Income and Other Taxes (Tables)

12 Months Ended

Dec. 31, 2017

The changes enacted by the TCJA were recorded as an adjustment to the Registrants' deferred tax provision, and have been reflected in "Income Taxes" on the Statement of Income for the year ended December 31, 2017 as follows:



	PPL		PPL Electric			LKE		LG&E		KU
Income tax expense (benefit)	$	321	$	(13	)	$	112	$	—	$	—

The rate reduction on non-regulated deferred tax assets and liabilities were recorded as an adjustment to the Registrants' deferred tax provision, and have been reflected in "Income Taxes" on the Statement of Income for the year ended December 31, 2017 as follows:



	PPL		PPL Electric			LKE		LG&E		KU
Income tax expense (benefit)	$	220	$	(13	)	$	112	$	—	$	—

The Balance Sheets at December 31, 2017 reflect the increase to the Registrants' net regulatory liabilities as a result of the TCJA as follows:



	PPL		PPL Electric		LKE		LG&E		KU
Net Increase in Regulatory Liabilities	$	2,185	$	1,019	$	1,166	$	532	$	634

Components of Income (Loss) From Continuing Operations Before Income Taxes

"Income from Continuing Operations Before Income Taxes" included the following:



	2017		2016		2015
Domestic income	$	874	$	1,463	$	968
Foreign income	1,038		1,087		1,100
Total	$	1,912	$	2,550	$	2,068

Components of Deferred Tax Assets and Liabilities

Significant components of PPL's deferred income tax assets and liabilities were as follows:



	2017 (a)			2016
Deferred Tax Assets
Deferred investment tax credits	$	33		$	51
Regulatory liabilities	62			94
Income taxes due to customer (b)	499			—
Accrued pension costs	159			250
Federal loss carryforwards	356			565
State loss carryforwards	409			326
Federal and state tax credit carryforwards	455			256
Foreign capital loss carryforwards	329			302
Foreign loss carryforwards	2			3
Foreign - pensions	(32		)	41
Foreign - regulatory obligations	2			6
Foreign - other	7			5
Contributions in aid of construction	134			141
Domestic - other	104			188
Unrealized losses on qualifying derivatives	10			20
Valuation allowances	(838		)	(593		)
Total deferred tax assets	1,691			1,655

Deferred Tax Liabilities
Domestic plant - net (b)	3,168			4,325
Taxes recoverable through future rates (b)	—			170
Regulatory assets	211			343
Reacquired debt costs	15			25
Foreign plant - net	726			640
Domestic - other	9			14
Total deferred tax liabilities	4,129			5,517
Net deferred tax liability	$	2,438		$	3,862


(a)	Deferred tax assets and liabilities at December 31, 2017 reflect the U.S. federal corporate income tax rate reduction from 35% to 21% enacted by the TCJA.


(b)	The impact on net deferred tax liabilities as a result of the U.S. federal corporate income tax rate reduction enacted by the TCJA is primarily related to plant (net of net operating losses) and resulted in a regulatory liability for income taxes due to customers, the deferred tax impact of which is reflected as a deferred tax asset.

Summary of Operating Loss Carryforwards and Tax Credit Carryforwards

At December 31, 2017, PPL had the following loss and tax credit carryforwards, related deferred tax assets and valuation allowances recorded against the deferred tax assets.



	Gross		Deferred Tax Asset		Valuation Allowance			Expiration
Loss carryforwards
Federal net operating losses (a)	$	1,662	$	349	$	—		2029-2037
Federal charitable contributions (a)	36		7		—			2020-2022
State net operating losses (a)	5,512		407		(348		)	2018-2037
State charitable contributions (a)	26		2		—			2018-2022
Foreign net operating losses	10		2		—			Indefinite
Foreign capital losses	1,938		329		(329		)	Indefinite



Credit carryforwards
Federal investment tax credit	133	—		2025-2036
Federal alternative minimum tax credit (b)	30	—		Indefinite
Federal foreign tax credits (c)	267	(148	)	2024-2027
Federal - other	24	(8	)	2019-2037
State - other	1	—		Indefinite


(a)	Due to the enactment of the TCJA, deferred tax assets are reflected at the new U.S. federal corporate income tax rate of 21%.


(b)	The TCJA repealed the corporate alternative minimum tax (AMT) for tax years beginning after December 31, 2017. The existing indefinite carryforward period for AMT credits was retained.


