US Cellular 2014 Annual Report Download - page 59

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United States Cellular Corporation
Notes to Consolidated Financial Statements (Continued)
NOTE 4 INCOME TAXES (Continued)
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
2014 2013 2012
(Dollars in thousands)
Unrecognized tax benefits balance at January 1, ................... $28,813 $26,460 $28,745
Additions for tax positions of current year ...................... 7,766 5,925 6,656
Additions for tax positions of prior years ....................... 154 1,501 854
Reductions for tax positions of prior years ...................... (554) (45) (115)
Reductions for settlements of tax positions ..................... — (576) —
Reductions for lapses in statutes of limitations ................... (104) (4,452) (9,680)
Unrecognized tax benefits balance at December 31, ................ $36,075 $28,813 $26,460
Unrecognized tax benefits are included in Accrued taxes and Other deferred liabilities and credits in the
Consolidated Balance Sheet. If these benefits were recognized, they would have reduced income tax
expense in 2014, 2013 and 2012 by $23.4 million, $18.7 million and $17.2 million, respectively, net of the
federal benefit from state income taxes. As of December 31, 2014, it is reasonably possible that
unrecognized tax benefits could decrease by approximately $10 million in the next twelve months. The
nature of the uncertainty relates primarily to state income tax positions and their resolution or the
expiration of statutes of limitation.
U.S. Cellular recognizes accrued interest and penalties related to unrecognized tax benefits in Income tax
expense. The amounts charged to income tax expense related to interest and penalties resulted in an
expense of $3.5 million and $0.6 million in 2014 and 2013, respectively, and a benefit of $2.2 million in
2012. Net accrued interest and penalties were $16.2 million and $12.3 million at December 31, 2014 and
2013, respectively.
U.S. Cellular is included in TDS’ consolidated federal income tax return. U.S. Cellular also files various
state and local income tax returns. The TDS consolidated group remains subject to federal income tax
audits for the tax years after 2011. With only a few exceptions, TDS is no longer subject to state income
tax audits for years prior to 2010.
NOTE 5 EARNINGS PER SHARE
Basic earnings (loss) per share attributable to U.S. Cellular shareholders is computed by dividing Net
income (loss) attributable to U.S. Cellular shareholders by the weighted average number of common
shares outstanding during the period. Diluted earnings (loss) per share attributable to U.S. Cellular
shareholders is computed by dividing Net income (loss) attributable to U.S. Cellular shareholders by the
weighted average number of common shares outstanding during the period adjusted to include the
effects of potentially dilutive securities. Potentially dilutive securities primarily include incremental shares
issuable upon exercise of outstanding stock options and the vesting of restricted stock units.
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