Income Taxes (Tables)

12 Months Ended

Dec. 31, 2013

Income Tax Disclosure

Income taxes receivable

December 31,	2013		2012
(Dollars in thousands)
Federal income taxes (payable)	$	(32,351)	$	(1,614)
State income taxes receivable (payable)		(1,545)		1,612

Income tax expense

Income tax expense (benefit) is summarized as follows:
Year Ended December 31,		2013		2012		2011
(Dollars in thousands)
Current
	Federal	$	180,056	$	10,547	$	(90,235)
	State		8,426		4,186		1,049
Deferred
	Federal		(69,917)		54,490		187,581
	State		(5,431)		(5,246)		15,683
		$	113,134	$	63,977	$	114,078

Income tax reconciliation

Year Ended December 31,		2013				2012				2011
		Amount		Rate		Amount		Rate		Amount		Rate
(Dollars in millions)
Statutory federal income tax expense and rate		$	90.2	35.0	%	$	71.8	35.0	%	$	109.5	35.0	%
State income taxes, net of federal benefit (1)			5.2	2.0			3.7	1.8			4.5	1.4
Effect of noncontrolling interests			(2.2)	(0.9)			(6.3)	(3.1)			(4.9)	(1.6)
Gains (losses) on investments and sale of assets (2)			20.5	8.0			-	-			-	-
Correction of deferred taxes (3)			-	-			(5.3)	(2.6)			6.1	2.0
Other differences, net			(0.6)	(0.2)			0.1	0.1			(1.1)	(0.3)
Total income tax expense and rate		$	113.1	43.9	%	$	64.0	31.2	%	$	114.1	36.5	%
(1)	Net state income taxes include changes in the valuation allowance. In addition, state tax benefits related to the settlement of state tax audits and the expiration of statutes of limitations are included in 2013, 2012 and 2011.
(2)	Represents 2013 tax expense related to the NY1 & NY2 Deconsolidation and the Divestiture Transaction.
(3)	U.S. Cellular recorded immaterial adjustments to correct deferred tax balances in 2012 and 2011 related to tax basis and law changes that related to periods prior to 2012 and 2011, respectively.

Temporary income tax differences

U.S. Cellular’s noncurrent deferred income tax assets and liabilities at December 31, 2013 and 2012 and the temporary differences that gave rise to them were as follows:
December 31,		2013		2012
(Dollars in thousands)
Noncurrent deferred tax assets
	Net operating loss (“NOL”) carryforwards	$	61,294	$	63,240
	Stock-based compensation		19,028		22,411
	Compensation and benefits - other		3,746		13,673
	Deferred rent		19,462		15,822
	Other		24,604		25,432
			128,134		140,578
	Less valuation allowance		(40,392)		(40,208)
	Total noncurrent deferred tax assets		87,742		100,370
Noncurrent deferred tax liabilities
	Property, plant and equipment		503,491		527,547
	Licenses/intangibles		282,764		294,738
	Partnership investments		133,931		124,221
	Other		3,853		3,682
	Total noncurrent deferred tax liabilities		924,039		950,188
Net noncurrent deferred income tax liability		$	836,297	$	849,818

Deferred tax valuation allowance

A summary of U.S. Cellular’s deferred tax asset valuation allowance is as follows:
		2013		2012		2011
(Dollars in thousands)
Balance at January 1,		$	41,295	$	30,261	$	29,891
	Charged to income tax expense		(1,527)		3,033		(1,450)
	Charged to other accounts		3,607		8,001		1,820
Balance at December 31,		$	43,375	$	41,295	$	30,261
As of December 31, 2013, the valuation allowance reduced current deferred tax assets by $3.0 million and noncurrent deferred tax assets by $40.4 million.

Income tax unrecognized benefits summary

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
		2013		2012		2011
(Dollars in thousands)
Unrecognized tax benefits balance at January 1,		$	26,460	$	28,745	$	32,547
	Additions for tax positions of current year		5,925		6,656		4,487
	Additions for tax positions of prior years		1,501		854		332
	Reductions for tax positions of prior years		(45)		(115)		(1,104)
	Reductions for settlements of tax positions		(576)		-		(244)
	Reductions for lapses in statutes of limitations		(4,452)		(9,680)		(7,273)
Unrecognized tax benefits balance at December 31,		$	28,813	$	26,460	$	28,745