Provision for Income Taxes

12 Months Ended

Dec. 31, 2013

Provision for Income Taxes [Abstract]

Provision for Income Taxes

Note 15.  Provision for Income Taxes

Provision for income taxes primarily reflects our state tax obligations under the Revised Texas Franchise Tax (the "Texas Margin Tax"). 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 recognized income tax expense of $57.5 million for the year ended December 31, 2013, of which $19.6 million was attributable to certain legislative changes to the Texas Margin Tax enacted during the second quarter of 2013.

During the year ended December 31, 2012, we recognized an overall income tax benefit of $17.2 million, which was primarily due to a $45.3 million income tax benefit related to the conversion of certain of our subsidiaries to limited liability companies, partially offset by accruals for the Texas Margin Tax. The $45.3 million income tax benefit is attributable to the difference between deferred income taxes accrued by the applicable subsidiaries through the date of conversion and any current income tax due in connection with the conversions.

Our federal and state income tax provision (benefit) is summarized below:

	For the Year Ended December 31,
	2013			2012			2011
Current:
Federal	$	(0.5	)	$	18.9		$	(4.0	)
State		19.3			28.9			18.9
Foreign		0.8			1.2			0.2
Total current		19.6			49.0			15.1
Deferred:
Federal		(0.5	)		(64.7	)		11.5
State		38.9			(1.4	)		0.8
Foreign		(0.5	)		(0.1	)		(0.2	)
Total deferred		37.9			(66.2	)		12.1
Total provision for (benefit from) income taxes	$	57.5		$	(17.2	)	$	27.2

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

	For the Year Ended December 31,
	2013			2012			2011
Pre-Tax Net Book Income ("NBI")	$	2,664.6		$	2,410.8		$	2,115.5
Texas Margin Tax (1)	$	58.3		$	23.5		$	19.1
State income taxes (net of federal benefit)		(0.1	)		5.3			0.5
Federal income taxes computed by applying the federal statutory rate to NBI of corporate entities		(1.4	)		(1.6	)		5.0
Valuation allowance		--			(2.0	)		(0.2	)
Expiration of tax net operating loss		0.1			2.4			0.2
Tax gain on conversion of corporate subsidiaries into limited liability companies		--			(45.3	)		--
Other permanent differences		0.6			0.5			2.6
Provision for (benefit from) income taxes	$	57.5		$	(17.2	)	$	27.2
Effective income tax rate		2.2	%		(0.7	)%		1.3	%

(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.

The following table presents the significant components of deferred tax assets and deferred tax liabilities at the dates indicated:

	At December 31,
	2013		2012
Deferred tax assets:
Net operating loss carryovers (1)	$	0.1	$	0.2
Employee benefit plans		0.2		0.1
Accruals		2.0		1.5
Total deferred tax assets		2.3		1.8
Valuation allowance (2)		--		--
Net deferred tax assets		2.3		1.8
Less: Deferred tax liabilities:
Property, plant and equipment		59.8		23.7
Equity investment in partnerships		2.9		0.6
Total deferred tax liabilities		62.7		24.3
Total net deferred tax liabilities	$	60.4	$	22.5
Current portion of total net deferred tax assets	$	0.4	$	--
Long-term portion of total net deferred tax liabilities	$	60.8	$	22.5

(1)	These losses expire in various years between 2014 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.

Current accounting guidance provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. We did not rely on any uncertain tax positions in recording our income tax-related amounts during the years ended December 31, 2013, 2012 or 2011.