(c)	Includes $62 million of foreign tax credits carried forward from 2016 and $205 million of additional foreign tax credits in 2017 related to the taxable deemed dividend associated with the TCJA.

Schedule of Valuation and Qualifying Accounts of Deferred Tax Assets

The changes in deferred tax valuation allowances were as follows:



			Additions
	Balance at Beginning of Period		Charged to Income			Charged to Other Accounts			Deductions			Balance at End of Period
2017	$	593	$	256	(a)	$	—		$	11		$	838
2016	662		17			2			88		(b)	593
2015	622		24			77		(c)	61		(b)	662


(a)	Increase in valuation allowance of approximately $145 million related to expected future utilization of both 2017 foreign tax credits and pre-2017 foreign tax credits carried forward. For additional information, see the "Reconciliation of Income Tax Expense" and associated notes below.

In addition, the reduction of the U.S. federal corporate income tax rate enacted by the TCJA in 2017 resulted in a $62 million increase in federal deferred tax assets and a corresponding valuation allowance related to the federal tax benefits of state net operating losses.

(b)

The reductions of the U.K. statutory income tax rates in 2016 and 2015 resulted in $19 million and $44 million in reductions in the deferred tax assets and corresponding valuation allowances. See "Reconciliation of Income Tax Expense" below for more information on the impact of the U.K. Finance Acts 2016 and 2015. In addition, the deferred tax assets and corresponding valuation allowances were reduced in 2016 by approximately $65 million due to the effect of foreign currency exchange rates.


(c)	Valuation allowance related to the deferred tax assets previously reflected on the PPL Energy Supply Segment. The deferred tax assets and related valuation allowance remained with PPL after the spinoff.

Components of Income Tax Expense (Benefit) From Continuing Operations

Details of the components of income tax expense, a reconciliation of federal income taxes derived from statutory tax rates applied to "Income from Continuing Operations Before Income Taxes" to income taxes for reporting purposes, and details of "Taxes, other than income" were as follows:



	2017		2016			2015
Income Tax Expense (Benefit)
Current - Federal	$	6	$	(14	)	$	(26	)
Current - State	25		21			25
Current - Foreign	45		80			89
Total Current Expense	76		87			88
Deferred - Federal (a)	532		385			699
Deferred - State	88		89			68
Deferred - Foreign	133		86			41
Total Deferred Expense, excluding operating loss carryforwards	753		560			808



	2017			2016			2015
Income Tax Expense (Benefit)

Amortization of investment tax credit	(3		)	(3		)	(4		)
Tax expense (benefit) of operating loss carryforwards
Deferred - Federal (b)	(16		)	25			(396		)
Deferred - State	(26		)	(21		)	(31		)
Total Tax Expense (Benefit) of Operating Loss Carryforwards	(42		)	4			(427		)
Total income taxes from continuing operations	$	784		$	648		$	465

Total income tax expense - Federal	$	519		$	393		$	273
Total income tax expense - State	87			89			62
Total income tax expense - Foreign	178			166			130
Total income taxes from continuing operations	$	784		$	648		$	465


(a)	Due to the enactment of the TCJA in 2017, PPL recorded the following:


•	$220 million of deferred income tax expense related to the impact of the U.S. federal corporate income tax rate reduction from 35% to 21% on deferred tax assets and liabilities;


•	$162 million of deferred tax expense related to the utilization of current year losses resulting from the taxable deemed dividend; partially offset by,


•	$60 million of deferred tax benefits related to the $205 million of 2017 foreign tax credits partially offset by $145 million of valuation allowances.


(b)	Increase in federal loss carryforwards for 2015 primarily relates to the extension of bonus depreciation and the impact of bonus depreciation related to provision to return adjustments.

