Income Taxes (Notes)

6 Months Ended

Jun. 30, 2015

Income tax expense included in our accompanying consolidated statements of income were as follows (in millions, except percentages):



	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Income tax expense	$	189		$	178		$	413		$	378
Effective tax rate	35.6		%	26.4		%	35.2		%	25.6		%

Income tax expense for the three months ended June 30, 2015 is approximately $189 million resulting in an effective tax rate of 35.6%, as compared with $178 million income tax expense and an effective tax rate of 26.4%, for the same period of 2014. The effective tax rate for the three months ended June 30, 2015 is slightly higher than the statutory federal rate of 35% primarily due to state and foreign income taxes, partially offset by dividend-received deductions from our investment in Citrus Corporation (Citrus).

Income tax expense for the six months ended June 30, 2015 is approximately $413 million resulting in an effective tax rate of 35.2%, as compared with $378 million income tax expense and an effective tax rate of 25.6%, for the same period of 2014. The effective tax rate for the six months ended June 30, 2015 is marginally higher than the statutory federal rate of 35% primarily due to state and foreign income taxes, offset by (i) dividend-received deductions from our investment in Citrus and (ii) the change in the effective state tax rate as a result of the Hiland acquisition.

The effective tax rate for the three months ended June 30, 2014 is lower than the statutory federal rate of 35% primarily due to (i) the net effect of consolidating KMP’s and EPB’s income tax provision, (ii) dividend-received deductions from our investment in Citrus, and (iii) adjustments to our income tax reserve for uncertain tax positions. These decreases are partially offset by (i) state income taxes and (ii) the amortization of the deferred charge recorded as a result of the drop-downs of TGP, EPNG, and the midstream assets.

The effective tax rate for the six months ended June 30, 2014 is lower than the statutory federal rate of 35% primarily due to (i) the net effect of consolidating KMP’s and EPB’s income tax provision, and (ii) dividend-received deductions from our investment in Citrus. These decreases are partially offset by (i) state income taxes and (ii) the amortization of the deferred charge recorded as a result of the drop-downs of TGP, EPNG, and the midstream assets.

As of June 30, 2015, the total amount of unrecognized tax benefits relating to uncertain tax positions is $160 million, a decrease of $29 million from the December 31, 2014 balance of $189 million. This $29 million decrease in unrecognized tax benefits resulted primarily from the settlement of a claim for refund and certain statute of limitations expiration related to state income taxes.