16. Income Taxes and Other Taxes

Income Taxes. Duke Energy and its subsidiaries file income tax returns in the U.S. with federal and various state governmental authorities, and in certain foreign jurisdictions. The taxable income of Duke Energy and its subsidiaries is reflected in Duke Energy's U.S. federal and state income tax returns. These subsidiaries have a tax sharing agreement with Duke Energy where the separate return method is used to allocate tax expenses and benefits to the subsidiaries whose investments or results of operations provide these tax expenses and benefits. The accounting for income taxes essentially represents the income taxes that each of these subsidiaries would incur if it were a separate company filing its own tax return as a C-Corporation.

The following table includes information regarding the Duke Energy Registrants unrecognized tax benefits.


September 30, 2011	Duke Energy		Duke Energy Carolinas		Duke Energy Ohio		Duke Energy Indiana
	(in millions)
Unrecognized tax benefits^(a)	$	392	$	262	$	33	$	22
Amount that if recognized, would affect the effective tax rate or regulatory liability^(b)		121		113		—		—
Amount that if recognized, would be recorded as a component of discontinued operations		11		—		—		—
December 31, 2010
Unrecognized tax benefits^(a)		342		217		29		21

(a)	The Duke Registrants do not anticipate a significant increase or decrease in unrecognized tax benefits in the next twelve months.

(b)	Duke Energy and Duke Energy Carolinas are unable to estimate the specific amounts that would affect the effective tax rate or regulatory liability.

Duke Energy and its subsidiaries are no longer subject to U.S. federal examination for years before 2004. The years 2004 and 2005 are in Appeals. The Internal Revenue Service (IRS) is currently auditing the federal income tax returns for years 2006 and 2007. With few exceptions, Duke Energy and its subsidiaries are no longer subject to state, local or non-U.S. income tax examinations by tax authorities for years before 1999.

The effective tax rates for each of the Duke Energy Registrants are as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
Duke Energy		30.7	%		31.2	%		30.8	%		41.9	%
Duke Energy Carolinas		37.0	%		33.8	%		36.1	%		33.9	%
Duke Energy Ohio		47.3	%		32.6	%		36.9	%		(32.6	)%
Duke Energy Indiana		37.2	%		32.2	%		30.8	%		33.8	%

As discussed in Note 7, in the second quarter of 2010, Duke Energy recorded a non-deductible goodwill impairment charge of $500 million and Duke Energy Ohio recorded non-deductible goodwill impairment charges of $677 million. In the third quarter of 2011, federal true ups related to the 2010 tax return filing were recorded, which resulted in an increase in income tax expense for Duke Energy Carolinas, Duke Energy Ohio, and Duke Energy Indiana. Duke Energy Indiana has reflected an increase in AFUDC equity in 2011, as well as a reduction in pre-tax income due to the Edwardsport IGCC impairment in the third quarter of 2011.

Excise Taxes. Certain excise taxes levied by state or local governments are collected by the Duke Energy Registrants from its customers. These taxes, which are required to be paid regardless of the Duke Energy Registrants' ability to collect from the customer, are accounted for on a gross basis. When each of the Duke Energy Registrants act as an agent, and the tax is not required to be remitted if it is not collected from the customer, the taxes are accounted for on a net basis. Excise taxes for each Duke Energy Registrant accounted for on a gross basis and recorded as revenues in the respective Condensed Consolidated Statements of Operations were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
	(in millions)				(in millions)
Duke Energy Carolinas	$	45	$	47	$	118	$	123
Duke Energy Ohio		27		28		86		90
Duke Energy Indiana		9		8		24		22

Total Duke Energy	$	81	$	83	$	228	$	235

Income Taxes And Other Taxes

16. Income Taxes and Other Taxes

Income Taxes. Duke Energy and its subsidiaries file income tax returns in the U.S. with federal and various state governmental authorities, and in certain foreign jurisdictions. The taxable income of Duke Energy and its subsidiaries is reflected in Duke Energy's U.S. federal and state income tax returns. These subsidiaries have a tax sharing agreement with Duke Energy where the separate return method is used to allocate tax expenses and benefits to the subsidiaries whose investments or results of operations provide these tax expenses and benefits. The accounting for income taxes essentially represents the income taxes that each of these subsidiaries would incur if it were a separate company filing its own tax return as a C-Corporation.

The following table includes information regarding the Duke Energy Registrants unrecognized tax benefits.


