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United States Cellular Corporation
Notes to the Consolidated Financial Statements (Continued)
NOTE 4 INCOME TAXES (Continued)
Income tax expense (benefit) is summarized as follows:
Year Ended December 31, 2012 2011 2010
(Dollars in thousands)
Current
Federal ................................. $10,547 $ (90,235) $ 19,290
State .................................. 4,186 1,049 (11,059)
Deferred
Federal ................................. 54,490 187,581 57,759
State .................................. (5,246) 15,683 15,968
$63,977 $114,078 $ 81,958
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:
2012 2011 2010
Year Ended December 31, Amount Rate Amount Rate Amount Rate
(Dollars in millions)
Statutory federal income tax expense and rate ........ $71.8 35.0% $109.5 35.0% $84.4 35.0%
State income taxes, net of federal benefit(1) .......... 3.7 1.8 4.5 1.4 5.0 2.1
Effect of noncontrolling interests .................. (6.3) (3.1) (4.9) (1.6) (4.6) (1.9)
Correction of deferred taxes(2) ................... (5.3) (2.6) 6.1 2.0 — —
Other differences, net .......................... 0.1 0.1 (1.1) (0.3) (2.8) (1.2)
Total income tax expense and rate ................. $64.0 31.2% $114.1 36.5% $82.0 34.0%
(1) Net state income taxes include changes in the valuation allowance. The 2011 benefit primarily
relates to the ability to utilize net operating losses as a result of state income tax law changes. In
addition, state tax benefits related to the settlement of state tax audits and the expiration of statutes
of limitations are included in 2012, 2011 and 2010.
(2) U.S. Cellular recorded immaterial adjustments to correct deferred tax balances in 2012 and 2011
related to tax basis adjustments and law changes that related to periods prior to 2012 and 2011,
respectively.
U.S. Cellular’s current Net deferred income tax asset totaled $35.4 million and $31.9 million at
December 31, 2012 and 2011, respectively, and primarily represents the deferred tax effects of accrued
liabilities and the allowance for doubtful accounts on customer receivables.
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