Income Taxes

12 Months Ended

Dec. 31, 2011

Income Taxes

22. 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 details the components of income tax expense:

Income Tax Expense

	For the Year Ended December 31, 2011
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	(in millions)
Current income taxes
Federal	$	(37	)	$	(122	)	$	(95	)	$	95
State		21			30			1			42
Foreign		164			—			—			—
Total current income taxes		148			(92	)		(94	)		137
Deferred income taxes
Federal		526			531			194			(38	)
State		56			40			(2	)		(23	)
Foreign		32			—			—			—
Total deferred income taxes		614			571			192			(61	)
Investment tax credit amortization		(10	)		(7	)		(2	)		(2	)
Total income tax expense included in Consolidated Statements of Operations(a)	$	752		$	472		$	96		$	74

(a) Included in the "Total current income taxes" line above are uncertain tax benefits relating primarily to certain temporary differences of $43 million at Duke Energy, $43 million at Duke Energy Carolinas, $3 million at Duke Energy Ohio and $3 million at Duke Energy Indiana. The offset to these temporary differences are included in the "Total deferred income taxes" line above.

	For the Year Ended December 31, 2010
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	(in millions)
Current income taxes
Federal	$	(5	)	$	3		$	107		$	(3	)
State		39			(2	)		8			16
Foreign		125			—			—			—
Total current income taxes		159			1			115			13
Deferred income taxes
Federal		639			388			6			123
State		83			75			12			22
Foreign		20			—			—			—
Total deferred income taxes		742			463			18			145
Investment tax credit amortization		(11	)		(7	)		(1	)		(2	)
Total income tax expense from continuing operations		890			457			132			156
Total income tax benefit from discontinued operations		(1	)		—			—			—
Total income tax expense included in Consolidated Statements of Operations(a)	$	889		$	457		$	132		$	156

(a) Included in the "Total current income taxes" line above are uncertain tax benefits relating primarily to certain temporary differences of $392 million at Duke Energy, $300 million at Duke Energy Carolinas, $3 million at Duke Energy Ohio and $7 million at Duke Energy Indiana. The offset to these temporary differences are included in the "Total deferred income taxes" line above.

	For the Year Ended December 31, 2009
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	(in millions)
Current income taxes
Federal	$	(271	)	$	(196	)	$	77		$	2
State		3			(27	)		7			5
Foreign		96			—			—			—
Total current income taxes		(172	)		(223	)		84			7
Deferred income taxes
Federal		767			518			97			89
State		148			89			7			22
Foreign		27			—			—			—
Total deferred income taxes		942			607			104			111
Investment tax credit amortization		(12	)		(7	)		(2	)		(2	)
Total income tax expense from continuing operations		758			377			186			116
Total income tax benefit from discontinued operations		(2	)		—			—			—
Total income tax expense included in Consolidated Statements of Operations(a)	$	756		$	377		$	186		$	116

(a) Included in the "Total current income taxes" line above are uncertain tax benefits relating primarily to certain temporary differences of $91 million at Duke Energy, uncertain tax expenses of $42 million, $22 million and $20 million at Duke Energy Carolinas, Duke Energy Ohio, and Duke Energy Indiana, respectively. The offset to these temporary differences are included in the "Total deferred income taxes" line above.

Duke Energy Income from Continuing Operations before Income Taxes

	For the Years Ended December 31,
	2011		2010		2009
	(in millions)
Domestic	$	1,780	$	1,731	$	1,433
Foreign		685		479		398
Total income from continuing operations before income taxes	$	2,465	$	2,210	$	1,831

Reconciliation of Income Tax Expense at the U.S. Federal Statutory Tax Rate to the Actual Tax Expense from Continuing Operations (Statutory Rate Reconciliation)

	For the Year Ended December 31, 2011
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	(in millions)
Income tax expense, computed at the statutory rate of 35%	$	863		$	457		$	102		$	85
State income tax, net of federal income tax effect		50			46			(1	)		13
Tax differential on foreign earnings		(44	)		—			—			—
AFUDC equity income		(91	)		(59	)		(2	)		(31	)
Other items, net		(26	)		28			(3	)		7
Total income tax expense from continuing operations	$	752		$	472		$	96		$	74
Effective tax rate		30.5	%		36.1	%		33.1	%		30.6	%

	For the Year Ended December 31, 2010
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	(in millions)
Income tax expense, computed at the statutory rate of 35%	$	774		$	454		$	(108	)	$	155
State income tax, net of federal income tax effect		82			48			14			26
Tax differential on foreign earnings		(22	)		—			—			—
Goodwill impairment charges		175			—			237			—
AFUDC equity income		(82	)		(61	)		(2	)		(20	)
Other items, net		(37	)		16			(9	)		(5	)
Total income tax expense from continuing operations	$	890		$	457		$	132		$	156
Effective tax rate		40.3	%		35.3	%		(43.0	)%		35.5	%

	For the Year Ended December 31, 2009
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	(in millions)
Income tax expense, computed at the statutory rate of 35%	$	641		$	378		$	(84	)	$	111
State income tax, net of federal income tax effect		98			40			9			18
Tax differential on foreign earnings		(16	)		—			—			—
Goodwill impairment charges		130			—			254			—
AFUDC equity income		(53	)		(44	)		1			(10	)
Other items, net		(42	)		3			6			(3	)
Total income tax expense from continuing operations	$	758		$	377		$	186		$	116
Effective tax rate		41.4	%		34.9	%		(77.5	)%		36.7	%

Valuation allowances have been established for certain foreign and state net operating loss carryforwards that reduce deferred tax assets to an amount that will be realized on a more-likely-than-not basis. The net change in the total valuation allowance is included in Tax differential on foreign earnings and State income tax, net of federal income tax effect in the above table.

Net Deferred Income Tax Liability Components

	For the Year Ended December 31, 2011
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	(in millions)
Deferred credits and other liabilities	$	790		$	228		$	68		$	92
Tax Credits and NOL Carryforwards(a)		930			199			—			95
Investments and other assets		—			—			3			—
Other		137			18			31			5
Total deferred income tax assets		1,857			445			102			192
Valuation allowance		(144	)		—			—			—
Net deferred income tax assets		1,713			445			102			192
Investments and other assets		(809	)		(720	)		—			(2	)
Accelerated depreciation rates		(6,989	)		(3,576	)		(1,706	)		(968	)
Regulatory assets and deferred debits		(1,219	)		(658	)		(216	)		(136	)
Total deferred income tax liabilities		(9,017	)		(4,954	)		(1,922	)		(1,106	)
Net deferred income tax liabilities	$	(7,304	)	$	(4,509	)	$	(1,820	)	$	(914	)

 

 (a) See Tax Credits and NOL Carryforwards table below.

