Income Taxes (Tables)

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income taxes receivable (payable)

UScellular’s current income taxes balances at December 31, 2023 and 2022, were as follows:

December 31,	2023		2022
(Dollars in millions)
Federal income taxes receivable	$	1	$	4
Net state income taxes receivable	—		—

Income tax expense (benefit)

Income tax expense (benefit) is summarized as follows:

Year Ended December 31,	2023		2022		2021
(Dollars in millions)
Current
Federal	$	2	$	1	$	2
State	4		3		(23)
Deferred
Federal	28		19		49
State	19		14		(8)
Total income tax expense (benefit)	$	53	$	37	$	20

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,	2023				2022				2021
	Amount		Rate		Amount		Rate		Amount		Rate
(Dollars in millions)
Statutory federal income tax expense and rate	$	23	21.0	%	$	15	21.0	%	$	38	21.0	%
State income taxes, net of federal benefit1	18		16.7		14		18.9		(25)		(14.1)
Change in federal valuation allowance2	8		7.5		7		9.9		7		3.8
Nondeductible compensation	4		3.5		3		3.6		2		1.3
Other differences, net	—		(1.0)		(2)		(1.9)		(2)		(0.6)
Total income tax expense (benefit) and rate	$	53	47.7	%	$	37	51.5	%	$	20	11.4	%

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 annual interest expense from partnership investments that carryforward but may not be realized.

Deferred income tax assets and liabilities

Significant components of UScellular’s deferred income tax assets and liabilities at December 31, 2023 and 2022, were as follows:

December 31,	2023		2022
(Dollars in millions)
Deferred tax assets
Net operating loss (NOL) carryforwards	$	132	$	132
Lease liabilities	239		244
Contract liabilities	59		62
Interest expense carryforwards	99		65
Asset retirement obligation	78		73
Other	62		100
Total deferred tax assets	669		676
Less valuation allowance	(146)		(115)
Net deferred tax assets	523		561
Deferred tax liabilities
Property, plant and equipment	434		457
Licenses/intangibles	408		382
Partnership investments	180		172
Lease assets	221		224
Other	35		34
Total deferred tax liabilities	1,278		1,269
Net deferred income tax liability	$	755	$	708

Deferred tax valuation allowance

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

	2023		2022		2021
(Dollars in millions)
Balance at beginning of year	$	115	$	83	$	94
Charged to Income tax expense	31		32		(11)
Balance at end of year	$	146	$	115	$	83

Income tax unrecognized benefits summary

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

	2023		2022		2021
(Dollars in millions)
Unrecognized tax benefits balance at beginning of year	$	35	$	35	$	51
Additions for tax positions of current year	9		5		8
Additions for tax positions of prior years	—		1		—
Reductions for tax positions of prior years	(3)		—		(3)
Reductions for settlements of tax positions	—		—		(2)
Reductions for lapses in statutes of limitations	(6)		(6)		(19)
Unrecognized tax benefits balance at end of year	$	35	$	35	$	35