Income Taxes

12 Months Ended

Dec. 31, 2015

Income Taxes

INCOME TAXES (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

Income taxes for 2015, 2014, and 2013 for Entergy Corporation and Subsidiaries consist of the following:

	2015			2014			2013
	(In Thousands)
Current:
Federal		$77,166			$90,061			$88,291
Foreign	97			90			101
State	157,829			(12,637		)	20,584
Total	235,092			77,514			108,976
Deferred and non-current - net	(864,799		)	528,326			126,935
Investment tax credit adjustments - net	(13,220		)	(16,243		)	(9,930		)
Income taxes		($642,927	)		$589,597			$225,981

Income taxes for 2015, 2014, and 2013 for Entergy’s Registrant Subsidiaries consist of the following:

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Current:
Federal		$66,966			$101,382			$25,628			($9,346	)		$53,313			($63,302	)
State	6,265			35,406			6,832			1,784			2,450			26,755
Total	73,231			136,788			32,460			(7,562		)	55,763			(36,547		)
Deferred and non-current - net	(31,463		)	47,220			31,149			32,890			(17,599		)	93,491
Investment tax credit adjustments - net	(1,227		)	(5,337		)	(1,737		)	(138		)	(914		)	(3,867		)
Income taxes		$40,541			$178,671			$61,872			$25,190			$37,250			$53,077

2014	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Current:
Federal		($34,258	)		($44,909	)		$8,103			($1,428	)		$48,610			$19,908
State	(678		)	(1,191		)	7,474			510			4,877			15,379
Total	(34,936		)	(46,100		)	15,577			(918		)	53,487			35,287
Deferred and non-current - net	119,841			236,794			42,305			14,592			(2,418		)	53,501
Investment tax credit adjustments - net	(1,276		)	(5,642		)	(2,172		)	(224		)	(1,425		)	(5,478		)
Income taxes		$83,629			$185,052			$55,710			$13,450			$49,644			$83,310

2013	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi		Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Current:
Federal		($13,574	)		($18,797	)		$2,498		$14,823			$37,199			($6,199	)
State	6,122			(15,631		)	4,849		(1,267		)	(843		)	15,845
Total	(7,452		)	(34,428		)	7,347		13,556			36,356			9,646
Deferred and non-current - net	101,253			179,036			41,150		(11,033		)	(4,639		)	60,614
Investment tax credit adjustments - net	(2,014		)	(5,912		)	1,260		(246		)	(1,609		)	(1,407		)
Income taxes		$91,787			$138,696			$49,757		$2,277			$30,108			$68,853

Total income taxes for Entergy Corporation and Subsidiaries differ from the amounts computed by applying the statutory income tax rate to income before income taxes.  The reasons for the differences for the years 2015, 2014, and 2013 are:

	2015			2014			2013
	(In Thousands)
Net income (loss) attributable to Entergy Corporation		($176,562	)		$940,721			$711,902
Preferred dividend requirements of subsidiaries	19,828			19,536			18,670
Consolidated net income (loss)	(156,734		)	960,257			730,572
Income taxes	(642,927		)	589,597			225,981
Income (loss) before income taxes		($799,661	)		$1,549,854			$956,553
Computed at statutory rate (35%)		($279,881	)		$542,449			$334,794
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	29,944			44,708			13,599
Regulatory differences - utility plant items	32,089			39,321			32,324
Equity component of AFUDC	(18,191		)	(21,108		)	(22,356		)
Amortization of investment tax credits	(11,136		)	(12,211		)	(13,535		)
Flow-through / permanent differences	(7,872		)	(18,003		)	(301		)
Net-of-tax regulatory liability	—			—			(2,899		)
New York tax law change (a)	—			(21,500		)	—
Louisiana business combination	(333,655		)	—			—
Termination of business reorganization	—			—			(27,192		)
Provision for uncertain tax positions (b)	(56,683		)	32,573			(59,249		)
Valuation allowance	—			—			(31,573		)
Other - net	2,458			3,368			2,369
Total income taxes as reported		($642,927	)		$589,597			$225,981
Effective Income Tax Rate	80.4		%	38.0		%	23.6		%

(a) In March 2014, New York enacted legislation that substantially modifies various aspects of New York tax law. The most significant effect of the legislation for Entergy is the adoption of full water’s-edge unitary combined reporting, meaning that all of Entergy’s domestic entities will be included in New York’s combined filing group. The effect of the tax law change resulted in a deferred state income tax reduction of approximately $21.5 million as shown in the table above.