Tax Credits and NOL Carryforwards

	For the Year Ended December 31, 2011
	(in millions)
Description	Amount		Expiration year
Investment Tax Credits	$	362	2029 – 2031
Alternative Minimum Tax Credits		145	Indefinite
Federal NOL		274	2031
State NOL(a)		47	2016 – 2031
Foreign NOL(b)		102	2015 – 2029; Indefinite

(a) A valuation allowance of $41 million has been recorded on the State NOL Carryforwards, as presented in the Net Deferred Income Tax Liability Components table.

(b) A valuation allowance of $102 million has been recorded on the Foreign NOL Carryforwards, as presented in the Net Deferred Income Tax Liability Components table.

	For the Year Ended December 31, 2010
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	(in millions)
Deferred credits and other liabilities	$	679		$	204		$	61		$	70
Tax Credits and NOL Carryforwards		554			52			—			100
Other		100			15			19			5
Total deferred income tax assets		1,333			271			80			175
Valuation allowance		(145	)		—			—			—
Net deferred income tax assets		1,188			271			80			175
Investments and other assets		(781	)		(675	)		(11	)		(41	)
Accelerated depreciation rates		(6,052	)		(2,990	)		(1,529	)		(973	)
Regulatory assets and deferred debits		(996	)		(513	)		(171	)		(93	)
Total deferred income tax liabilities		(7,829	)		(4,178	)		(1,711	)		(1,107	)
Net deferred income tax liabilities	$	(6,641	)	$	(3,907	)	$	(1,631	)	$	(932	)

The above amounts have been classified in the Consolidated Balance Sheets as follows:

Deferred Tax Assets (Liabilities)

	For the Year Ended December 31, 2011
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	(in millions)
Current deferred tax assets, included in other current assets	$	210		$	46		$	33		$	13
Non-current deferred tax assets, included in other investments and other assets		67			—			—			—
Non-current deferred tax liabilities		(7,581	)		(4,555	)		(1,853	)		(927	)
Total net deferred income tax liabilities	$	(7,304	)	$	(4,509	)	$	(1,820	)	$	(914	)

	For the Year Ended December 31, 2010
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	(in millions)
Current deferred tax assets, included in other current assets	$	236		$	81		$	9		$	41
Non-current deferred tax assets, included in other investments and other assets		101			—			—			—
Non-current deferred tax liabilities		(6,978	)		(3,988	)		(1,640	)		(973	)
Total net deferred income tax liabilities	$	(6,641	)	$	(3,907	)	$	(1,631	)	$	(932	)

Deferred income taxes and foreign withholding taxes have not been provided on undistributed earnings of Duke Energy's foreign subsidiaries when such amounts are deemed to be indefinitely reinvested. The cumulative undistributed earnings as of December 31, 2011 on which Duke Energy has not provided deferred income taxes and foreign withholding taxes is $1.7 billion. The amount of unrecognized deferred tax liability related to these undistributed earnings is estimated at between $250 million and $325 million.

Changes to Unrecognized Tax Benefits

	For the Year Ended December 31, 2011
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	Increase/(Decrease)
	(in millions)
Unrecognized Tax Benefits—January 1,	$	342		$	217		$	29		$	21
Unrecognized Tax Benefits Changes
Gross increases—tax positions in prior periods		49			42			4			3
Gross decreases—tax positions in prior periods		(18	)		(8	)		(5	)		(3	)
Gross increases—current period tax positions		16			9			4			3
Settlements		(4	)		—			—			—
Total Changes		43			43			3			3
Unrecognized Tax Benefits—December 31,	$	385		$	260		$	32		$	24

	For the Year Ended December 31, 2010
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	Increase/(Decrease)
	(in millions)
Unrecognized Tax Benefits—January 1,	$	664		$	517		$	32		$	28
Unrecognized Tax Benefits Changes
Gross increases—tax positions in prior periods		36			14			15			7
Gross decreases—tax positions in prior periods		(43	)		(7	)		(21	)		(13	)
Gross increases—current period tax positions		5			3			1			1
Settlements		(320	)		(310	)		2			(2	)
Total Changes		(322	)		(300	)		(3	)		(7	)
Unrecognized Tax Benefits—December 31,	$	342		$	217		$	29		$	21

	For the Year Ended December 31, 2009
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	Increase/(Decrease)
	(in millions)
Unrecognized Tax Benefits—January 1,	$	572		$	462		$	15		$	9
Unrecognized Tax Benefits Changes
Gross increases—tax positions in prior periods		132			58			30			22
Gross decreases—tax positions in prior periods		(38	)		(11	)		(9	)		(1	)
Gross increases—current period tax positions		11			8			1			2
Settlements		(13	)		—			(5	)		(4	)
Total Changes		92			55			17			19
Unrecognized Tax Benefits—December 31,	$	664		$	517		$	32		$	28

The following table includes information regarding the Duke Energy Registrants unrecognized tax benefits^(a).

	Duke Energy		Duke Energy Carolinas		Duke Energy Ohio		Duke Energy Indiana
	(in millions)
December 31, 2011
Amount that if recognized, would affect the effective tax rate or regulatory liability(b)		121		115		—		—
Amount that if recognized, would be recorded as a component of discontinued operations		11		—		—		—

^(a) The Duke Registrants do not anticipate a material increase or decrease in unrecognized tax benefits in the next 12 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.

The following tables include interest and penalties recognized in the consolidated statements of operations and the consolidated balance sheets:

	Duke Energy		Duke Energy Carolinas		Duke Energy Ohio		Duke Energy Indiana
	(in millions)
December 31, 2011
Net interest income recognized related to income taxes	$	12	$	5	$	—	$	—
Net interest expense recognized related to income taxes		—		—		1		1
Interest receivable related to income taxes included in the consolidated balance sheets		8		5		—		—
Interest payable related to income taxes included in the consolidated balance sheets		—		—		3		3
Accruals for the payment of penalties included in the consolidated balance sheets		—		—		—		—

	Duke Energy		Duke Energy Carolinas		Duke Energy Ohio		Duke Energy Indiana
	(in millions)
December 31, 2010
Net interest income recognized related to income taxes	$	26	$	18	$	4	$	5
Interest receivable related to income taxes included in the consolidated balance sheets		33		34		—		—
Interest payable related to income taxes included in the consolidated balance sheets		—		—		1		2
Accruals for the payment of penalties included in the consolidated balance sheets		3		—		—		—

	Duke Energy		Duke Energy Carolinas		Duke Energy Ohio		Duke Energy Indiana
	(in millions)
December 31, 2009
Net interest expense recognized related to income taxes	$	7	$	—	$	8	$	5

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.