September 30, 2011	Duke Energy		Duke Energy Carolinas		Duke Energy Ohio		Duke Energy Indiana
	(in millions)
Unrecognized tax benefits^(a)	$	392	$	262	$	33	$	22
Amount that if recognized, would affect the effective tax rate or regulatory liability^(b)		121		113		—		—
Amount that if recognized, would be recorded as a component of discontinued operations		11		—		—		—
December 31, 2010
Unrecognized tax benefits^(a)		342		217		29		21

(a)	The Duke Registrants do not anticipate a significant increase or decrease in unrecognized tax benefits in the next twelve months.

(b)	Duke Energy and Duke Energy Carolinas are unable to estimate the specific amounts that would affect the effective tax rate or regulatory liability.

Duke Energy and its subsidiaries are no longer subject to U.S. federal examination for years before 2004. The years 2004 and 2005 are in Appeals. The Internal Revenue Service (IRS) is currently auditing the federal income tax returns for years 2006 and 2007. With few exceptions, Duke Energy and its subsidiaries are no longer subject to state, local or non-U.S. income tax examinations by tax authorities for years before 1999.

The effective tax rates for each of the Duke Energy Registrants are as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
Duke Energy		30.7	%		31.2	%		30.8	%		41.9	%
Duke Energy Carolinas		37.0	%		33.8	%		36.1	%		33.9	%
Duke Energy Ohio		47.3	%		32.6	%		36.9	%		(32.6	)%
Duke Energy Indiana		37.2	%		32.2	%		30.8	%		33.8	%

As discussed in Note 7, in the second quarter of 2010, Duke Energy recorded a non-deductible goodwill impairment charge of $500 million and Duke Energy Ohio recorded non-deductible goodwill impairment charges of $677 million. In the third quarter of 2011, federal true ups related to the 2010 tax return filing were recorded, which resulted in an increase in income tax expense for Duke Energy Carolinas, Duke Energy Ohio, and Duke Energy Indiana. Duke Energy Indiana has reflected an increase in AFUDC equity in 2011, as well as a reduction in pre-tax income due to the Edwardsport IGCC impairment in the third quarter of 2011.

Excise Taxes. Certain excise taxes levied by state or local governments are collected by the Duke Energy Registrants from its customers. These taxes, which are required to be paid regardless of the Duke Energy Registrants' ability to collect from the customer, are accounted for on a gross basis. When each of the Duke Energy Registrants act as an agent, and the tax is not required to be remitted if it is not collected from the customer, the taxes are accounted for on a net basis. Excise taxes for each Duke Energy Registrant accounted for on a gross basis and recorded as revenues in the respective Condensed Consolidated Statements of Operations were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
	(in millions)				(in millions)
Duke Energy Carolinas	$	45	$	47	$	118	$	123
Duke Energy Ohio		27		28		86		90
Duke Energy Indiana		9		8		24		22

Total Duke Energy	$	81	$	83	$	228	$	235

Income Taxes And Other Taxes

16. Income Taxes and Other Taxes

Income Taxes. Duke Energy and its subsidiaries file income tax returns in the U.S. with federal and various state governmental authorities, and in certain foreign jurisdictions. The taxable income of Duke Energy and its subsidiaries is reflected in Duke Energy's U.S. federal and state income tax returns. These subsidiaries have a tax sharing agreement with Duke Energy where the separate return method is used to allocate tax expenses and benefits to the subsidiaries whose investments or results of operations provide these tax expenses and benefits. The accounting for income taxes essentially represents the income taxes that each of these subsidiaries would incur if it were a separate company filing its own tax return as a C-Corporation.

The following table includes information regarding the Duke Energy Registrants unrecognized tax benefits.


September 30, 2011	Duke Energy		Duke Energy Carolinas		Duke Energy Ohio		Duke Energy Indiana
	(in millions)
Unrecognized tax benefits^(a)	$	392	$	262	$	33	$	22
Amount that if recognized, would affect the effective tax rate or regulatory liability^(b)		121		113		—		—
Amount that if recognized, would be recorded as a component of discontinued operations		11		—		—		—
December 31, 2010
Unrecognized tax benefits^(a)		342		217		29		21

(a)	The Duke Registrants do not anticipate a significant increase or decrease in unrecognized tax benefits in the next twelve months.

(b)	Duke Energy and Duke Energy Carolinas are unable to estimate the specific amounts that would affect the effective tax rate or regulatory liability.

Duke Energy and its subsidiaries are no longer subject to U.S. federal examination for years before 2004. The years 2004 and 2005 are in Appeals. The Internal Revenue Service (IRS) is currently auditing the federal income tax returns for years 2006 and 2007. With few exceptions, Duke Energy and its subsidiaries are no longer subject to state, local or non-U.S. income tax examinations by tax authorities for years before 1999.

