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Income Taxes | 12 Months Ended
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Dec. 31, 2012
Disclosure Text Block |
Income Taxes | NOTE 4 INCOME TAXES U.S. Cellular's i ncome taxes balances at December 31, 2012 and 2011 were as follows:
December 31, | 2012 |  | 2011
(Dollars in thousands) |  |  |  |  |
Federal income taxes receivable (payable) | $ | (1,614) |  | $ | 73,525
State income taxes receivable |  | 1,612 |  |  | 1,266
Income tax expense (benefit) is summarized as follows:
Year Ended December 31, | 2012 |  | 2011 |  | 2010
(Dollars in thousands) |  |  |  |  |  |  |  |
Current |  |  |  |  |  |  |  |
| Federal | $ | 10,547 |  | $ | (90,235) |  | $ | 19,290
| State |  | 4,186 |  |  | 1,049 |  |  | (11,059)
Deferred |  |  |  |  |  |  |  |
| Federal |  | 54,490 |  |  | 187,581 |  |  | 57,759
| State |  | (5,246) |  |  | 15,683 |  |  | 15,968
|  | $ | 63,977 |  | $ | 114,078 |  | $ | 81,958
A reconciliation of U.S. Cellular's income tax expense computed at the statutory rate to the reported income tax expense, and the statutory federal income tax expense rate to U.S. Cellular's effective income tax expense rate is as follows:
Year Ended December 31, | 2012 |  |  | 2011 |  |  | 2010 |
|  | Amount |  | Rate |  |  | Amount |  | Rate |  |  | Amount |  | Rate |
(Dollars in millions) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Statutory federal income tax expense and rate | $ | 71.8 |  | 35.0 | % |  | $ | 109.5 |  | 35.0 | % |  | $ | 84.4 |  | 35.0 | %
State income taxes, net of federal benefit (1) |  | 3.7 |  | 1.8 |  |  |  | 4.5 |  | 1.4 |  |  |  | 5.0 |  | 2.1 |
Effect of noncontrolling interests |  | (6.3) |  | (3.1) |  |  |  | (4.9) |  | (1.6) |  |  |  | (4.6) |  | (1.9) |
Correction of deferred taxes (2) |  | (5.3) |  | (2.6) |  |  |  | 6.1 |  | 2.0 |  |  |  | - |  | - |
Other differences, net |  | 0.1 |  | 0.1 |  |  |  | (1.1) |  | (0.3) |  |  |  | (2.8) |  | (1.2) |
Total income tax expense and rate | $ | 64.0 |  | 31.2 | % |  | $ | 114.1 |  | 36.5 | % |  | $ | 82.0 |  | 34.0 | %
(1) | Net state income taxes include changes in the valuation allowance. The 2011 benefit primarily relates to the ability to utilize net operating losses as a result of state income tax law changes. In addition, state tax benefits related to the settlement of state tax audits and the expiration of statutes of limitations are included in 2012, 2011 and 2010.
(2) | U.S. Cellular recorded immaterial adjustments to correct deferred tax balances in 2012 and 2011 related to tax basis adjustments and law changes that related to periods prior to 2012 and 2011, respectively.
U.S. Cellular's current N et deferred income tax asset totaled $35.4 million and $31.9 million at December 31, 2012 and 2011, respectively, and primarily represents the deferred tax effects of accrued liabilities and the allowance for doubtful accounts on customer receivables.