Duke Energy Carolinas [Member]

Income Taxes

22. 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 details the components of income tax expense:

Income Tax Expense

	For the Year Ended December 31, 2011
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	(in millions)
Current income taxes
Federal	$	(37	)	$	(122	)	$	(95	)	$	95
State		21			30			1			42
Foreign		164			—			—			—
Total current income taxes		148			(92	)		(94	)		137
Deferred income taxes
Federal		526			531			194			(38	)
State		56			40			(2	)		(23	)
Foreign		32			—			—			—
Total deferred income taxes		614			571			192			(61	)
Investment tax credit amortization		(10	)		(7	)		(2	)		(2	)
Total income tax expense included in Consolidated Statements of Operations(a)	$	752		$	472		$	96		$	74

(a) Included in the "Total current income taxes" line above are uncertain tax benefits relating primarily to certain temporary differences of $43 million at Duke Energy, $43 million at Duke Energy Carolinas, $3 million at Duke Energy Ohio and $3 million at Duke Energy Indiana. The offset to these temporary differences are included in the "Total deferred income taxes" line above.

	For the Year Ended December 31, 2010
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	(in millions)
Current income taxes
Federal	$	(5	)	$	3		$	107		$	(3	)
State		39			(2	)		8			16
Foreign		125			—			—			—
Total current income taxes		159			1			115			13
Deferred income taxes
Federal		639			388			6			123
State		83			75			12			22
Foreign		20			—			—			—
Total deferred income taxes		742			463			18			145
Investment tax credit amortization		(11	)		(7	)		(1	)		(2	)
Total income tax expense from continuing operations		890			457			132			156
Total income tax benefit from discontinued operations		(1	)		—			—			—
Total income tax expense included in Consolidated Statements of Operations(a)	$	889		$	457		$	132		$	156

(a) Included in the "Total current income taxes" line above are uncertain tax benefits relating primarily to certain temporary differences of $392 million at Duke Energy, $300 million at Duke Energy Carolinas, $3 million at Duke Energy Ohio and $7 million at Duke Energy Indiana. The offset to these temporary differences are included in the "Total deferred income taxes" line above.

	For the Year Ended December 31, 2009
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	(in millions)
Current income taxes
Federal	$	(271	)	$	(196	)	$	77		$	2
State		3			(27	)		7			5
Foreign		96			—			—			—
Total current income taxes		(172	)		(223	)		84			7
Deferred income taxes
Federal		767			518			97			89
State		148			89			7			22
Foreign		27			—			—			—
Total deferred income taxes		942			607			104			111
Investment tax credit amortization		(12	)		(7	)		(2	)		(2	)
Total income tax expense from continuing operations		758			377			186			116
Total income tax benefit from discontinued operations		(2	)		—			—			—
Total income tax expense included in Consolidated Statements of Operations(a)	$	756		$	377		$	186		$	116

(a) Included in the "Total current income taxes" line above are uncertain tax benefits relating primarily to certain temporary differences of $91 million at Duke Energy, uncertain tax expenses of $42 million, $22 million and $20 million at Duke Energy Carolinas, Duke Energy Ohio, and Duke Energy Indiana, respectively. The offset to these temporary differences are included in the "Total deferred income taxes" line above.

Duke Energy Income from Continuing Operations before Income Taxes

	For the Years Ended December 31,
	2011		2010		2009
	(in millions)
Domestic	$	1,780	$	1,731	$	1,433
Foreign		685		479		398
Total income from continuing operations before income taxes	$	2,465	$	2,210	$	1,831

Reconciliation of Income Tax Expense at the U.S. Federal Statutory Tax Rate to the Actual Tax Expense from Continuing Operations (Statutory Rate Reconciliation)

	For the Year Ended December 31, 2011
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	(in millions)
Income tax expense, computed at the statutory rate of 35%	$	863		$	457		$	102		$	85
State income tax, net of federal income tax effect		50			46			(1	)		13
Tax differential on foreign earnings		(44	)		—			—			—
AFUDC equity income		(91	)		(59	)		(2	)		(31	)
Other items, net		(26	)		28			(3	)		7
Total income tax expense from continuing operations	$	752		$	472		$	96		$	74
Effective tax rate		30.5	%		36.1	%		33.1	%		30.6	%

	For the Year Ended December 31, 2010
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	(in millions)
Income tax expense, computed at the statutory rate of 35%	$	774		$	454		$	(108	)	$	155
State income tax, net of federal income tax effect		82			48			14			26
Tax differential on foreign earnings		(22	)		—			—			—
Goodwill impairment charges		175			—			237			—
AFUDC equity income		(82	)		(61	)		(2	)		(20	)
Other items, net		(37	)		16			(9	)		(5	)
Total income tax expense from continuing operations	$	890		$	457		$	132		$	156
Effective tax rate		40.3	%		35.3	%		(43.0	)%		35.5	%

	For the Year Ended December 31, 2009
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	(in millions)
Income tax expense, computed at the statutory rate of 35%	$	641		$	378		$	(84	)	$	111
State income tax, net of federal income tax effect		98			40			9			18
Tax differential on foreign earnings		(16	)		—			—			—
Goodwill impairment charges		130			—			254			—
AFUDC equity income		(53	)		(44	)		1			(10	)
Other items, net		(42	)		3			6			(3	)
Total income tax expense from continuing operations	$	758		$	377		$	186		$	116
Effective tax rate		41.4	%		34.9	%		(77.5	)%		36.7	%

Valuation allowances have been established for certain foreign and state net operating loss carryforwards that reduce deferred tax assets to an amount that will be realized on a more-likely-than-not basis. The net change in the total valuation allowance is included in Tax differential on foreign earnings and State income tax, net of federal income tax effect in the above table.

Net Deferred Income Tax Liability Components

	For the Year Ended December 31, 2011
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	(in millions)
Deferred credits and other liabilities	$	790		$	228		$	68		$	92
Tax Credits and NOL Carryforwards(a)		930			199			—			95
Investments and other assets		—			—			3			—
Other		137			18			31			5
Total deferred income tax assets		1,857			445			102			192
Valuation allowance		(144	)		—			—			—
Net deferred income tax assets		1,713			445			102			192
Investments and other assets		(809	)		(720	)		—			(2	)
Accelerated depreciation rates		(6,989	)		(3,576	)		(1,706	)		(968	)
Regulatory assets and deferred debits		(1,219	)		(658	)		(216	)		(136	)
Total deferred income tax liabilities		(9,017	)		(4,954	)		(1,922	)		(1,106	)
Net deferred income tax liabilities	$	(7,304	)	$	(4,509	)	$	(1,820	)	$	(914	)

(a) See Tax Credits and NOL Carryforwards table below.