(b) See “Income Tax Audits- 2008-2009 IRS Audit” below for discussion of the most significant items for 2015 and 2013.

Total income taxes for the Registrant Subsidiaries differ from the amounts computed by applying the statutory income tax rate to income before taxes.  The reasons for the differences for the years 2015, 2014, and 2013 are:

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Net income		$74,272			$446,639			$92,708			$44,925			$69,625			$111,318
Income taxes	40,541			178,671			61,872			25,190			37,250			53,077
Pretax income		$114,813			$625,310			$154,580			$70,115			$106,875			$164,395
Computed at statutory rate (35%)		$40,185			$218,859			$54,103			$24,540			$37,406			$57,538
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	6,643			23,650			5,219			2,887			1,621			6,403
Regulatory differences - utility plant items	7,299			3,013			2,383			2,201			3,703			12,167
Equity component of AFUDC	(4,979		)	(5,420		)	(1,083		)	(451		)	(1,987		)	(2,973		)
Amortization of investment tax credits	(1,201		)	(5,252		)	(160		)	(111		)	(900		)	(3,476		)
Flow-through / permanent differences	(4,062		)	2,460			431			(4,539		)	530			618
Non-taxable dividend income	—			(44,658		)	—			—			—			—
Provision for uncertain tax positions (a)	(3,978		)	(15,377		)	756			525			(3,365		)	(17,313		)
Other - net	634			1,396			223			138			242			113
Total income taxes		$40,541			$178,671			$61,872			$25,190			$37,250			$53,077
Effective Income Tax Rate	35.3		%	28.6		%	40.0		%	35.9		%	34.9		%	32.3		%

(a) See “Income Tax Audits- 2008-2009 IRS Audit” below for discussion of the most significant items for Entergy Louisiana and System Energy.

2014	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Net income		$121,392			$446,022			$74,821			$31,030			$74,804			$96,334
Income taxes	83,629			185,052			55,710			13,450			49,644			83,310
Pretax income		$205,021			$631,074			$130,531			$44,480			$124,448			$179,644
Computed at statutory rate (35%)		$71,757			$220,876			$45,686			$15,568			$43,557			$62,875
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	9,591			11,666			5,180			1,562			3,221			6,877
Regulatory differences - utility plant items	8,653			7,487			4,448			777			4,165			13,791
Equity component of AFUDC	(2,533		)	(14,612		)	(833		)	(320		)	(1,035		)	(1,774		)
Amortization of investment tax credits	(1,251		)	(5,594		)	(260		)	(218		)	(1,412		)	(3,476		)
Flow-through / permanent differences	(5,082		)	(225		)	555			(4,458		)	393			(327		)
Non-taxable dividend income	—			(41,255		)	—			—			—			—
Provision for uncertain tax positions	1,881			5,336			718			405			522			5,235
Other - net	613			1,373			216			134			233			109
Total income taxes		$83,629			$185,052			$55,710			$13,450			$49,644			$83,310
Effective Income Tax Rate	40.8		%	29.3		%	42.7		%	30.2		%	39.9		%	46.4		%

2013	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Net income		$161,948			$414,126			$82,159			$12,608			$57,881			$113,664
Income taxes	91,787			138,696			49,757			2,277			30,108			68,853
Pretax income		$253,735			$552,822			$131,916			$14,885			$87,989			$182,517
Computed at statutory rate (35%)		$88,807			$193,488			$46,171			$5,210			$30,796			$63,881
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	10,954			19,084			4,564			1,116			(897		)	5,900
Regulatory differences - utility plant items	7,938			7,005			2,603			453			3,256			11,070
Equity component of AFUDC	(3,820		)	(13,100		)	(764		)	(322		)	(1,626		)	(2,724		)
Amortization of investment tax credits	(1,989		)	(5,864		)	(260		)	(216		)	(1,596		)	(3,476		)
Flow-through / permanent differences	2,540			3,646			1,702			(4,402		)	2,467			(491		)
Net-of-tax regulatory liability	—			(2,899		)	—			—			—			—
Termination of business organization	(6,753		)	(7,453		)	(4,177		)	(501		)	(3,542		)	(13		)
Non-taxable dividend income	—			(36,953		)	—			—			—			—
Provision for uncertain tax positions (a)	(6,527		)	(18,645		)	(326		)	795			1,027			(5,353		)
Other - net	637			387			244			144			223			59
Total income taxes		$91,787			$138,696			$49,757			$2,277			$30,108			$68,853
Effective Income Tax Rate	36.2		%	25.1		%	37.7		%	15.3		%	34.2		%	37.7		%

(a) See “Income Tax Audits- 2008-2009 IRS Audit” below for discussion of the most significant items for Entergy Louisiana and System Energy.

