US Cellular 2008 Annual Report Download - page 172

UNITED STATES CELLULAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 2 INVESTMENT GAINS AND LOSSES (Continued)
$6.3 million and $0.3 million were recorded in 2007 and 2008, respectively, in connection with the
release of certain proceeds held in escrow at the time of sale. See Note 6—Acquisitions, Divestitures and
Exchanges for more information on the disposition of Midwest Wireless.
NOTE 3 INCOME TAXES
Income tax expense charged to Income before income taxes and minority interest is summarized as
follows:
Year Ended December 31, 2008 2007 2006
(Dollars in thousands)
Current
Federal ...................................... $80,558 $223,952 $137,793
State ........................................ 10,618 19,262 15,756
Deferred
Federal ...................................... (54,814) (31,775) (39,578)
State ........................................ (28,307) 5,272 6,633
$ 8,055 $216,711 $120,604
A reconciliation of U.S. Cellular’s income tax expense computed at the statutory rate to the reported
income tax expense, and the statutory federal income tax expense rate to U.S. Cellular’s effective income
tax expense rate is as follows:
2008 2007 2006
Year Ended December 31, Amount Rate Amount Rate Amount Rate
(Dollars in millions)
Statutory federal income tax expense and rate ....... $23.2 35.0% $191.3 35.0% $109.6 35.0%
State income taxes, net of federal benefit ........... (10.5) (15.9) 18.4 3.4 14.2 4.5
Effects of minority share of income excluded from
consolidated federal income tax return(1) ......... (4.5) (6.8) 2.1 0.4 (3.9) (1.2)
Effects of gains (losses) on investments, sales of assets
and impairment of assets ..................... 1.3 2.0 — — — —
Resolution of prior period tax issues ............... (2.1) (3.1) 0.7 0.1 (0.1) —
Other ..................................... 0.7 1.0 4.2 0.8 0.8 0.2
Effective income tax expense and rate ............. $ 8.1 12.2% $216.7 39.7% $120.6 38.5%
(1) Minority share of income includes a $4.6 million charge in 2007 related to the write-off of deferred
tax assets established in prior years for certain partnerships.
U.S. Cellular’s current net deferred tax asset totaled $19.5 million and $18.6 million at December 31,
2008 and 2007, respectively. The 2008 and 2007 current net deferred tax asset primarily represents the
deferred tax effects of accrued liabilities and the allowance for doubtful accounts on customer
receivables.
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