Tax Credits and NOL Carryforwards

	For the Year Ended December 31, 2011
	(in millions)
Description	Amount		Expiration year
Investment Tax Credits	$	362	2029 – 2031
Alternative Minimum Tax Credits		145	Indefinite
Federal NOL		274	2031
State NOL(a)		47	2016 – 2031
Foreign NOL(b)		102	2015 – 2029; Indefinite

(a) A valuation allowance of $41 million has been recorded on the State NOL Carryforwards, as presented in the Net Deferred Income Tax Liability Components table.

(b) A valuation allowance of $102 million has been recorded on the Foreign NOL Carryforwards, as presented in the Net Deferred Income Tax Liability Components table.

	For the Year Ended December 31, 2010
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	(in millions)
Deferred credits and other liabilities	$	679		$	204		$	61		$	70
Tax Credits and NOL Carryforwards		554			52			—			100
Other		100			15			19			5
Total deferred income tax assets		1,333			271			80			175
Valuation allowance		(145	)		—			—			—
Net deferred income tax assets		1,188			271			80			175
Investments and other assets		(781	)		(675	)		(11	)		(41	)
Accelerated depreciation rates		(6,052	)		(2,990	)		(1,529	)		(973	)
Regulatory assets and deferred debits		(996	)		(513	)		(171	)		(93	)
Total deferred income tax liabilities		(7,829	)		(4,178	)		(1,711	)		(1,107	)
Net deferred income tax liabilities	$	(6,641	)	$	(3,907	)	$	(1,631	)	$	(932	)

The above amounts have been classified in the Consolidated Balance Sheets as follows:

Deferred Tax Assets (Liabilities)

	For the Year Ended December 31, 2011
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	(in millions)
Current deferred tax assets, included in other current assets	$	210		$	46		$	33		$	13
Non-current deferred tax assets, included in other investments and other assets		67			—			—			—
Non-current deferred tax liabilities		(7,581	)		(4,555	)		(1,853	)		(927	)
Total net deferred income tax liabilities	$	(7,304	)	$	(4,509	)	$	(1,820	)	$	(914	)

	For the Year Ended December 31, 2010
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	(in millions)
Current deferred tax assets, included in other current assets	$	236		$	81		$	9		$	41
Non-current deferred tax assets, included in other investments and other assets		101			—			—			—
Non-current deferred tax liabilities		(6,978	)		(3,988	)		(1,640	)		(973	)
Total net deferred income tax liabilities	$	(6,641	)	$	(3,907	)	$	(1,631	)	$	(932	)

Deferred income taxes and foreign withholding taxes have not been provided on undistributed earnings of Duke Energy's foreign subsidiaries when such amounts are deemed to be indefinitely reinvested. The cumulative undistributed earnings as of December 31, 2011 on which Duke Energy has not provided deferred income taxes and foreign withholding taxes is $1.7 billion. The amount of unrecognized deferred tax liability related to these undistributed earnings is estimated at between $250 million and $325 million.

Changes to Unrecognized Tax Benefits

	For the Year Ended December 31, 2011
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	Increase/(Decrease)
	(in millions)
Unrecognized Tax Benefits—January 1,	$	342		$	217		$	29		$	21
Unrecognized Tax Benefits Changes
Gross increases—tax positions in prior periods		49			42			4			3
Gross decreases—tax positions in prior periods		(18	)		(8	)		(5	)		(3	)
Gross increases—current period tax positions		16			9			4			3
Settlements		(4	)		—			—			—
Total Changes		43			43			3			3
Unrecognized Tax Benefits—December 31,	$	385		$	260		$	32		$	24

	For the Year Ended December 31, 2010
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	Increase/(Decrease)
	(in millions)
Unrecognized Tax Benefits—January 1,	$	664		$	517		$	32		$	28
Unrecognized Tax Benefits Changes
Gross increases—tax positions in prior periods		36			14			15			7
Gross decreases—tax positions in prior periods		(43	)		(7	)		(21	)		(13	)
Gross increases—current period tax positions		5			3			1			1
Settlements		(320	)		(310	)		2			(2	)
Total Changes		(322	)		(300	)		(3	)		(7	)
Unrecognized Tax Benefits—December 31,	$	342		$	217		$	29		$	21

	For the Year Ended December 31, 2009
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	Increase/(Decrease)
	(in millions)
Unrecognized Tax Benefits—January 1,	$	572		$	462		$	15		$	9
Unrecognized Tax Benefits Changes
Gross increases—tax positions in prior periods		132			58			30			22
Gross decreases—tax positions in prior periods		(38	)		(11	)		(9	)		(1	)
Gross increases—current period tax positions		11			8			1			2
Settlements		(13	)		—			(5	)		(4	)
Total Changes		92			55			17			19
Unrecognized Tax Benefits—December 31,	$	664		$	517		$	32		$	28

The following table includes information regarding the Duke Energy Registrants unrecognized tax benefits^(a).

	Duke Energy		Duke Energy Carolinas		Duke Energy Ohio		Duke Energy Indiana
	(in millions)
December 31, 2011
Amount that if recognized, would affect the effective tax rate or regulatory liability(b)		121		115		—		—
Amount that if recognized, would be recorded as a component of discontinued operations		11		—		—		—

(a) The Duke Registrants do not anticipate a material increase or decrease in unrecognized tax benefits in the next 12 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.

The following tables include interest and penalties recognized in the consolidated statements of operations and the consolidated balance sheets:

	Duke Energy		Duke Energy Carolinas		Duke Energy Ohio		Duke Energy Indiana
	(in millions)
December 31, 2011
Net interest income recognized related to income taxes	$	12	$	5	$	—	$	—
Net interest expense recognized related to income taxes		—		—		1		1
Interest receivable related to income taxes included in the consolidated balance sheets		8		5		—		—
Interest payable related to income taxes included in the consolidated balance sheets		—		—		3		3
Accruals for the payment of penalties included in the consolidated balance sheets		—		—		—		—

	Duke Energy		Duke Energy Carolinas		Duke Energy Ohio		Duke Energy Indiana
	(in millions)
December 31, 2010
Net interest income recognized related to income taxes	$	26	$	18	$	4	$	5
Interest receivable related to income taxes included in the consolidated balance sheets		33		34		—		—
Interest payable related to income taxes included in the consolidated balance sheets		—		—		1		2
Accruals for the payment of penalties included in the consolidated balance sheets		3		—		—		—

	Duke Energy		Duke Energy Carolinas		Duke Energy Ohio		Duke Energy Indiana
	(in millions)
December 31, 2009
Net interest expense recognized related to income taxes	$	7	$	—	$	8	$	5

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.