In the table above, the following income tax expense (benefit) are excluded from income taxes from continuing operations:



	2017			2016			2015
Discontinued operations - PPL Energy Supply Segment	$	—		$	—		$	(30	)
Stock-based compensation recorded to Earnings Reinvested	—			(7		)	—
Other comprehensive income	(34		)	(6		)	(2		)
Valuation allowance on state deferred taxes recorded to other comprehensive income	(1		)	1			(4		)
Total	$	(35	)	$	(12	)	$	(36	)

Reconciliation of Income Tax Expense Derived From Statutory Tax Rate



	2017			2016			2015
Reconciliation of Income Tax Expense
Federal income tax on Income from Continuing Operations Before Income Taxes at statutory tax rate - 35%	$	669		$	893		$	724
Increase (decrease) due to:
State income taxes, net of federal income tax benefit	46			46			31
Valuation allowance adjustments (a)	36			16			24
Impact of lower U.K. income tax rates (b)	(176		)	(177		)	(176		)
U.S. income tax on foreign earnings - net of foreign tax credit (c)	47			(42		)	8
Federal and state tax reserves adjustments (d)	—			—			(22		)
Foreign income return adjustments	(8		)	2			—
Impact of the U.K. Finance Acts on deferred tax balances (b)	(16		)	(49		)	(91		)
Depreciation not normalized	(10		)	(10		)	(5		)
Interest benefit on U.K. financing entities	(16		)	(17		)	(20		)
Stock-based compensation (e)	(3		)	(10		)	—
Deferred tax impact of U.S. tax reform (f)	220			—			—
Other	(5		)	(4		)	(8		)
Total increase (decrease)	115			(245		)	(259		)
Total income taxes from continuing operations	$	784		$	648		$	465
Effective income tax rate	41.0		%	25.4		%	22.5		%


(a)	During 2017, PPL recorded an increase in valuation allowances of $23 million primarily related to foreign tax credits recorded in 2016. The future utilization of these credits is expected to be lower as a result of the TCJA.

During 2017 and 2016, PPL recorded deferred income tax expense of $16 million and $13 million for valuation allowances primarily related to increased Pennsylvania net operating loss carryforwards expected to be unutilized.

During 2015, PPL recorded $24 million of deferred income tax expense related to deferred tax valuation allowances. PPL recorded state deferred income tax expense of $12 million primarily related to increased Pennsylvania net operating loss carryforwards expected to be unutilized and $12 million of federal deferred income tax expense primarily related to federal tax credit carryforwards that are expected to expire as a result of lower future taxable earnings due to the extension of bonus depreciation.


(b)	The U.K. Finance Act 2016, enacted in September 2016, reduced the U.K. statutory income tax rate effective April 1, 2020 from 18% to 17%. As a result, PPL reduced its net deferred tax liabilities and recognized a $42 million deferred income tax benefit during 2016.

The U.K. Finance Act 2015, enacted in November 2015, reduced the U.K. statutory income tax rate from 20% to 19% effective April 1, 2017 and from 19% to 18% effective April 1, 2020. As a result, PPL reduced its net deferred tax liabilities and recognized a $90 million deferred income tax benefit during 2015, related to both rate decreases.


(c)	During 2017, PPL recorded a federal income tax benefit of $35 million primarily attributable to U.K. pension contributions.

During 2017, PPL recorded deferred income tax expense of $83 million primarily related to enactment of the TCJA. The enacted tax law included a conversion from a worldwide tax system to a territorial tax system, effective January 1, 2018. In the transition to the territorial regime, a one-time transition tax was imposed on PPL’s unrepatriated accumulated foreign earnings in 2017. These earnings were treated as a taxable deemed dividend to PPL of approximately $462 million, including $205 million of foreign tax credits. As the PPL consolidated U.S. group had a taxable loss for 2017, inclusive of the taxable deemed dividend, these credits were recorded as a deferred tax asset. However, it is expected that under the TCJA, only $83 million of the $205 million of foreign tax credits will be realized in the carry forward period. Accordingly, a valuation allowance on the current year foreign tax credits in the amount of $122 million has been recorded to reflect the reduction in the future utilization of the credits. The foreign tax credits associated with the deemed repatriation result in a gross carryforward and corresponding deferred tax asset of $205 million offset by a valuation allowance of $122 million.

During 2016, PPL recorded lower income taxes primarily attributable to foreign tax credit carryforwards, arising from a decision to amend prior year tax returns to claim foreign tax credits rather than deduct foreign taxes. This decision was prompted by changes to the Company's most recent business plan.


(d)	During 2015, PPL recorded a $9 million income tax benefit related to a planned amendment of a prior period tax return and a $12 million income tax benefit related to the settlement of the IRS audit for the tax years 1998-2011.


(e)	During 2016, PPL recorded lower income tax expense related to the application of new stock-based compensation accounting guidance. See Note 1 for additional information.


