Income Taxes

9 Months Ended

Sep. 30, 2014

Income Taxes

6.  Income Taxes 

The following table details the effective tax rates for the three and nine months endedSeptember 30, 2014 and 2013. 

	Three months ended September 30,		Nine months ended September 30,
	2014	2013	2014	2013
DPL	(71.5)%	25.4%	(34.2)%	21.5%

Income tax expense for the three and nine months endedSeptember 30, 2014 and 2013 was calculated using the estimated annual effective income tax rates for 2014 and 2013 of (42.3)% and 31.0%, respectively.  For the three and nine months endedSeptember 30, 2014 and September 30, 2013, management estimated 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 September 30, 2014, DPL’s current period effective rate is less than the estimated annual effective rate due to a 2014 adjustment to the tax reserves due to uncertain tax positions related to the expiration of the statute of limitations on the 2010 tax year.

For the nine months ended September 30, 2014, the decrease in DPL’s effective rate compared to the same period in 2013 primarily reflects decreased pre-tax earnings related to the non-deductible goodwill impairment during the first quarter of 2014, which is treated as a permanent item in the annual effective income tax rate, and a 2014 adjustment to the tax reserves due to uncertain tax positions related to the expiration of the statute of limitations on the 2010 tax year. 

For the nine months endedSeptember 30, 2013,  DPL’s current period effective rate was less than the estimated annual effective rate due primarily to a favorable resolution of the 2008 IRS examination in the first quarter of 2013 and a 2013 deferred tax adjustment related to the expiration of the statute of limitations on the 2007, 2008 and 2009 tax years.

DP&L [Member]

Income Taxes

6.  Income Taxes 

The following table details the effective tax rates for the three and nine months endedSeptember 30, 2014 and 2013. 

	Three months ended September 30,		Nine months ended September 30,
	2014	2013	2014	2013
DP&L	19.8%	24.4%	23.2%	22.5%

Income tax expense for the three and nine months endedSeptember 30, 2014 and 2013 was calculated using the estimated annual effective income tax rates for 2014 and 2013 of 30.5% and 29.5%, respectively.  For the three and nine months endedSeptember 30,2014 and 2013 management estimated 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 and nine months ended September 30, 2014, DP&L’s current period effective rate is less than the estimated annual effective rate due to a 2014 adjustment to the tax reserves due to uncertain tax positions related to the expiration of the statute of limitations on the 2010 tax year.

For the nine months endedSeptember 30, 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 Internal Revenue Service examination in the first quarter of 2013 and the adjustment to the tax reserves due to uncertain tax positions related to the expiration of the statute of limitations on the 2007, 2008 and 2009 tax years.