Duke Energy Ohio [Member]

Income Taxes

22. 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 details the components of income tax expense:

Income Tax Expense

	For the Year Ended December 31, 2011
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	(in millions)
Current income taxes
Federal	$	(37	)	$	(122	)	$	(95	)	$	95
State		21			30			1			42
Foreign		164			—			—			—
Total current income taxes		148			(92	)		(94	)		137
Deferred income taxes
Federal		526			531			194			(38	)
State		56			40			(2	)		(23	)
Foreign		32			—			—			—
Total deferred income taxes		614			571			192			(61	)
Investment tax credit amortization		(10	)		(7	)		(2	)		(2	)
Total income tax expense included in Consolidated Statements of Operations(a)	$	752		$	472		$	96		$	74

(a) Included in the "Total current income taxes" line above are uncertain tax benefits relating primarily to certain temporary differences of $43 million at Duke Energy, $43 million at Duke Energy Carolinas, $3 million at Duke Energy Ohio and $3 million at Duke Energy Indiana. The offset to these temporary differences are included in the "Total deferred income taxes" line above.

	For the Year Ended December 31, 2010
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	(in millions)
Current income taxes
Federal	$	(5	)	$	3		$	107		$	(3	)
State		39			(2	)		8			16
Foreign		125			—			—			—
Total current income taxes		159			1			115			13
Deferred income taxes
Federal		639			388			6			123
State		83			75			12			22
Foreign		20			—			—			—
Total deferred income taxes		742			463			18			145
Investment tax credit amortization		(11	)		(7	)		(1	)		(2	)
Total income tax expense from continuing operations		890			457			132			156
Total income tax benefit from discontinued operations		(1	)		—			—			—
Total income tax expense included in Consolidated Statements of Operations(a)	$	889		$	457		$	132		$	156

(a) Included in the "Total current income taxes" line above are uncertain tax benefits relating primarily to certain temporary differences of $392 million at Duke Energy, $300 million at Duke Energy Carolinas, $3 million at Duke Energy Ohio and $7 million at Duke Energy Indiana. The offset to these temporary differences are included in the "Total deferred income taxes" line above.

	For the Year Ended December 31, 2009
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	(in millions)
Current income taxes
Federal	$	(271	)	$	(196	)	$	77		$	2
State		3			(27	)		7			5
Foreign		96			—			—			—
Total current income taxes		(172	)		(223	)		84			7
Deferred income taxes
Federal		767			518			97			89
State		148			89			7			22
Foreign		27			—			—			—
Total deferred income taxes		942			607			104			111
Investment tax credit amortization		(12	)		(7	)		(2	)		(2	)
Total income tax expense from continuing operations		758			377			186			116
Total income tax benefit from discontinued operations		(2	)		—			—			—
Total income tax expense included in Consolidated Statements of Operations(a)	$	756		$	377		$	186		$	116

(a) Included in the "Total current income taxes" line above are uncertain tax benefits relating primarily to certain temporary differences of $91 million at Duke Energy, uncertain tax expenses of $42 million, $22 million and $20 million at Duke Energy Carolinas, Duke Energy Ohio, and Duke Energy Indiana, respectively. The offset to these temporary differences are included in the "Total deferred income taxes" line above.

Duke Energy Income from Continuing Operations before Income Taxes

	For the Years Ended December 31,
	2011		2010		2009
	(in millions)
Domestic	$	1,780	$	1,731	$	1,433
Foreign		685		479		398
Total income from continuing operations before income taxes	$	2,465	$	2,210	$	1,831

Reconciliation of Income Tax Expense at the U.S. Federal Statutory Tax Rate to the Actual Tax Expense from Continuing Operations (Statutory Rate Reconciliation)

	For the Year Ended December 31, 2011
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	(in millions)
Income tax expense, computed at the statutory rate of 35%	$	863		$	457		$	102		$	85
State income tax, net of federal income tax effect		50			46			(1	)		13
Tax differential on foreign earnings		(44	)		—			—			—
AFUDC equity income		(91	)		(59	)		(2	)		(31	)
Other items, net		(26	)		28			(3	)		7
Total income tax expense from continuing operations	$	752		$	472		$	96		$	74
Effective tax rate		30.5	%		36.1	%		33.1	%		30.6	%

	For the Year Ended December 31, 2010
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	(in millions)
Income tax expense, computed at the statutory rate of 35%	$	774		$	454		$	(108	)	$	155
State income tax, net of federal income tax effect		82			48			14			26
Tax differential on foreign earnings		(22	)		—			—			—
Goodwill impairment charges		175			—			237			—
AFUDC equity income		(82	)		(61	)		(2	)		(20	)
Other items, net		(37	)		16			(9	)		(5	)
Total income tax expense from continuing operations	$	890		$	457		$	132		$	156
Effective tax rate		40.3	%		35.3	%		(43.0	)%		35.5	%

	For the Year Ended December 31, 2009
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	(in millions)
Income tax expense, computed at the statutory rate of 35%	$	641		$	378		$	(84	)	$	111
State income tax, net of federal income tax effect		98			40			9			18
Tax differential on foreign earnings		(16	)		—			—			—
Goodwill impairment charges		130			—			254			—
AFUDC equity income		(53	)		(44	)		1			(10	)
Other items, net		(42	)		3			6			(3	)
Total income tax expense from continuing operations	$	758		$	377		$	186		$	116
Effective tax rate		41.4	%		34.9	%		(77.5	)%		36.7	%

Valuation allowances have been established for certain foreign and state net operating loss carryforwards that reduce deferred tax assets to an amount that will be realized on a more-likely-than-not basis. The net change in the total valuation allowance is included in Tax differential on foreign earnings and State income tax, net of federal income tax effect in the above table.

Net Deferred Income Tax Liability Components

	For the Year Ended December 31, 2011
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	(in millions)
Deferred credits and other liabilities	$	790		$	228		$	68		$	92
Tax Credits and NOL Carryforwards(a)		930			199			—			95
Investments and other assets		—			—			3			—
Other		137			18			31			5
Total deferred income tax assets		1,857			445			102			192
Valuation allowance		(144	)		—			—			—
Net deferred income tax assets		1,713			445			102			192
Investments and other assets		(809	)		(720	)		—			(2	)
Accelerated depreciation rates		(6,989	)		(3,576	)		(1,706	)		(968	)
Regulatory assets and deferred debits		(1,219	)		(658	)		(216	)		(136	)
Total deferred income tax liabilities		(9,017	)		(4,954	)		(1,922	)		(1,106	)
Net deferred income tax liabilities	$	(7,304	)	$	(4,509	)	$	(1,820	)	$	(914	)

(a) See Tax Credits and NOL Carryforwards table below.

