Income Taxes

3 Months Ended

Mar. 31, 2013

6. Income Taxes

The following table details the effective tax rates for the three months ended March 31, 2013 and 2012.

Income tax expense for the three months ended March 31, 2013 and 2012 was calculated using the estimated annual effective income tax rates for 2013 and 2012 of 30.2% and 25.6%, respectively. Management estimates the annual effective tax rate based on its forecast of annual pre-tax income. To the extent that actual pre-tax results for the year differ from the forecasts applied to the most recent interim period, the rates estimated could be materially different from the actual effective tax rates.

For the three months ended March 31, 2013, DPL’s current period effective rate is less than the estimated annual effective rate due primarily to a favorable resolution of the 2008 IRS examination in the first quarter of 2013. The decrease in the effective rate compared to the same period in 2012 is also primarily due to the resolution of the 2008 IRS examination.

Deferred tax liabilities for DPL increased by approximately $23.3 million during the three months ended March 31, 2013 primarily related to the resolution of the 2008 IRS examination.

The IRS began an examination of our 2008 Federal income tax return during the second quarter of 2010. The results of the examination were approved by the Joint Committee on Taxation on January 18, 2013. As a result of the examination, DPL received a refund of $19.9 million and recorded a $1.2 million reduction to income tax expense.

DP&L [Member]

Income Taxes

6. Income Taxes

The following table details the effective tax rates for the three months ended March 31, 2013 and 2012.

Income tax expense for the three months ended March 31, 2013 and 2012 was calculated using the estimated annual effective income tax rates for 2013 and 2012 of 28.8% and 31.1%, respectively. Management estimates the annual effective tax rate based upon its forecast of annual pre-tax income. To the extent that actual pre-tax results for the year differ from the forecasts applied to the most recent interim period, the rates estimated could be materially different from the actual effective tax rates.

For the three months ended March 31, 2013, DP&L’s current period effective rate is less than the estimated annual effective rate due primarily to a favorable resolution of the 2008 IRS examination in the first quarter of 2013. The decrease in the effective rate compared to the same period in 2012 is also primarily due to the resolution of the 2008 IRS examination.

Deferred tax liabilities for DP&L increased by approximately $21.3 million during the three months ended March 31, 2013 primarily related to the resolution of the 2008 IRS examination.

The Internal Revenue Service began an examination of our 2008 federal income tax return during the second quarter of 2010. The results of the examination were approved by the Joint Committee on Taxation on January 18, 2013. As a result of the examination, DPL received a refund of $19.9 million and recorded a $1.2 million reduction to income tax expense.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 6: http://www.xbrl.org/2003/role/presentationRef

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+ Details

Three months ended March 31,