Income Taxes (Tables)

12 Months Ended

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 benefit1	16		12.8		(23)		(10.3)		11		4.0
Change in federal valuation allowance2	7		5.7		7		3.1		—		—
Loss carryback benefit of CARES Act3	—		—		—		—		(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	%

1State 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.

2Change 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		20211
(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