Tax Credits and NOL Carryforwards

	For the Year Ended December 31, 2011
	(in millions)
Description	Amount		Expiration year
Investment Tax Credits	$	362	2029 – 2031
Alternative Minimum Tax Credits		145	Indefinite
Federal NOL		274	2031
State NOL(a)		47	2016 – 2031
Foreign NOL(b)		102	2015 – 2029; Indefinite

(a) A valuation allowance of $41 million has been recorded on the State NOL Carryforwards, as presented in the Net Deferred Income Tax Liability Components table.

(b) A valuation allowance of $102 million has been recorded on the Foreign NOL Carryforwards, as presented in the Net Deferred Income Tax Liability Components table.

	For the Year Ended December 31, 2010
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	(in millions)
Deferred credits and other liabilities	$	679		$	204		$	61		$	70
Tax Credits and NOL Carryforwards		554			52			—			100
Other		100			15			19			5
Total deferred income tax assets		1,333			271			80			175
Valuation allowance		(145	)		—			—			—
Net deferred income tax assets		1,188			271			80			175
Investments and other assets		(781	)		(675	)		(11	)		(41	)
Accelerated depreciation rates		(6,052	)		(2,990	)		(1,529	)		(973	)
Regulatory assets and deferred debits		(996	)		(513	)		(171	)		(93	)
Total deferred income tax liabilities		(7,829	)		(4,178	)		(1,711	)		(1,107	)
Net deferred income tax liabilities	$	(6,641	)	$	(3,907	)	$	(1,631	)	$	(932	)

The above amounts have been classified in the Consolidated Balance Sheets as follows:

Deferred Tax Assets (Liabilities)

	For the Year Ended December 31, 2011
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	(in millions)
Current deferred tax assets, included in other current assets	$	210		$	46		$	33		$	13
Non-current deferred tax assets, included in other investments and other assets		67			—			—			—
Non-current deferred tax liabilities		(7,581	)		(4,555	)		(1,853	)		(927	)
Total net deferred income tax liabilities	$	(7,304	)	$	(4,509	)	$	(1,820	)	$	(914	)

	For the Year Ended December 31, 2010
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	(in millions)
Current deferred tax assets, included in other current assets	$	236		$	81		$	9		$	41
Non-current deferred tax assets, included in other investments and other assets		101			—			—			—
Non-current deferred tax liabilities		(6,978	)		(3,988	)		(1,640	)		(973	)
Total net deferred income tax liabilities	$	(6,641	)	$	(3,907	)	$	(1,631	)	$	(932	)

Deferred income taxes and foreign withholding taxes have not been provided on undistributed earnings of Duke Energy's foreign subsidiaries when such amounts are deemed to be indefinitely reinvested. The cumulative undistributed earnings as of December 31, 2011 on which Duke Energy has not provided deferred income taxes and foreign withholding taxes is $1.7 billion. The amount of unrecognized deferred tax liability related to these undistributed earnings is estimated at between $250 million and $325 million.

Changes to Unrecognized Tax Benefits

	For the Year Ended December 31, 2011
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	Increase/(Decrease)
	(in millions)
Unrecognized Tax Benefits—January 1,	$	342		$	217		$	29		$	21
Unrecognized Tax Benefits Changes
Gross increases—tax positions in prior periods		49			42			4			3
Gross decreases—tax positions in prior periods		(18	)		(8	)		(5	)		(3	)
Gross increases—current period tax positions		16			9			4			3
Settlements		(4	)		—			—			—
Total Changes		43			43			3			3
Unrecognized Tax Benefits—December 31,	$	385		$	260		$	32		$	24

	For the Year Ended December 31, 2010
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	Increase/(Decrease)
	(in millions)
Unrecognized Tax Benefits—January 1,	$	664		$	517		$	32		$	28
Unrecognized Tax Benefits Changes
Gross increases—tax positions in prior periods		36			14			15			7
Gross decreases—tax positions in prior periods		(43	)		(7	)		(21	)		(13	)
Gross increases—current period tax positions		5			3			1			1
Settlements		(320	)		(310	)		2			(2	)
Total Changes		(322	)		(300	)		(3	)		(7	)
Unrecognized Tax Benefits—December 31,	$	342		$	217		$	29		$	21

	For the Year Ended December 31, 2009
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	Increase/(Decrease)
	(in millions)
Unrecognized Tax Benefits—January 1,	$	572		$	462		$	15		$	9
Unrecognized Tax Benefits Changes
Gross increases—tax positions in prior periods		132			58			30			22
Gross decreases—tax positions in prior periods		(38	)		(11	)		(9	)		(1	)
Gross increases—current period tax positions		11			8			1			2
Settlements		(13	)		—			(5	)		(4	)
Total Changes		92			55			17			19
Unrecognized Tax Benefits—December 31,	$	664		$	517		$	32		$	28

The following table includes information regarding the Duke Energy Registrants unrecognized tax benefits^(a).

	Duke Energy		Duke Energy Carolinas		Duke Energy Ohio		Duke Energy Indiana
	(in millions)
December 31, 2011
Amount that if recognized, would affect the effective tax rate or regulatory liability(b)		121		115		—		—
Amount that if recognized, would be recorded as a component of discontinued operations		11		—		—		—

(a) The Duke Registrants do not anticipate a material increase or decrease in unrecognized tax benefits in the next 12 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.

The following tables include interest and penalties recognized in the consolidated statements of operations and the consolidated balance sheets:

	Duke Energy		Duke Energy Carolinas		Duke Energy Ohio		Duke Energy Indiana
	(in millions)
December 31, 2011
Net interest income recognized related to income taxes	$	12	$	5	$	—	$	—
Net interest expense recognized related to income taxes		—		—		1		1
Interest receivable related to income taxes included in the consolidated balance sheets		8		5		—		—
Interest payable related to income taxes included in the consolidated balance sheets		—		—		3		3
Accruals for the payment of penalties included in the consolidated balance sheets		—		—		—		—

	Duke Energy		Duke Energy Carolinas		Duke Energy Ohio		Duke Energy Indiana
	(in millions)
December 31, 2010
Net interest income recognized related to income taxes	$	26	$	18	$	4	$	5
Interest receivable related to income taxes included in the consolidated balance sheets		33		34		—		—
Interest payable related to income taxes included in the consolidated balance sheets		—		—		1		2
Accruals for the payment of penalties included in the consolidated balance sheets		3		—		—		—

	Duke Energy		Duke Energy Carolinas		Duke Energy Ohio		Duke Energy Indiana
	(in millions)
December 31, 2009
Net interest expense recognized related to income taxes	$	7	$	—	$	8	$	5

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.