(f)	During 2017, PPL recorded deferred income tax expense related to the U.S. federal corporate income tax rate reduction from 35% to 21% enacted by the TCJA.

Details of Taxes Other Than Income



	2017			2015		2015
Taxes, other than income
State gross receipts (a)	$	102		$	100	$	89
State capital stock	(6		)	—		—
Foreign property	127			135		148
Domestic Other	69			66		62
Total	$	292		$	301	$	299


(a)	In 2015, the settlement of a 2011 gross receipts tax audit resulted in the reversal of $17 million of previously recognized reserves.

Summary of Income Tax Examinations

With few exceptions, at December 31, 2017, these jurisdictions, as well as the tax years that are no longer subject to examination, were as follows.



	PPL	PPL Electric	LKE	LG&E	KU
U.S. (federal)	2013 and prior	2013 and prior	2013 and prior	2013 and prior	2013 and prior
Pennsylvania (state)	2011 and prior	2011 and prior
Kentucky (state)	2012 and prior		2012 and prior	2012 and prior	2012 and prior
U.K. (foreign)	2014 and prior

PPL Electric Utilities Corp [Member]

Income Taxes [Line Items]

Components of Deferred Tax Assets and Liabilities

Significant components of PPL Electric's deferred income tax assets and liabilities were as follows:



	2017 (a)		2016
Deferred Tax Assets
Accrued pension costs	$	63	$	107
Contributions in aid of construction	117		112
Regulatory liabilities	25		34
Income taxes due to customers (b)	193		—
State loss carryforwards	19		22
Federal loss carryforwards	91		147
Other	45		81
Total deferred tax assets	553		503

Deferred Tax Liabilities
Electric utility plant - net (b)	1,544		2,001
Taxes recoverable through future rates (b)	—		141
Reacquired debt costs	8		15
Regulatory assets	150		240
Other	5		5
Total deferred tax liabilities	1,707		2,402
Net deferred tax liability	$	1,154	$	1,899


(a)	Deferred tax assets and liabilities at December 31, 2017 reflect the U.S. federal corporate income tax rate reduction from 35% to 21% enacted by the TCJA.


(b)	The impact on net deferred tax liabilities as a result of the U.S. federal tax rate reduction enacted by the TCJA is primarily related to plant (net of net operating losses) and resulted in a regulatory liability for income taxes due to customers, the deferred tax impact of which is reflected as a deferred tax asset.

Summary of Operating Loss Carryforwards and Tax Credit Carryforwards

At December 31, 2017, PPL Electric had the following loss carryforwards and related deferred tax assets:



	Gross		Deferred Tax Asset		Expiration
Loss carryforwards (a)
Federal net operating losses	$	426	$	89	2031-2037
Federal charitable contributions	8		2		2020-2022
State net operating losses	233		18		2030-2032
State charitable contributions	13		1		2018-2022


(a)	Due to the enactment of the TCJA, deferred tax assets are reflected at the new U.S. federal corporate income tax rate of 21%.

Components of Income Tax Expense (Benefit) From Continuing Operations

Details of the components of income tax expense, a reconciliation of federal income taxes derived from statutory tax rates applied to "Income Before Income Taxes" to income taxes for reporting purposes, and details of "Taxes, other than income" were as follows.



	2017			2016			2015
Income Tax Expense (Benefit)
Current - Federal	$	(65	)	$	(29	)	$	(80	)
Current - State	20			19			23
Total Current Expense (Benefit)	(45		)	(10		)	(57		)
Deferred - Federal (a)	234			193			287
Deferred - State	29			29			12
Total Deferred Expense, excluding operating loss carryforwards	263			222			299



	2017			2016		2015
Amortization of investment tax credit	—			—		—
Tax expense (benefit) of operating loss carryforwards
Deferred - Federal	(5		)	—		(75		)
Deferred - State	—			—		(3		)
Total Tax Expense (Benefit) of Operating Loss Carryforwards	(5		)	—		(78		)
Total income tax expense	$	213		$	212	$	164

Total income tax expense - Federal	$	164		$	164	$	132
Total income tax expense - State	49			48		32
Total income tax expense	$	213		$	212	$	164


(a)	Due to the enactment of the TCJA in 2017, PPL Electric recorded a $13 million deferred tax benefit related to the impact of the U.S. federal corporate income tax rate reduction from 35% to 21% on deferred tax assets and liabilities.

