US Cellular 2008 Annual Report Download - page 173

UNITED STATES CELLULAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 3 INCOME TAXES (Continued)
U.S. Cellular’s noncurrent deferred income tax assets and liabilities at December 31, 2008 and 2007 and
the temporary differences that gave rise to them were as follows:
December 31, 2008 2007
(Dollars in thousands)
Noncurrent deferred tax assets
Net operating loss carryforward (‘‘NOL’’) ................ $ 31,236 $ 30,126
Other ......................................... 29,665 32,647
60,901 62,773
Less valuation allowance ........................... (23,565) (22,874)
Total noncurrent deferred tax assets ................... 37,336 39,899
Noncurrent deferred tax liabilities
Licenses/intangibles ............................... 202,606 286,965
Property, plant and equipment ....................... 258,453 216,583
Partnership investments ............................ 51,059 85,498
Other ......................................... 3,324 5,265
Total noncurrent deferred tax liabilities .................. 515,442 594,311
Net noncurrent deferred income tax liability ............... $478,106 $554,412
At December 31, 2008, U.S. Cellular and certain subsidiaries had $567.3 million of state NOL
carryforwards (generating a $27.2 million deferred tax asset) available to offset future taxable income
primarily of the individual subsidiaries which generated the losses. The state NOL carryforwards expire
between 2009 and 2028. Certain subsidiaries which are not included in the federal consolidated income
tax return, but file separate federal tax returns, had federal NOL carryforwards (generating a $4.0 million
deferred tax asset) available to offset future taxable income. The federal NOL carryforwards expire
between 2009 and 2028. A valuation allowance totaling $23.6 million was established for certain state
NOL carryforwards and federal NOL carryforwards since it is more likely than not that a portion of such
carryforwards will expire before they can be utilized.
Effective January 1, 2007, U.S. Cellular adopted FIN 48. In accordance with FIN 48, U.S. Cellular
recognized a cumulative effect adjustment of $1.3 million, increasing its liability for unrecognized tax
benefits, interest and penalties and reducing the January 1, 2007 balance of Retained earnings.
At December 31, 2008, U.S. Cellular had $27.8 million in unrecognized tax benefits which, if recognized,
would reduce income tax expense by $15.3 million, net of the federal benefit from state income taxes. At
December 31, 2007, U.S. Cellular had $33.9 million in unrecognized tax benefits, which, if recognized,
would reduce income tax expense by $16.1 million, net of the federal benefit from state income taxes.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
(Dollars in thousands) 2008 2007
Balance at January 1, ................................. $33,890 $25,751
Additions for tax positions of current year ................. 4,858 6,213
Additions for tax positions of prior years .................. 692 2,793
Reductions for tax positions of prior years ................. (5,320) (491)
Reductions for settlements of tax positions ................ (3,177) (117)
Reductions for lapses in statutes of limitations .............. (3,157) (259)
Balance at December 31, .............................. $27,786 $33,890
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