Income Taxes (Tables)

12 Months Ended

Dec. 31, 2014

Income Tax Disclosure

Income taxes receivable (payable)

December 31,	2014		2013
(Dollars in thousands)
Federal income taxes receivable (payable)	$	73,510	$	(32,351)
Net state income taxes receivable (payable)		1,199		(1,545)

Income tax expense (benefit)

Income tax expense (benefit) is summarized as follows:
Year Ended December 31,		2014		2013		2012
(Dollars in thousands)
Current
	Federal	$	(77,931)	$	180,056	$	10,547
	State		8,545		8,426		4,186
Deferred
	Federal		44,881		(69,917)		54,490
	State		6,276		(5,431)		(5,246)
	State - valuation allowance adjustment		6,447		-		-
		$	(11,782)	$	113,134	$	63,977

Income tax reconciliation

Year Ended December 31,		2014				2013				2012
		Amount		Rate		Amount		Rate		Amount		Rate
(Dollars in millions)
Statutory federal income tax expense and rate		$	(20.5)	35.0	%	$	90.2	35.0	%	$	71.8	35.0	%
State income taxes, net of federal benefit (1)			12.2	(20.8)			5.2	2.0			3.7	1.8
Effect of noncontrolling interests			(5.8)	9.8			(2.2)	(0.9)			(6.3)	(3.1)
Gains (losses) on investments and sale of assets (2)			-	-			20.5	8.0			-	-
Correction of deferred taxes (3)			-	-			-	-			(5.3)	(2.6)
Other differences, net			2.3	(3.9)			(0.6)	(0.2)			0.1	0.1
Total income tax expense and rate		$	(11.8)	20.1	%	$	113.1	43.9	%	$	64.0	31.2	%
(1)	State income taxes, net of federal benefit, include changes in unrecognized tax benefits as well as adjustments to the valuation allowance. During the third quarter of 2014 U.S. Cellular recorded a $6.4 million increase to income tax expense related to a valuation allowance recorded against certain state deferred tax assets. In each interim period, U.S. Cellular evaluates the available positive and negative evidence to assess whether deferred tax assets are realizable, on a more likely than not basis. During the year ended December 31, 2014, based on revised forecasts of future state income, U.S. Cellular concluded that the negative evidence related to the realization of certain state deferred tax assets outweighed the positive evidence. Accordingly, U.S. Cellular determined that such deferred tax assets related to certain states were not realizable, on a more likely than not basis.
(2)	Gains (losses) on investments and sale of assets represents 2013 tax expense related to the NY1 & NY2 Deconsolidation and the Divestiture Transaction.
(3)	Correction of deferred taxes reflects immaterial adjustments to correct deferred tax balances in 2012 related to tax basis and law changes that related to periods prior to 2012.

Temporary income tax differences

Significant components of U.S. Cellular’s deferred income tax assets and liabilities at December 31, 2014 and 2013 were as follows:
December 31,		2014		2013
(Dollars in thousands)
Deferred tax assets
	Current deferred tax assets	$	96,886	$	102,088
	Net operating loss (“NOL”) carryforwards		72,878		61,294
	Stock-based compensation		21,072		19,028
	Compensation and benefits - other		2,586		3,746
	Deferred rent		18,513		19,462
	Other		26,116		24,604
	Total deferred tax assets		238,051		230,222
	Less valuation allowance		(53,119)		(43,375)
	Net deferred tax assets		184,932		186,847
Deferred tax liabilities
	Property, plant and equipment		520,723		503,491
	Licenses/intangibles		275,456		282,764
	Partnership investments		149,371		133,931
	Other		4,135		3,853
	Total deferred tax liabilities		949,685		924,039
Net deferred income tax liability		$	764,753	$	737,192

Deferred tax valuation allowance

A summary of U.S. Cellular’s deferred tax asset valuation allowance is as follows:
		2014		2013		2012
(Dollars in thousands)
Balance at January 1,		$	43,375	$	41,295	$	30,261
	Charged to income tax expense		9,744		(1,527)		3,033
	Charged to other accounts		-		3,607		8,001
Balance at December 31,		$	53,119	$	43,375	$	41,295
As of December 31, 2014, the valuation allowance reduced current deferred tax assets by $3.8 million and noncurrent deferred tax assets by $49.2 million.

Income tax unrecognized benefits summary

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
		2014		2013		2012
(Dollars in thousands)
Unrecognized tax benefits balance at January 1,		$	28,813	$	26,460	$	28,745
	Additions for tax positions of current year		7,766		5,925		6,656
	Additions for tax positions of prior years		154		1,501		854
	Reductions for tax positions of prior years		(554)		(45)		(115)
	Reductions for settlements of tax positions		-		(576)		-
	Reductions for lapses in statutes of limitations		(104)		(4,452)		(9,680)
Unrecognized tax benefits balance at December 31,		$	36,075	$	28,813	$	26,460