2021 |  | 2020
(Dollars in millions) |  |  |  |  |
Balance at beginning of year | $ | 149 |  |  | $ | 158 |  |  | $ | 152 |
Charged to Income tax expense | 28 |  |  | (9) |  |  | 6 |
Balance at end of year | $ | 177 |  |  | $ | 149 |  |  | $ | 158 |
Income tax unrecognized benefits summary | A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
| 2022 |  | 2021 |  | 2020
(Dollars in millions) |  |  |  |  |
Unrecognized tax benefits balance at beginning of year | $ | 37 |  |  | $ | 54 |  |  | $ | 49 |
Additions for tax positions of current year | 6 |  |  | 8 |  |  | 8 |
Additions for tax positions of prior years | 1 |  |  | — |  |  | 3 |
Reductions for tax positions of prior years | — |  |  | (3) |  |  | (1) |
Reductions for settlements of tax positions | — |  |  | (2) |  |  | — |
Reductions for lapses in statutes of limitations | (6) |  |  | (20) |  |  | (5) |
Unrecognized tax benefits balance at end of year | $ | 38 |  |  | $ | 37 |  |  | $ | 54 |

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32639-109319 + Details
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- Definition Tabular disclosure of the components of net deferred tax asset or liability recognized in an entity's statement of financial position, including the following: the total of all deferred tax liabilities, the total of all deferred tax assets, the total valuation allowance recognized for deferred tax assets. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32537-109319 + Details
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