Note 7 - Income Taxes

Questar

Details of Questar's income tax expense and deferred income taxes from continuing operations are provided in the following tables. The components of income tax expense were as follows:



	Year Ended December 31,
	2012			2011			2010
	(in millions)
Federal
Current	$	1.3		$	—		$	18.3
Deferred	112.0			110.8			85.6
State
Current	—			(1.3		)	(0.2		)
Deferred	3.6			7.3			6.1
Deferred investment tax credits recognized	(0.4		)	(0.4		)	(0.4		)
Total income tax expense	$	116.5		$	116.4		$	109.4

The difference between the statutory federal income tax rate and the Company's effective income tax rate is explained as follows:



	Year Ended December 31,
	2012		2011		2010
Federal income taxes statutory rate	35.0	%	35.0	%	35.0	%
Increase (decrease) in rate as a result of:
State income taxes, net of federal income tax benefit	1.0		1.3		1.3
Tax benefits from dividends paid to employee stock plan	(0.5	)	(0.5	)	(0.4	)
Other	—		0.1		0.4
Effective income tax rate	35.5	%	35.9	%	36.3	%

Significant components of Questar's deferred income taxes were as follows:



	December 31,
	2012		2011
	(in millions)
Deferred tax liabilities
Property, plant and equipment	$	743.1	$	673.6
Deferred tax liabilities - noncurrent	743.1		673.6
Deferred tax assets
Employee benefits and compensation costs	110.0		116.1
Hedging activities	13.6		13.8
Net operating loss carryforward	15.8		39.2
Other	0.3		4.3
Deferred tax assets - noncurrent	139.7		173.4
Deferred income taxes – net noncurrent liability	$	603.4	$	500.2
Deferred income taxes - current asset	$	17.6	$	16.1
Deferred income taxes - current liability	4.6		—
Deferred income taxes - net current asset	$	13.0	$	16.1

Questar Gas

Details of Questar Gas's income tax expense and deferred income taxes are provided in the following tables. The components of income tax expense were as follows:



	Year Ended December 31,
	2012			2011			2010
	(in millions)
Federal
Current	$	(18.7	)	$	—		$	(15.9	)
Deferred	45.1			26.3			40.2
State
Current	—			(1.6		)	(2.2		)
Deferred	1.2			3.2			3.5
Deferred investment tax credit recognized	(0.4		)	(0.4		)	(0.4		)
Total income tax expense	$	27.2		$	27.5		$	25.2

The difference between the statutory federal income tax rate and Questar Gas's effective income tax rate is explained as follows:



	Year Ended December 31,
	2012		2011		2010
Federal income taxes statutory rate	35.0	%	35.0	%	35.0	%
Increase (decrease) in rate as a result of:
State income taxes, net of federal income tax benefit	1.0		1.4		1.2
Amortization of investment tax credits related to rate-regulated assets	(0.4	)	(0.5	)	(0.5	)
Other	1.0		1.5		0.8
Effective income tax rate	36.6	%	37.4	%	36.5	%

Significant components of Questar Gas's deferred income taxes were as follows:



	December 31,
	2012		2011
	(in millions)
Deferred tax liabilities
Property, plant and equipment	$	293.4	$	264.7
Employee benefits and compensation costs	19.3		9.7
Deferred tax liabilities - noncurrent	312.7		274.4
Deferred tax assets
Net operating loss carryforward	11.1		14.6
Deferred tax assets - noncurrent	11.1		14.6
Deferred income taxes – net noncurrent liability	$	301.6	$	259.8
Deferred income taxes - current asset	$	6.1	$	5.6
Deferred income taxes - current liability	4.6		—
Deferred income taxes - net current asset	$	1.5	$	5.6

Questar Pipeline

Details of Questar Pipeline's income tax expense and deferred income taxes are provided in the following tables. The components of income tax expense were as follows:



	Year Ended December 31,
	2012			2011			2010
	(in millions)
Federal
Current	$	(5.4	)	$	—		$	19.7
Deferred	40.4			37.0			16.7
State
Current	1.6			(0.7		)	1.5
Deferred	0.7			1.9			0.9
Total income tax expense	$	37.3		$	38.2		$	38.8

The difference between the statutory federal income tax rate and Questar Pipeline's effective income tax rate is explained as follows:



	Year Ended December 31,
	2012		2011		2010
Federal income taxes statutory rate	35.0	%	35.0	%	35.0	%
Increase in rate as a result of:
State income taxes, net of federal income tax benefit	1.6		1.0		1.5
Effective income tax rate	36.6	%	36.0	%	36.5	%

Significant components of Questar Pipeline's deferred income taxes were as follows:



	December 31,
	2012			2011
	(in millions)
Deferred tax liabilities
Property, plant and equipment	$	250.2		$	240.4
Employee benefits and compensation costs	6.8			3.8
Deferred tax liabilities - noncurrent	257.0			244.2
Deferred tax assets
Hedging activities	13.6			13.8
Net operating loss carryforward	1.0			29.3
Other	(0.1		)	(0.3		)
Deferred tax assets - noncurrent	14.5			42.8
Deferred income taxes - net noncurrent liability	$	242.5		$	201.4
Deferred income taxes - current asset	$	1.6		$	1.8