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UNITED STATES CELLULAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 3 FAIR VALUE MEASUREMENTS (Continued)
excluding capital lease obligations and the current portion of such long-term debt, was estimated using
market prices for the 7.5% senior notes and discounted cash flow analysis for the 6.7% senior notes.
As of December 31, 2009, U.S. Cellular had certain Licenses recorded at fair value in its Consolidated
Balance Sheet as a result of impairment losses recognized at or proximate to December 31, 2009. For
Licenses recorded at fair value, the following table provides information regarding their classification in
the fair value hierarchy:
Fair Value Measurements Using
Quoted Prices in Significant
Active Markets for Other Significant
December 31, Identical Assets Observable Unobservable Total
Description 2009 (Level 1) Inputs (Level 2) Inputs (Level 3) (Losses)(1)
(Dollars in thousands)
Licenses recorded at fair
value ............... $57,000 $— $— $57,000 $(14,000)
(1) These losses represent the excess carrying value of the Licenses over their estimated fair values at
November 1, 2009, the impairment testing date in the fourth quarter of 2009. Such amount is
recorded as Loss on impairment of intangible assets in the Consolidated Statement of Operations.
See Note 1—Summary of Significant Accounting Policies and Recent Accounting Pronouncements for
information regarding the methods and assumptions used to estimate the fair values for Licenses and a
description of the levels in the fair value hierarchy.
NOTE 4 INCOME TAXES
U.S. Cellular’s Prepaid income taxes were $41.4 million and $0.7 million at December 31, 2010 and 2009,
respectively. At December 31, 2010, Prepaid income taxes included prepaid federal income taxes of
$39.7 million and prepaid state income taxes of $1.7 million. At December 31, 2009, Prepaid income
taxes included prepaid state income taxes of $0.7 million, and Accrued taxes included $2.0 million of
accrued federal income taxes. The timing of the enactment of federal bonus depreciation provisions in
2010 caused a significant increase in prepaid federal income taxes at December 31, 2010.
Income tax expense is summarized as follows:
Year Ended December 31, 2010 2009 2008
(Dollars in thousands)
Current
Federal ................................ $19,290 $ 69,942 $ 76,305
State .................................. (11,059) 648 10,089
Deferred
Federal ................................ 55,740 40,368 (50,808)
State .................................. 15,638 5,128 (28,126)
$ 79,609 $116,086 $ 7,460
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