The effective tax rates for each of the Duke Energy Registrants are as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
Duke Energy		30.7	%		31.2	%		30.8	%		41.9	%
Duke Energy Carolinas		37.0	%		33.8	%		36.1	%		33.9	%
Duke Energy Ohio		47.3	%		32.6	%		36.9	%		(32.6	)%
Duke Energy Indiana		37.2	%		32.2	%		30.8	%		33.8	%

As discussed in Note 7, in the second quarter of 2010, Duke Energy recorded a non-deductible goodwill impairment charge of $500 million and Duke Energy Ohio recorded non-deductible goodwill impairment charges of $677 million. In the third quarter of 2011, federal true ups related to the 2010 tax return filing were recorded, which resulted in an increase in income tax expense for Duke Energy Carolinas, Duke Energy Ohio, and Duke Energy Indiana. Duke Energy Indiana has reflected an increase in AFUDC equity in 2011, as well as a reduction in pre-tax income due to the Edwardsport IGCC impairment in the third quarter of 2011.

Excise Taxes. Certain excise taxes levied by state or local governments are collected by the Duke Energy Registrants from its customers. These taxes, which are required to be paid regardless of the Duke Energy Registrants' ability to collect from the customer, are accounted for on a gross basis. When each of the Duke Energy Registrants act as an agent, and the tax is not required to be remitted if it is not collected from the customer, the taxes are accounted for on a net basis. Excise taxes for each Duke Energy Registrant accounted for on a gross basis and recorded as revenues in the respective Condensed Consolidated Statements of Operations were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
	(in millions)				(in millions)
Duke Energy Carolinas	$	45	$	47	$	118	$	123
Duke Energy Ohio		27		28		86		90
Duke Energy Indiana		9		8		24		22

Total Duke Energy	$	81	$	83	$	228	$	235

Income Taxes And Other Taxes

16. Income Taxes and Other Taxes

Income Taxes. Duke Energy and its subsidiaries file income tax returns in the U.S. with federal and various state governmental authorities, and in certain foreign jurisdictions. The taxable income of Duke Energy and its subsidiaries is reflected in Duke Energy's U.S. federal and state income tax returns. These subsidiaries have a tax sharing agreement with Duke Energy where the separate return method is used to allocate tax expenses and benefits to the subsidiaries whose investments or results of operations provide these tax expenses and benefits. The accounting for income taxes essentially represents the income taxes that each of these subsidiaries would incur if it were a separate company filing its own tax return as a C-Corporation.

The following table includes information regarding the Duke Energy Registrants unrecognized tax benefits.


September 30, 2011	Duke Energy		Duke Energy Carolinas		Duke Energy Ohio		Duke Energy Indiana
	(in millions)
Unrecognized tax benefits^(a)	$	392	$	262	$	33	$	22
Amount that if recognized, would affect the effective tax rate or regulatory liability^(b)		121		113		—		—
Amount that if recognized, would be recorded as a component of discontinued operations		11		—		—		—
December 31, 2010
Unrecognized tax benefits^(a)		342		217		29		21

(a)	The Duke Registrants do not anticipate a significant increase or decrease in unrecognized tax benefits in the next twelve months.

(b)	Duke Energy and Duke Energy Carolinas are unable to estimate the specific amounts that would affect the effective tax rate or regulatory liability.

Duke Energy and its subsidiaries are no longer subject to U.S. federal examination for years before 2004. The years 2004 and 2005 are in Appeals. The Internal Revenue Service (IRS) is currently auditing the federal income tax returns for years 2006 and 2007. With few exceptions, Duke Energy and its subsidiaries are no longer subject to state, local or non-U.S. income tax examinations by tax authorities for years before 1999.

The effective tax rates for each of the Duke Energy Registrants are as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
Duke Energy		30.7	%		31.2	%		30.8	%		41.9	%
Duke Energy Carolinas		37.0	%		33.8	%		36.1	%		33.9	%
Duke Energy Ohio		47.3	%		32.6	%		36.9	%		(32.6	)%
Duke Energy Indiana		37.2	%		32.2	%		30.8	%		33.8	%

As discussed in Note 7, in the second quarter of 2010, Duke Energy recorded a non-deductible goodwill impairment charge of $500 million and Duke Energy Ohio recorded non-deductible goodwill impairment charges of $677 million. In the third quarter of 2011, federal true ups related to the 2010 tax return filing were recorded, which resulted in an increase in income tax expense for Duke Energy Carolinas, Duke Energy Ohio, and Duke Energy Indiana. Duke Energy Indiana has reflected an increase in AFUDC equity in 2011, as well as a reduction in pre-tax income due to the Edwardsport IGCC impairment in the third quarter of 2011.

