Income Taxes: |
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | INCOME TAXES Income tax expense (benefit) from continuing operations for the years ended December 31 was (in thousands):
The temporary differences, which gave rise to the net deferred tax liability, for the years ended December 31 were as follows (in thousands):
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The effective tax rate differs from the federal statutory rate for the years ended December 31, as follows:
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At December 31, 2015, we have federal and gross state NOL carryforwards that will expire at various dates as follows (in thousands):
As of December 31, 2015, we had a $0.8 million valuation allowance against the state NOL carryforwards. Our 2015 analysis of the ability to utilize such NOLs resulted in a slight decrease of the valuation allowance of approximately $0.2 million, which resulted in a decrease to tax expense. The valuation allowance adjustment was primarily attributable to a projected increase in state taxable income for years beyond 2015. Such an increase impacted the utilization of NOL carryforward in those states where the carryforward period is significantly shorter than the federal carryforward period of 20 years. In certain states, the carryforward period is limited to 5 years. Ultimate usage of these NOLs depends upon our future tax filings. If the valuation allowance is adjusted due to higher or lower than anticipated utilization of the NOLs, the offsetting amount will affect tax expense. The following table reconciles the total amounts of unrecognized tax benefits, without interest, at the beginning and end of the period included in Other deferred credits and other liabilities on the accompanying Consolidated Balance Sheets (in thousands):
The total amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate is approximately $2.6 million. We recognized interest expense of $1.8 million, $1.6 million and $1.6 million for the years ended December 31, 2015, 2014 and 2013, respectively. We had approximately $13.3 million and $11.5 million of accrued interest (before tax effect) associated with income taxes at December 31, 2015 and 2014, respectively. We file income tax returns with the IRS and various state jurisdictions. We received a 30-day Letter along with a Revenue Agent’s Report from the IRS in regards to the audit of the 2007 to 2009 tax years. A protest was timely filed with IRS in August 2014 related to the like-kind exchange transaction described below and research and development credits and deductions claimed with respect to certain costs and projects. We are also currently under examination by the IRS for the 2010 to 2012 tax years. We have deferred a substantial amount of tax payments through various tax planning strategies including the deferral of approximately $125 million in income taxes attributable to the like-kind exchange effectuated in connection with the IPP Transaction and Aquila Transaction that occurred in 2008. The IRS has challenged our position with respect to the like-kind exchange; however in February 2016, we reached an agreement in principle with IRS Appeals and expect a reduction of approximately $21 million with respect to our liability for unrecognized tax benefits on or before December 31, 2016. Excess foreign tax credits have been generated and are available to offset United States federal income taxes. At December 31, 2015, we had foreign tax credit carryforwards of approximately $0.5 million, which expire between 2015 and 2017. As of December 31, 2015, we had a $0.5 million valuation allowance against the foreign tax credit carryforwards. In addition, the carryforward balance reflects the expected utilization of approximately $1.8 million of foreign tax credits to be included as computational adjustments upon finalization of our current IRS examination covering tax years 2007 to 2009. Such foreign tax credits have been reflected as an offset to liabilities for unrecognized tax benefits in recognition of the estimated impact the resolution of material uncertain tax positions could have with respect to utilization. State tax credits have been generated and are available to offset future state income taxes. At December 31, 2015, we had the following state tax credit carryforwards (in thousands):
As of December 31, 2015, we had a $3.0 million valuation allowance against the state tax credit carryforwards. The re-evaluation of our ability to utilize such credits resulted in a decrease of the valuation allowance of approximately $0.5 million of which approximately $0.3 million resulted in a decrease to tax expense. The remaining $0.2 million decrease is attributable to our regulated business and is being accounted for under the deferral method whereby the credits are amortized to tax expense over the estimated useful life of the underlying asset that generated the credit. The valuation allowance adjustment was primarily attributable to the impact of greater projected apportionment factors resulting in increased state taxable income in years beyond 2015. Ultimate usage of these credits depends upon our future tax filings. If the valuation allowance is adjusted due to higher or lower than anticipated utilization of the state tax credit carryforwards, the offsetting amount will affect tax expense. |