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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income taxes receivable (payable)

UScellular’s current income taxes balances at December 31, 2021 and 2020, were as follows:

December 31,			2021						2020
(Dollars in millions)
Federal income taxes receivable			$	123					$	124
Net state income taxes receivable			—						1

Income tax expense (benefit)

Income tax expense (benefit) is summarized as follows:

Year Ended December 31,			2021						2020						2019
(Dollars in millions)
Current
Federal			$	2					$	(118)					$	44
State			(23)						5						12
Deferred
Federal			49						124						—
State			(8)						6						(4)
Total income tax expense (benefit)			$	20					$	17					$	52

Income tax reconciliation

A reconciliation of UScellular’s income tax expense computed at the statutory rate to the reported income tax expense, and the statutory federal income tax rate to UScellular’s effective income tax rate is as follows:

Year Ended December 31,			2021												2020												2019
			Amount						Rate						Amount						Rate						Amount						Rate
(Dollars in millions)
Statutory federal income tax expense and rate			$	38					21.0		%				$	52					21.0		%				$	39					21.0		%
State income taxes, net of federal benefit1			(25)						(14.1)						8						3.4						6						3.4
Change in federal valuation allowance2			7						3.8						—						0.1						7						3.6
Loss carryback benefit of CARES Act3			—						—						(49)						(19.8)						—						—
Nondeductible compensation			2						1.3						6						2.6						2						1.3
Tax credits			—						(0.2)						—						(0.1)						(3)						(1.5)
Other differences, net			(2)						(0.4)						—						(0.6)						1						0.3
Total income tax expense (benefit) and rate			$	20					11.4		%				$	17					6.6		%				$	52					28.1		%

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

2Change in federal valuation allowance is due primarily to interest expense carryforwards from partnership investments that may not be realized.

3The 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 UScellular’s deferred income tax assets and liabilities at December 31, 2021 and 2020, were as follows:

December 31,			2021						2020
(Dollars in millions)
Deferred tax assets
Net operating loss (NOL) carryforwards			$	126					$	107
Lease liabilities			254						236
Asset retirement obligation			64						51
Other			130						83
Total deferred tax assets			574						477
Less valuation allowance			(83)						(94)
Net deferred tax assets			491						383
Deferred tax liabilities
Property, plant and equipment			446						391
Licenses/intangibles			330						256
Partnership investments			154						143
Lease assets			232						215
Other			3						11
Total deferred tax liabilities			1,165						1,016
Net deferred income tax liability			$	674					$	633

Deferred tax valuation allowance

A summary of UScellular’s deferred tax asset valuation allowance is as follows:

			2021						2020						2019
(Dollars in millions)
Balance at beginning of year			$	94					$	90					$	75
Charged to Income tax expense			(11)						4						15
Balance at end of year			$	83					$	94					$	90

Income tax unrecognized benefits summary

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

			2021						2020						2019
(Dollars in millions)
Unrecognized tax benefits balance at beginning of year			$	51					$	48					$	48
Additions for tax positions of current year			8						7						7
Additions for tax positions of prior years			—						2						—
Reductions for tax positions of prior years			(3)						—						(6)
Reductions for settlements of tax positions			(2)						—						(1)
Reductions for lapses in statutes of limitations			(19)						(6)						—
Unrecognized tax benefits balance at end of year			$	35					$	51					$	48

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