Duke Energy Indiana [Member]

Income Taxes

22. 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 details the components of income tax expense:

Income Tax Expense

	For the Year Ended December 31, 2011
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	(in millions)
Current income taxes
Federal	$	(37	)	$	(122	)	$	(95	)	$	95
State		21			30			1			42
Foreign		164			—			—			—
Total current income taxes		148			(92	)		(94	)		137
Deferred income taxes
Federal		526			531			194			(38	)
State		56			40			(2	)		(23	)
Foreign		32			—			—			—
Total deferred income taxes		614			571			192			(61	)
Investment tax credit amortization		(10	)		(7	)		(2	)		(2	)
Total income tax expense included in Consolidated Statements of Operations(a)	$	752		$	472		$	96		$	74

(a) Included in the "Total current income taxes" line above are uncertain tax benefits relating primarily to certain temporary differences of $43 million at Duke Energy, $43 million at Duke Energy Carolinas, $3 million at Duke Energy Ohio and $3 million at Duke Energy Indiana. The offset to these temporary differences are included in the "Total deferred income taxes" line above.

	For the Year Ended December 31, 2010
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	(in millions)
Current income taxes
Federal	$	(5	)	$	3		$	107		$	(3	)
State		39			(2	)		8			16
Foreign		125			—			—			—
Total current income taxes		159			1			115			13
Deferred income taxes
Federal		639			388			6			123
State		83			75			12			22
Foreign		20			—			—			—
Total deferred income taxes		742			463			18			145
Investment tax credit amortization		(11	)		(7	)		(1	)		(2	)
Total income tax expense from continuing operations		890			457			132			156
Total income tax benefit from discontinued operations		(1	)		—			—			—
Total income tax expense included in Consolidated Statements of Operations(a)	$	889		$	457		$	132		$	156

(a) Included in the "Total current income taxes" line above are uncertain tax benefits relating primarily to certain temporary differences of $392 million at Duke Energy, $300 million at Duke Energy Carolinas, $3 million at Duke Energy Ohio and $7 million at Duke Energy Indiana. The offset to these temporary differences are included in the "Total deferred income taxes" line above.

	For the Year Ended December 31, 2009
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	(in millions)
Current income taxes
Federal	$	(271	)	$	(196	)	$	77		$	2
State		3			(27	)		7			5
Foreign		96			—			—			—
Total current income taxes		(172	)		(223	)		84			7
Deferred income taxes
Federal		767			518			97			89
State		148			89			7			22
Foreign		27			—			—			—
Total deferred income taxes		942			607			104			111
Investment tax credit amortization		(12	)		(7	)		(2	)		(2	)
Total income tax expense from continuing operations		758			377			186			116
Total income tax benefit from discontinued operations		(2	)		—			—			—
Total income tax expense included in Consolidated Statements of Operations(a)	$	756		$	377		$	186		$	116

(a) Included in the "Total current income taxes" line above are uncertain tax benefits relating primarily to certain temporary differences of $91 million at Duke Energy, uncertain tax expenses of $42 million, $22 million and $20 million at Duke Energy Carolinas, Duke Energy Ohio, and Duke Energy Indiana, respectively. The offset to these temporary differences are included in the "Total deferred income taxes" line above.

Duke Energy Income from Continuing Operations before Income Taxes

	For the Years Ended December 31,
	2011		2010		2009
	(in millions)
Domestic	$	1,780	$	1,731	$	1,433
Foreign		685		479		398
Total income from continuing operations before income taxes	$	2,465	$	2,210	$	1,831

Reconciliation of Income Tax Expense at the U.S. Federal Statutory Tax Rate to the Actual Tax Expense from Continuing Operations (Statutory Rate Reconciliation)

	For the Year Ended December 31, 2011
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	(in millions)
Income tax expense, computed at the statutory rate of 35%	$	863		$	457		$	102		$	85
State income tax, net of federal income tax effect		50			46			(1	)		13
Tax differential on foreign earnings		(44	)		—			—			—
AFUDC equity income		(91	)		(59	)		(2	)		(31	)
Other items, net		(26	)		28			(3	)		7
Total income tax expense from continuing operations	$	752		$	472		$	96		$	74
Effective tax rate		30.5	%		36.1	%		33.1	%		30.6	%

	For the Year Ended December 31, 2010
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	(in millions)
Income tax expense, computed at the statutory rate of 35%	$	774		$	454		$	(108	)	$	155
State income tax, net of federal income tax effect		82			48			14			26
Tax differential on foreign earnings		(22	)		—			—			—
Goodwill impairment charges		175			—			237			—
AFUDC equity income		(82	)		(61	)		(2	)		(20	)
Other items, net		(37	)		16			(9	)		(5	)
Total income tax expense from continuing operations	$	890		$	457		$	132		$	156
Effective tax rate		40.3	%		35.3	%		(43.0	)%		35.5	%

	For the Year Ended December 31, 2009
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	(in millions)
Income tax expense, computed at the statutory rate of 35%	$	641		$	378		$	(84	)	$	111
State income tax, net of federal income tax effect		98			40			9			18
Tax differential on foreign earnings		(16	)		—			—			—
Goodwill impairment charges		130			—			254			—
AFUDC equity income		(53	)		(44	)		1			(10	)
Other items, net		(42	)		3			6			(3	)
Total income tax expense from continuing operations	$	758		$	377		$	186		$	116
Effective tax rate		41.4	%		34.9	%		(77.5	)%		36.7	%

Valuation allowances have been established for certain foreign and state net operating loss carryforwards that reduce deferred tax assets to an amount that will be realized on a more-likely-than-not basis. The net change in the total valuation allowance is included in Tax differential on foreign earnings and State income tax, net of federal income tax effect in the above table.

Net Deferred Income Tax Liability Components

	For the Year Ended December 31, 2011
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	(in millions)
Deferred credits and other liabilities	$	790		$	228		$	68		$	92
Tax Credits and NOL Carryforwards(a)		930			199			—			95
Investments and other assets		—			—			3			—
Other		137			18			31			5
Total deferred income tax assets		1,857			445			102			192
Valuation allowance		(144	)		—			—			—
Net deferred income tax assets		1,713			445			102			192
Investments and other assets		(809	)		(720	)		—			(2	)
Accelerated depreciation rates		(6,989	)		(3,576	)		(1,706	)		(968	)
Regulatory assets and deferred debits		(1,219	)		(658	)		(216	)		(136	)
Total deferred income tax liabilities		(9,017	)		(4,954	)		(1,922	)		(1,106	)
Net deferred income tax liabilities	$	(7,304	)	$	(4,509	)	$	(1,820	)	$	(914	)

(a) See Tax Credits and NOL Carryforwards table below.