Reconciliation of Income Tax Expense Derived From Statutory Tax Rate



	2017			2016			2015
Reconciliation of Income Taxes
Federal income tax on Income Before Income Taxes at statutory tax rate - 35%	$	201		$	193		$	146
Increase (decrease) due to:
State income taxes, net of federal income tax benefit	36			36			25
Depreciation not normalized	(8		)	(8		)	(4		)
Stock-based compensation (a)	(2		)	(6		)	—
Deferred tax impact of U.S. tax reform (b)	(13		)	—			—
Other	(1		)	(3		)	(3		)
Total increase (decrease)	12			19			18
Total income tax expense	$	213		$	212		$	164
Effective income tax rate	37.0		%	38.4		%	39.4		%


(a)	During 2016, PPL Electric recorded lower income tax expense related to the application of new stock-based compensation accounting guidance. See Note 1 for additional information.


(b)	During 2017, PPL Electric recorded a deferred tax benefit related to the U.S. federal corporate income tax rate reduction from 35% to 21% enacted by the TCJA.

Details of Taxes Other Than Income



	2017		2016		2015
Taxes, other than income
State gross receipts (a)	$	102	$	100	$	89
Property and other	5		5		5
Total	$	107	$	105	$	94


(a)	In 2015, the settlement of a 2011 gross receipts tax audit resulted in the reversal of $17 million of previously recognized reserves.

LG And E And KU Energy LLC [Member]

Income Taxes [Line Items]

Components of Deferred Tax Assets and Liabilities

Significant components of LKE's deferred income tax assets and liabilities were as follows:



	2017 (a)			2016
Deferred Tax Assets
Federal loss carryforwards	$	150		$	248
State loss carryforwards	41			35
Federal tax credit carryforwards	181			186
Contributions in aid of construction	17			29
Regulatory liabilities	37			60
Accrued pension costs	29			58
Income taxes due to customers (b)	305			15
Deferred investment tax credits	33			51
Derivative liability	7			12
Other	26			49
Valuation allowances	(8		)	(11		)
Total deferred tax assets	818			732

Deferred Tax Liabilities
Plant - net (b)	1,615			2,352
Regulatory assets	61			102
Other	8			13
Total deferred tax liabilities	1,684			2,467
Net deferred tax liability	$	866		$	1,735


(a)	Deferred tax assets and liabilities at December 31, 2017 reflect the U.S. federal corporate income tax rate reduction from 35% to 21% enacted by the TCJA.


(b)	The impact on net deferred tax liabilities as a result of the U.S. federal tax rate reduction enacted by the TCJA is primarily related to plant (net of net operating losses) and resulted in a regulatory liability for income taxes due to customers, the deferred tax impact of which is reflected as a deferred tax asset.

Summary of Operating Loss Carryforwards and Tax Credit Carryforwards

At December 31, 2017, LKE had the following loss and tax credit carryforwards, related deferred tax assets, and valuation allowances recorded against the deferred tax assets.



	Gross		Deferred Tax Asset		Valuation Allowance		Expiration
Loss carryforwards (a)
Federal net operating losses	$	713	$	150	$	—	2028-2037
Federal charitable contributions	14		3		—		2020-2022
State net operating losses	874		41		—		2028-2037



Credit carryforwards
Federal investment tax credit	133	—		2025-2036
Federal alternative minimum tax credit (b)	27	—		Indefinite
Federal - other	21	(8	)	2019-2037
State - other	1	—		Indefinite


(a)	Due to the enactment of the TCJA, deferred tax assets are reflected at the new U.S. federal corporate income tax rate of 21%.


(b)	The TCJA repealed the corporate alternative minimum tax (AMT) for tax years beginning after December 31, 2017. The existing indefinite carryforward period for AMT credits was retained.

Schedule of Valuation and Qualifying Accounts of Deferred Tax Assets

Changes in deferred tax valuation allowances were:



	Balance at Beginning of Period		Additions			Deductions			Balance at End of Period
2017	$	11	$	4	(a)	$	7	(b)	$	8
2016	12		—			1		(b)	11
2015	—		12		(c)	—			12


(a)	Federal tax credits expiring in 2021 that are more likely than not to expire before being utilized.


(b)	Federal tax credit expiring.


(c)	Federal tax credits expiring in 2016 through 2020 that are more likely than not to expire before being utilized.

