US Cellular 2013 Annual Report Download - page 56

United States Cellular Corporation
Notes to Consolidated Financial Statements (Continued)
NOTE 3 INCOME TAXES (Continued)
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:
2013 2012 2011
Year Ended December 31, Amount Rate Amount Rate Amount Rate
(Dollars in millions)
Statutory federal income tax expense and rate ........ $ 90.2 35.0% $71.8 35.0% $109.5 35.0%
State income taxes, net of federal benefit(1) .......... 5.2 2.0 3.7 1.8 4.5 1.4
Effect of noncontrolling interests .................. (2.2) (0.9) (6.3) (3.1) (4.9) (1.6)
Gains (losses) on investments and sale of assets(2) .... 20.5 8.0 — — — —
Correction of deferred taxes(3) ................... — — (5.3) (2.6) 6.1 2.0
Other differences, net .......................... (0.6) (0.2) 0.1 0.1 (1.1) (0.3)
Total income tax expense and rate ................. $113.1 43.9% $64.0 31.2% $114.1 36.5%
(1) Net state income taxes include changes in the valuation allowance. In addition, state tax benefits
related to the settlement of state tax audits and the expiration of statutes of limitations are included
in 2013, 2012 and 2011.
(2) Represents 2013 tax expense related to the NY1 & NY2 Deconsolidation and the Divestiture
Transaction.
(3) U.S. Cellular recorded immaterial adjustments to correct deferred tax balances in 2012 and 2011
related to tax basis and law changes that related to periods prior to 2012 and 2011, respectively.
U.S. Cellular’s current Net deferred income tax asset totaled $99.1 million and $35.4 million at
December 31, 2013 and 2012, respectively, and primarily represents the deferred tax effects of the
deferred revenue for the loyalty reward points, the allowance for doubtful accounts on customer
receivables and accrued liabilities.
U.S. Cellular’s noncurrent deferred income tax assets and liabilities at December 31, 2013 and 2012 and
the temporary differences that gave rise to them were as follows:
December 31, 2013 2012
(Dollars in thousands)
Noncurrent deferred tax assets
Net operating loss (‘‘NOL’’) carryforwards ............... $ 61,294 $ 63,240
Stock-based compensation .......................... 19,028 22,411
Compensation and benefits—other .................... 3,746 13,673
Deferred rent .................................... 19,462 15,822
Other ......................................... 24,604 25,432
128,134 140,578
Less valuation allowance ........................... (40,392) (40,208)
Total noncurrent deferred tax assets ................... 87,742 100,370
Noncurrent deferred tax liabilities
Property, plant and equipment ....................... 503,491 527,547
Licenses/intangibles ............................... 282,764 294,738
Partnership investments ............................ 133,931 124,221
Other ......................................... 3,853 3,682
Total noncurrent deferred tax liabilities .................. 924,039 950,188
Net noncurrent deferred income tax liability ............... $836,297 $849,818
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