Excise Taxes. Certain excise taxes levied by state or local governments are collected by the Duke Energy Registrants from its customers. These taxes, which are required to be paid regardless of the Duke Energy Registrants' ability to collect from the customer, are accounted for on a gross basis. When each of the Duke Energy Registrants act as an agent, and the tax is not required to be remitted if it is not collected from the customer, the taxes are accounted for on a net basis. Excise taxes for each Duke Energy Registrant accounted for on a gross basis and recorded as revenues in the respective Condensed Consolidated Statements of Operations were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
	(in millions)				(in millions)
Duke Energy Carolinas	$	45	$	47	$	118	$	123
Duke Energy Ohio		27		28		86		90
Duke Energy Indiana		9		8		24		22

Total Duke Energy	$	81	$	83	$	228	$	235

Income Taxes And Other Taxes

16. Income Taxes and Other Taxes

Income Taxes. Duke Energy and its subsidiaries file income tax returns in the U.S. with federal and various state governmental authorities, and in certain foreign jurisdictions. The taxable income of Duke Energy and its subsidiaries is reflected in Duke Energy's U.S. federal and state income tax returns. These subsidiaries have a tax sharing agreement with Duke Energy where the separate return method is used to allocate tax expenses and benefits to the subsidiaries whose investments or results of operations provide these tax expenses and benefits. The accounting for income taxes essentially represents the income taxes that each of these subsidiaries would incur if it were a separate company filing its own tax return as a C-Corporation.

The following table includes information regarding the Duke Energy Registrants unrecognized tax benefits.


September 30, 2011	Duke Energy		Duke Energy Carolinas		Duke Energy Ohio		Duke Energy Indiana
	(in millions)
Unrecognized tax benefits^(a)	$	392	$	262	$	33	$	22
Amount that if recognized, would affect the effective tax rate or regulatory liability^(b)		121		113		—		—
Amount that if recognized, would be recorded as a component of discontinued operations		11		—		—		—
December 31, 2010
Unrecognized tax benefits^(a)		342		217		29		21

(a)	The Duke Registrants do not anticipate a significant increase or decrease in unrecognized tax benefits in the next twelve months.

(b)	Duke Energy and Duke Energy Carolinas are unable to estimate the specific amounts that would affect the effective tax rate or regulatory liability.

Duke Energy and its subsidiaries are no longer subject to U.S. federal examination for years before 2004. The years 2004 and 2005 are in Appeals. The Internal Revenue Service (IRS) is currently auditing the federal income tax returns for years 2006 and 2007. With few exceptions, Duke Energy and its subsidiaries are no longer subject to state, local or non-U.S. income tax examinations by tax authorities for years before 1999.

The effective tax rates for each of the Duke Energy Registrants are as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
Duke Energy		30.7	%		31.2	%		30.8	%		41.9	%
Duke Energy Carolinas		37.0	%		33.8	%		36.1	%		33.9	%
Duke Energy Ohio		47.3	%		32.6	%		36.9	%		(32.6	)%
Duke Energy Indiana		37.2	%		32.2	%		30.8	%		33.8	%

As discussed in Note 7, in the second quarter of 2010, Duke Energy recorded a non-deductible goodwill impairment charge of $500 million and Duke Energy Ohio recorded non-deductible goodwill impairment charges of $677 million. In the third quarter of 2011, federal true ups related to the 2010 tax return filing were recorded, which resulted in an increase in income tax expense for Duke Energy Carolinas, Duke Energy Ohio, and Duke Energy Indiana. Duke Energy Indiana has reflected an increase in AFUDC equity in 2011, as well as a reduction in pre-tax income due to the Edwardsport IGCC impairment in the third quarter of 2011.

Excise Taxes. Certain excise taxes levied by state or local governments are collected by the Duke Energy Registrants from its customers. These taxes, which are required to be paid regardless of the Duke Energy Registrants' ability to collect from the customer, are accounted for on a gross basis. When each of the Duke Energy Registrants act as an agent, and the tax is not required to be remitted if it is not collected from the customer, the taxes are accounted for on a net basis. Excise taxes for each Duke Energy Registrant accounted for on a gross basis and recorded as revenues in the respective Condensed Consolidated Statements of Operations were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
	(in millions)				(in millions)
Duke Energy Carolinas	$	45	$	47	$	118	$	123
Duke Energy Ohio		27		28		86		90
Duke Energy Indiana		9		8		24		22

Total Duke Energy	$	81	$	83	$	228	$	235