Components of Income Tax Expense (Benefit) From Continuing Operations



	2017			2016			2015
Income Tax Expense (Benefit)
Current - Federal	$	74		$	(36	)	$	2
Current - State	6			1			1
Total Current Expense (Benefit)	80			(35		)	3
Deferred - Federal (a)	268			248			405
Deferred - State	32			38			32
Total Deferred Expense, excluding benefits of operating loss carryforwards	300			286			437
Amortization of investment tax credit - Federal	(3		)	(3		)	(3		)
Tax benefit of operating loss carryforwards
Deferred - Federal	(2		)	10			(198		)
Deferred - State	—			(1		)	—
Total Tax Expense (Benefit) of Operating Loss Carryforwards	(2		)	9			(198		)
Total income tax expense from continuing operations (b)	$	375		$	257		$	239

Total income tax expense - Federal	$	337		$	219		$	206
Total income tax expense - State	38			38			33
Total income tax expense from continuing operations (b)	$	375		$	257		$	239


(a)	Due to the enactment of the TCJA in 2017, LKE recorded $112 million of deferred income tax expense, of which $108 million related to the impact of the U.S. federal corporate income tax rate reduction from 35% to 21% on deferred tax assets and liabilities and $4 million related to valuation allowances on tax credits expiring in 2021.


(b)	Excludes deferred federal and state tax expense (benefit) recorded to OCI of $(10) million in 2017, $(16) million in 2016 and less than $(1) million in 2015.

Reconciliation of Income Tax Expense Derived From Statutory Tax Rate



	2017			2016			2015
Reconciliation of Income Taxes
Federal income tax on Income Before Income Taxes at statutory tax rate - 35%	$	242		$	240		$	211
Increase (decrease) due to:
State income taxes, net of federal income tax benefit	25			25			22
Amortization of investment tax credit	(3		)	(3		)	(3		)
Valuation allowance adjustment (a)	—			—			12
Stock-based compensation (b)	1			(3		)	—
Deferred tax impact of U.S. tax reform (c)	112			—			—
Other	(2		)	(2		)	(3		)
Total increase	133			17			28
Total income tax expense	$	375		$	257		$	239
Effective income tax rate	54.3		%	37.5		%	39.6		%


(a)	Represents a valuation allowance against tax credits expiring through 2020 that are more likely than not to expire before being utilized.


(b)	During 2016, LKE recorded lower income tax expense related to the application of new stock-based compensation accounting guidance. See Note 1 for additional information.


(c)	During 2017, LKE recorded deferred income tax expense primarily due to the U.S. federal corporate income tax rate reduction from 35% to 21% enacted by the TCJA.

Details of Taxes Other Than Income



	2017		2016		2015
Taxes, other than income
Property and other	$	65	$	62	$	57
Total	$	65	$	62	$	57

Louisville Gas And Electric Co [Member]

Income Taxes [Line Items]

Components of Deferred Tax Assets and Liabilities

Significant components of LG&E's deferred income tax assets and liabilities were as follows:



	2017 (a)		2016
Deferred Tax Assets
Federal loss carryforwards	$	29	$	80
Contributions in aid of construction	11		18
Regulatory liabilities	21		34
Deferred investment tax credits	9		14
Income taxes due to customers (b)	142		17
Derivative liability	7		12
Other	12		17
Total deferred tax assets	231		192

Deferred Tax Liabilities
Plant - net (b)	724		1,058
Regulatory assets	40		65
Accrued pension costs	34		35
Other	5		8
Total deferred tax liabilities	803		1,166
Net deferred tax liability	$	572	$	974


(a)	Deferred tax assets and liabilities at December 31, 2017 reflect the U.S. federal corporate income tax rate reduction from 35% to 21% enacted by the TCJA.


(b)	The impact on net deferred tax liabilities as a result of the U.S. federal tax rate reduction enacted by the TCJA is primarily related to plant (net of net operating losses) and resulted in a regulatory liability for income taxes due to customers, the deferred tax impact of which is reflected as a deferred tax asset.

