Income Taxes (Tables)

6 Months Ended

Jun. 30, 2018

Reconciliations of income taxes for the periods ended June 30 are as follows.



(PPL)
	Three Months						Six Months
	2018			2017			2018			2017
Federal income tax on Income Before Income Taxes at statutory tax rate (a)	$	138		$	129		$	257		$	315
Increase (decrease) due to:
State income taxes, net of federal income tax benefit	10			10			25			23
Valuation allowance adjustments	5			—			12			5
Impact of lower U.K. income tax rates relative to U.S. income tax rates (a)	(6		)	(40		)	(13		)	(88		)
U.S. income tax on foreign earnings - net of foreign tax credit (a) (b)	—			(7		)	1			(16		)
Federal and state tax reserve adjustments	3			—			3			—
Impact of the U.K. Finance Acts	(2		)	(6		)	(3		)	(9		)
Depreciation and other items not normalized	(2		)	(2		)	(4		)	(5		)
Amortization of excess deferred income taxes (a)	(9		)	—			(19		)	—
Deferred tax impact of state tax reform (c)	9			—			9			—
Interest benefit on U.K. financing entities	(4		)	(4		)	(9		)	(8		)
Stock-based compensation	—			(4		)	1			(7		)
Other	—			—			(1		)	(5		)
Total increase (decrease)	4			(53		)	2			(110		)
Total income taxes	$	142		$	76		$	259		$	205


(a)	The U.S. federal corporate income tax rate was reduced from 35% to 21%, as enacted by the TCJA, effective January 1, 2018.


(b)	Lower income taxes in 2017 primarily due to the tax benefit of accelerated pension contributions made in the first quarter of 2017. The related tax benefit was recognized over the annual period as a result of utilizing an estimated annual effective tax rate.


(c)	During the second quarter of 2018, LKE recorded deferred income tax expense, primarily associated with LKE's non-regulated entities, due to the Kentucky corporate income tax rate reduction from 6% to 5%, as enacted by HB 487, effective January 1, 2018.

Reconciliations of income taxes for the periods ended June 30 are as follows.



(PPL Electric)
	Three Months						Six Months
	2018			2017			2018			2017
Federal income tax on Income Before Income Taxes at statutory tax rate (a)	$	22		$	44		$	63		$	88
Increase (decrease) due to:
State income taxes, net of federal income tax benefit	8			9			24			17
Depreciation and other items not normalized	(1		)	(2		)	(3		)	(4		)
Amortization of excess deferred income taxes (a)	(3		)	—			(8		)	—
Stock-based compensation	—			(3		)	—			(5		)
Other	1			(1		)	—			(1		)
Total increase (decrease)	5			3			13			7
Total income taxes	$	27		$	47		$	76		$	95


(a)	The U.S. federal corporate income tax rate was reduced from 35% to 21%, as enacted by the TCJA, effective January 1, 2018.

Reconciliations of income taxes for the periods ended June 30 are as follows.



(LKE)
	Three Months						Six Months
	2018			2017			2018			2017
Federal income tax on Income Before Income Taxes at statutory tax rate (a)	$	25		$	49		$	63		$	107
Increase (decrease) due to:
State income taxes, net of federal income tax benefit (b)	3			5			11			11
Deferred tax impact of state tax reform (c)	9			—			9			—
Amortization of excess deferred income taxes (a)	(6		)	—			(11		)	—
Other	—			(1		)	(2		)	(2		)
Total increase (decrease)	6			4			7			9
Total income taxes	$	31		$	53		$	70		$	116


(a)	The U.S. federal corporate income tax rate was reduced from 35% to 21%, as enacted by the TCJA, effective January 1, 2018.


(b)	The Kentucky corporate income tax rate was reduced from 6% to 5%, as enacted by HB 487, effective January 1, 2018.


(c)	During the second quarter of 2018, LKE recorded deferred income tax expense, primarily associated with LKE's non-regulated entities, due to the Kentucky corporate income tax rate reduction from 6% to 5%, as enacted by HB 487, effective January 1, 2018.

Reconciliations of income taxes for the periods ended June 30 are as follows.



(LG&E)
	Three Months					Six Months
	2018			2017		2018			2017
Federal income tax on Income Before Income Taxes at statutory tax rate (a)	$	13		$	24	$	33		$	55
Increase (decrease) due to:
State income taxes, net of federal income tax benefit (b)	2			3		6			6
Amortization of excess deferred income taxes (a)	(3		)	—		(5		)	—
Other	—			—		(1		)	(1		)
Total increase (decrease)	(1		)	3		—			5
Total income taxes	$	12		$	27	$	33		$	60


(a)	The U.S. federal corporate income tax rate was reduced from 35% to 21%, as enacted by the TCJA, effective January 1, 2018.


(b)	The Kentucky corporate income tax rate was reduced from 6% to 5%, as enacted by HB 487, effective January 1, 2018.

Reconciliations of income taxes for the periods ended June 30 are as follows.



(KU)
	Three Months						Six Months
	2018			2017			2018			2017
Federal income tax on Income Before Income Taxes at statutory tax rate (a)	$	16		$	32		$	39		$	67
Increase (decrease) due to:
State income taxes, net of federal income tax benefit (b)	2			3			7			7
Amortization of excess deferred income taxes (a)	(3		)	—			(6		)	—
Other	(1		)	(1		)	(2		)	(1		)
Total increase (decrease)	(2		)	2			(1		)	6
Total income taxes	$	14		$	34		$	38		$	73


(a)	The U.S. federal corporate income tax rate was reduced from 35% to 21%, as enacted by the TCJA, effective January 1, 2018.


(b)	The Kentucky corporate income tax rate was reduced from 6% to 5%, as enacted by HB 487, effective January 1, 2018.