Provision for Income Taxes

12 Months Ended

Dec. 31, 2011

Provision for Income Taxes [Abstract]

Provision for Income Taxes

Note 16.  Provision for Income Taxes

Provision for income taxes primarily relates to our state tax obligations under the Revised Texas Franchise Tax (the “Texas Margin Tax”) and the federal and state tax obligations of our consolidated subsidiaries taxed as corporations.  Deferred income tax assets and liabilities are recognized for temporary differences between the assets and liabilities of our tax paying entities for financial reporting and tax purposes.

We must recognize the tax effects of any uncertain tax positions we may adopt, if the position taken by us is more likely than not sustainable based on its technical merits.  If a tax position meets such criteria, the tax effect that would be recognized by us would be the largest amount of benefit with more than a 50% chance of being realized.

Our federal and state income tax provision is summarized below:

	For Year Ended December 31,
	2011			2010			2009
Current:
Federal	$	(4.0	)	$	2.2		$	7.9
State		18.9			16.0			11.9
Foreign		0.2			--			1.0
Total current		15.1			18.2			20.8
Deferred:
Federal		11.5			5.3			4.8
State		0.8			2.9			(0.3	)
Foreign		(0.2	)		(0.3	)		--
Total deferred		12.1			7.9			4.5
Total provision for income taxes	$	27.2		$	26.1		$	25.3

A reconciliation of the provision for income taxes with amounts determined by applying the statutory U.S. federal income tax rate to income before income taxes is as follows:

	For Year Ended December 31,
	2011			2010			2009
Pre-Tax Net Book Income (“NBI”)	$	2,115.5		$	1,409.8		$	1,165.6
Texas Margin Tax (1)	$	19.1		$	18.3		$	10.1
State income taxes (net of federal benefit)		0.5			0.4			1.3
Federal income taxes computed by applying the federal statutory rate to NBI of corporate entities		5.0			8.0			8.3
Valuation allowance		(0.2	)		--			(1.7	)
Expiration of tax net operating loss		0.2			--			1.7
Other permanent differences		2.6			(0.6	)		5.6
Provision for income taxes	$	27.2		$	26.1		$	25.3
Effective income tax rate		1.3%			1.9%			2.2%
(1)   Although the Texas Margin Tax is not considered a state income tax, it has the characteristics of an income tax since it is determined by applying a tax rate to a base that considers our Texas-sourced revenues and expenses.

Significant components of deferred tax assets and deferred tax liabilities as of December 31, 2011 and 2010 are as follows:

	At December 31,
	2011		2010
Deferred tax assets:
Net operating loss carryovers (1)	$	17.8	$	23.4
Employee benefit plans		3.0		3.1
Deferred revenue		1.5		1.2
Equity investment in partnerships		0.9		0.9
AROs		0.1		0.1
Accruals		1.6		1.4
Total deferred tax assets		24.9		30.1
Valuation allowance (2)		2.0		2.2
Net deferred tax assets		22.9		27.9
Less:  Deferred tax liabilities:
Property, plant and equipment		112.1		103.9
Total deferred tax liabilities		112.1		103.9
Total net deferred tax liabilities	$	89.2	$	76.0
Current portion of total net deferred tax assets	$	2.0	$	2.0
Long-term portion of total net deferred tax liabilities	$	91.2	$	78.0
(1)   These losses expire in various years between 2012 and 2028 and are subject to limitations on their utilization. (2)   We record a valuation allowance to reduce our deferred tax assets to the amount of future benefit that is more likely than not to be realized.

In January 2012, we submitted applications to the Internal Revenue Service for the conversion of certain of our entities taxed as corporations into pass-through entities.  If these conversions are approved, we expect to recognize an income tax benefit during the first quarter of 2012 of approximately $46.5 million, which is attributable to the difference between the deferred taxes accrued by these entities through the date of conversion and any current income tax due in connection with the conversion.