U.S. Cellular’s noncurrent deferred income tax assets and liabilities at December 31, 2012 and 2011 and the temporary differences that gave rise to them were as follows:
December 31, | 2012 |  | 2011
(Dollars in thousands) |  |  |  |  |
Noncurrent deferred tax assets |  |  |  |  |
| Net operating loss (“NOL”) carryforwards | $ | 63,240 |  | $ | 48,565
| Stock-based compensation |  | 22,411 |  |  | 19,079
| Compensation and benefits - other |  | 13,673 |  |  | 2,985
| Deferred rent |  | 15,822 |  |  | 12,656
| Other |  | 25,432 |  |  | 20,554
|  |  | 140,578 |  |  | 103,839
| Less valuation allowance |  | (40,208) |  |  | (29,262)
| Total noncurrent deferred tax assets |  | 100,370 |  |  | 74,577
Noncurrent deferred tax liabilities |  |  |  |  |
| Property, plant and equipment |  | 527,547 |  |  | 482,433
| Licenses/intangibles |  | 294,738 |  |  | 267,344
| Partnership investments |  | 124,221 |  |  | 120,941
| Other |  | 3,682 |  |  | 3,049
| Total noncurrent deferred tax liabilities |  | 950,188 |  |  | 873,767
Net noncurrent deferred income tax liability | $ | 849,818 |  | $ | 799,190
At December 31, 2012, U.S. Cellular and certain subsidiaries had $1,152.0 million of state NOL carryforwards (generating a $54.4 million deferred tax asset) available to offset future taxable income. The state NOL carryforwards expire between 2013 and 2032. Certain subsidiaries had federal NOL carryforwards (generating a $8.8 million deferred tax asset) available to offset their future taxable income. The federal NOL carryforwards expire between 2013 and 2032. 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 U.S. Cellular’s deferred tax asset valuation allowance is as follows:
|  | 2012 |  | 2011 |  | 2010
(Dollars in thousands) |  |  |  |  |  |  |  |
Balance at January 1, | $ | 30,261 |  | $ | 29,891 |  | $ | 19,234
| Charged to income tax expense |  | 3,033 |  |  | (1,450) |  |  | (832)
| Charged to other accounts |  | 8,001 |  |  | 1,820 |  |  | 11,489
Balance at December 31, | $ | 41,295 |  | $ | 30,261 |  | $ | 29,891
As of December 31, 2012, the valuation allowance reduced current deferred tax assets by $1.1 million and noncurrent deferred tax assets by $40.2 million.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
|  | 2012 |  | 2011 |  | 2010
(Dollars in thousands) |  |  |  |  |  |  |  |
Unrecognized tax benefits balance at January 1, | $ | 28,745 |  | $ | 32,547 |  | $ | 34,442
| Additions for tax positions of current year |  | 6,656 |  |  | 4,487 |  |  | 5,119
| Additions for tax positions of prior years |  | 854 |  |  | 332 |  |  | 550
| Reductions for tax positions of prior years |  | (115) |  |  | (1,104) |  |  | (1,560)
| Reductions for settlements of tax positions |  | - |  |  | (244) |  |  | (5,938)
| Reductions for lapses in statutes of limitations |  | (9,680) |  |  | (7,273) |  |  | (66)
Unrecognized tax benefits balance at December 31, | $ | 26,460 |  | $ | 28,745 |  | $ | 32,547
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 ex pense in 2012, 2011 and 2010 by $17.2 million, $18.7 million and $21.1 million, respectively, net of the federal be nefit from state income taxes. As of December 31, 2012, U.S. Cellular believes it is reasonably possible that unrecognized tax benefits could decrease by approximately $4.9 million in the next twelve months. The nature of the uncertainty primarily relates to state income tax positions and their resolution or the expiration of statutes of limitation. U.S. Cellular recognizes accrued interest and penalties related to unrecognized tax benefits in Income tax ex pense. The amounts charged to I ncome tax expense related to interest and penalties resulted in a benefit in 2012 of $2.2 million, a benefit of $2.6 million in 2011 and expense of $3.0 million in 2010, respectively. Net accrued intere st and penalties were $12.8 million and $15.6 million at December 31, 2012 and 2011, respectively. U.S. Cellular is included in TDS' consolidated federal income tax return. U.S. Cellular also files various state and local income tax returns. The TDS consolidated group remains subject to federal income tax audits for the tax years after 2009. With only a few exceptions, TDS is no longer subject to state income tax audits for years prior to 2008.

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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 Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 136, 172 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 2: 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=6881521&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: 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 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 43, 44, 45, 46, 47, 48, 49 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 6: 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 Reference 7: 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 8: 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 + Details
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