Tax Credits and NOL Carryforwards

	For the Year Ended December 31, 2011
	(in millions)
Description	Amount		Expiration year
Investment Tax Credits	$	362	2029 – 2031
Alternative Minimum Tax Credits		145	Indefinite
Federal NOL		274	2031
State NOL(a)		47	2016 – 2031
Foreign NOL(b)		102	2015 – 2029; Indefinite

(a) A valuation allowance of $41 million has been recorded on the State NOL Carryforwards, as presented in the Net Deferred Income Tax Liability Components table.

(b) A valuation allowance of $102 million has been recorded on the Foreign NOL Carryforwards, as presented in the Net Deferred Income Tax Liability Components table.

	For the Year Ended December 31, 2010
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	(in millions)
Deferred credits and other liabilities	$	679		$	204		$	61		$	70
Tax Credits and NOL Carryforwards		554			52			—			100
Other		100			15			19			5
Total deferred income tax assets		1,333			271			80			175
Valuation allowance		(145	)		—			—			—
Net deferred income tax assets		1,188			271			80			175
Investments and other assets		(781	)		(675	)		(11	)		(41	)
Accelerated depreciation rates		(6,052	)		(2,990	)		(1,529	)		(973	)
Regulatory assets and deferred debits		(996	)		(513	)		(171	)		(93	)
Total deferred income tax liabilities		(7,829	)		(4,178	)		(1,711	)		(1,107	)
Net deferred income tax liabilities	$	(6,641	)	$	(3,907	)	$	(1,631	)	$	(932	)

The above amounts have been classified in the Consolidated Balance Sheets as follows:

Deferred Tax Assets (Liabilities)

	For the Year Ended December 31, 2011
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	(in millions)
Current deferred tax assets, included in other current assets	$	210		$	46		$	33		$	13
Non-current deferred tax assets, included in other investments and other assets		67			—			—			—
Non-current deferred tax liabilities		(7,581	)		(4,555	)		(1,853	)		(927	)
Total net deferred income tax liabilities	$	(7,304	)	$	(4,509	)	$	(1,820	)	$	(914	)

	For the Year Ended December 31, 2010
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	(in millions)
Current deferred tax assets, included in other current assets	$	236		$	81		$	9		$	41
Non-current deferred tax assets, included in other investments and other assets		101			—			—			—
Non-current deferred tax liabilities		(6,978	)		(3,988	)		(1,640	)		(973	)
Total net deferred income tax liabilities	$	(6,641	)	$	(3,907	)	$	(1,631	)	$	(932	)

Deferred income taxes and foreign withholding taxes have not been provided on undistributed earnings of Duke Energy's foreign subsidiaries when such amounts are deemed to be indefinitely reinvested. The cumulative undistributed earnings as of December 31, 2011 on which Duke Energy has not provided deferred income taxes and foreign withholding taxes is $1.7 billion. The amount of unrecognized deferred tax liability related to these undistributed earnings is estimated at between $250 million and $325 million.

Changes to Unrecognized Tax Benefits

	For the Year Ended December 31, 2011
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	Increase/(Decrease)
	(in millions)
Unrecognized Tax Benefits—January 1,	$	342		$	217		$	29		$	21
Unrecognized Tax Benefits Changes
Gross increases—tax positions in prior periods		49			42			4			3
Gross decreases—tax positions in prior periods		(18	)		(8	)		(5	)		(3	)
Gross increases—current period tax positions		16			9			4			3
Settlements		(4	)		—			—			—
Total Changes		43			43			3			3
Unrecognized Tax Benefits—December 31,	$	385		$	260		$	32		$	24

	For the Year Ended December 31, 2010
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	Increase/(Decrease)
	(in millions)
Unrecognized Tax Benefits—January 1,	$	664		$	517		$	32		$	28
Unrecognized Tax Benefits Changes
Gross increases—tax positions in prior periods		36			14			15			7
Gross decreases—tax positions in prior periods		(43	)		(7	)		(21	)		(13	)
Gross increases—current period tax positions		5			3			1			1
Settlements		(320	)		(310	)		2			(2	)
Total Changes		(322	)		(300	)		(3	)		(7	)
Unrecognized Tax Benefits—December 31,	$	342		$	217		$	29		$	21

	For the Year Ended December 31, 2009
	Duke Energy			Duke Energy Carolinas			Duke Energy Ohio			Duke Energy Indiana
	Increase/(Decrease)
	(in millions)
Unrecognized Tax Benefits—January 1,	$	572		$	462		$	15		$	9
Unrecognized Tax Benefits Changes
Gross increases—tax positions in prior periods		132			58			30			22
Gross decreases—tax positions in prior periods		(38	)		(11	)		(9	)		(1	)
Gross increases—current period tax positions		11			8			1			2
Settlements		(13	)		—			(5	)		(4	)
Total Changes		92			55			17			19
Unrecognized Tax Benefits—December 31,	$	664		$	517		$	32		$	28

The following table includes information regarding the Duke Energy Registrants unrecognized tax benefits^(a).

	Duke Energy		Duke Energy Carolinas		Duke Energy Ohio		Duke Energy Indiana
	(in millions)
December 31, 2011
Amount that if recognized, would affect the effective tax rate or regulatory liability(b)		121		115		—		—
Amount that if recognized, would be recorded as a component of discontinued operations		11		—		—		—

(a) The Duke Registrants do not anticipate a material increase or decrease in unrecognized tax benefits in the next 12 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.

The following tables include interest and penalties recognized in the consolidated statements of operations and the consolidated balance sheets:

	Duke Energy		Duke Energy Carolinas		Duke Energy Ohio		Duke Energy Indiana
	(in millions)
December 31, 2011
Net interest income recognized related to income taxes	$	12	$	5	$	—	$	—
Net interest expense recognized related to income taxes		—		—		1		1
Interest receivable related to income taxes included in the consolidated balance sheets		8		5		—		—
Interest payable related to income taxes included in the consolidated balance sheets		—		—		3		3
Accruals for the payment of penalties included in the consolidated balance sheets		—		—		—		—

	Duke Energy		Duke Energy Carolinas		Duke Energy Ohio		Duke Energy Indiana
	(in millions)
December 31, 2010
Net interest income recognized related to income taxes	$	26	$	18	$	4	$	5
Interest receivable related to income taxes included in the consolidated balance sheets		33		34		—		—
Interest payable related to income taxes included in the consolidated balance sheets		—		—		1		2
Accruals for the payment of penalties included in the consolidated balance sheets		3		—		—		—

	Duke Energy		Duke Energy Carolinas		Duke Energy Ohio		Duke Energy Indiana
	(in millions)
December 31, 2009
Net interest expense recognized related to income taxes	$	7	$	—	$	8	$	5

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.