Components of Income Tax Expense (Benefit) From Continuing Operations



	2017			2016			2015
Income Tax Expense (Benefit)
Current - Federal	$	—		$	(22	)	$	(15	)
Current - State	5			1			3
Total current Expense (Benefit)	5			(21		)	(12		)
Deferred - Federal	112			134			190
Deferred - State	14			18			13
Total Deferred Expense, excluding benefits of operating loss carryforwards	126			152			203
Amortization of investment tax credit - Federal	(1		)	(1		)	(1		)
Tax benefit of operating loss carryforwards
Deferred - Federal	1			(4		)	(76		)
Total Tax Benefit of Operating Loss Carryforwards	1			(4		)	(76		)
Total income tax expense	$	131		$	126		$	114

Total income tax expense - Federal	$	112		$	107		$	98
Total income tax expense - State	19			19			16
Total income tax expense	$	131		$	126		$	114

Reconciliation of Income Tax Expense Derived From Statutory Tax Rate



	2017			2016			2015
Reconciliation of Income Taxes
Federal income tax on Income Before Income Taxes at
statutory tax rate - 35%	$	120		$	115		$	105
Increase (decrease) due to:
State income taxes, net of federal income tax benefit	13			12			11
Amortization of investment tax credit	(1		)	(1		)	(1		)
Other	(1		)	—			(1		)
Total increase	11			11			9
Total income tax expense	$	131		$	126		$	114
Effective income tax rate	38.1		%	38.3		%	38.1		%

Details of Taxes Other Than Income



	2017		2016		2015
Taxes, other than income
Property and other	$	33	$	32	$	28
Total	$	33	$	32	$	28

Kentucky Utilities Co [Member]

Income Taxes [Line Items]

Components of Deferred Tax Assets and Liabilities

Significant components of KU's deferred income tax assets and liabilities were as follows:



	2017 (a)		2016
Deferred Tax Assets
Federal loss carryforwards	$	13	$	79
Contributions in aid of construction	6		11
Regulatory liabilities	16		26
Deferred investment tax credits	24		37
Income taxes due to customers (b)	163		—
Other	9		11
Total deferred tax assets	231		164

Deferred Tax Liabilities
Plant - net (b)	882		1,280
Regulatory assets	21		37
Accrued pension costs	17		12
Other	2		5
Total deferred tax liabilities	922		1,334
Net deferred tax liability	$	691	$	1,170


(a)	Deferred tax assets and liabilities at December 31, 2017 reflect the U.S. federal corporate income tax rate reduction from 35% to 21% enacted by the TCJA.


(b)	The impact on net deferred tax liabilities as a result of the U.S. federal tax rate reduction enacted by the TCJA is primarily related to plant (net of net operating losses) and resulted in a regulatory liability for income taxes due to customers, the deferred tax impact of which is reflected as a deferred tax asset.

Components of Income Tax Expense (Benefit) From Continuing Operations



	2017			2016			2015
Income Tax Expense (Benefit)
Current - Federal	$	—		$	31		$	(21	)
Current - State	7			5			1
Total Current Expense (Benefit)	7			36			(20		)
Deferred - Federal	138			131			240
Deferred - State	16			19			19
Total Deferred Expense, excluding benefits of operating loss carryforwards	154			150			259
Amortization of investment tax credit - Federal	(2		)	(2		)	(2		)
Tax benefit of operating loss carryforwards
Deferred - Federal	—			(21		)	(97		)
Total Tax Benefit of Operating Loss Carryforwards	—			(21		)	(97		)
Total income tax expense (a)	$	159		$	163		$	140

Total income tax expense - Federal	$	136		$	139		$	120
Total income tax expense - State	23			24			20
Total income tax expense (a)	$	159		$	163		$	140


(a)	Excludes deferred federal and state tax expense (benefit) recorded to OCI of less than $1 million in 2017, and less than $(1) million in 2016 and 2015.

Reconciliation of Income Tax Expense Derived From Statutory Tax Rate



	2017			2016			2015
Reconciliation of Income Taxes
Federal income tax on Income Before Income Taxes at statutory tax rate - 35%	$	146		$	150		$	131
Increase (decrease) due to:
State income taxes, net of federal income tax benefit	15			16			13
Amortization of investment tax credit	(2		)	(2		)	(2		)
Other	—			(1		)	(2		)
Total increase	13			13			9
Total income tax expense	$	159		$	163		$	140
Effective income tax rate	38.0		%	38.1		%	37.4		%

Details of Taxes Other Than Income



	2017		2016		2015
Taxes, other than income
Property and other	$	32	$	30	$	29
Total	$	32	$	30	$	29