Significant components of accumulated deferred income taxes and taxes accrued for Entergy Corporation and Subsidiaries as of December 31, 2015 and 2014 are as follows:

	2015			2014
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($6,804,225	)		($8,128,096	)
Regulatory assets	(646,392		)	(922,161		)
Nuclear decommissioning trusts	(1,254,463		)	(1,248,737		)
Pension, net funding	(365,111		)	(324,881		)
Combined unitary state taxes	(45,078		)	(162,340		)
Power purchase agreements	—			(110,889		)
Other	(315,844		)	(500,424		)
Total	(9,431,113		)	(11,397,528		)
Deferred tax assets:
Nuclear decommissioning liabilities	828,983			874,493
Regulatory liabilities	284,432			458,230
Pension and other post-employment benefits	525,524			586,455
Sale and leaseback	139,720			153,308
Compensation	69,432			74,692
Accumulated deferred investment tax credit	95,248			100,442
Provision for allowances and contingencies	188,282			160,551
Power purchase agreements	38,401			—
Net operating loss carryforwards	360,188			457,758
Capital losses and miscellaneous tax credits	11,075			12,146
Valuation allowance	(91,532		)	(27,387		)
Other	68,204			58,334
Total	2,517,957			2,909,022
Non-current accrued taxes (including unrecognized tax benefits)	(1,338,806		)	(606,560		)
Accumulated deferred income taxes and taxes accrued		($8,251,962	)		($9,095,066	)

Entergy’s estimated tax attributes carryovers and their expiration dates as of December 31, 2015 are as follows:

Carryover Description	Carryover Amount	Year(s) of expiration
Federal net operating losses	$3.6 billion	2023-2035
State net operating losses	$5.2 billion	2016-2035
Miscellaneous federal and state credits	$77.9 million	2016-2035

As a result of the accounting for uncertain tax positions, the amount of the deferred tax assets reflected in the financial statements is less than the amount of the tax effect of the federal and state net operating loss carryovers, tax credit carryovers, and other tax attributes reflected on income tax returns. Because it is more likely than not that the benefit from certain state net operating loss carryovers will not be utilized, valuation allowances of $46 million as of December 31, 2015 and $21 million as of December 31, 2014 have been provided on the deferred tax assets relating to these state net operating loss carryovers. Additionally, valuation allowances totaling $45.5 million as of December 31, 2015 have been provided on deferred tax assets related to state jurisdictions in which Entergy does not currently expect to be able to utilize separate company tax return losses, preventing realization of such deferred tax assets.

Significant components of accumulated deferred income taxes and taxes accrued for the Registrant Subsidiaries as of December 31, 2015 and 2014 are as follows:

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($1,710,444	)		($2,041,968	)		($781,427	)		($167,294	)		($778,270	)		($611,745	)
Regulatory assets	(108,422		)	(254,316		)	(24,918		)	(39,451		)	(172,117		)	(46,990		)
Nuclear decommissioning trusts	(121,326		)	(99,980		)	—			—			—			(68,370		)
Pension, net funding	(107,073		)	(109,709		)	(30,901		)	(14,459		)	(28,001		)	(25,791		)
Deferred fuel	(7,647		)	(2,513		)	(684		)	(175		)	2,050			(18		)
Other	(38,683		)	(86,275		)	(5,625		)	(12,253		)	(10,109		)	(22,478		)
Total	(2,093,595		)	(2,594,761		)	(843,555		)	(233,632		)	(986,447		)	(775,392		)
Deferred tax assets:
Regulatory liabilities	18,369			215,154			7,787			20,888			7,307			14,927
Nuclear decommissioning liabilities	109,962			49,333			—			—			—			39,420
Pension and other post-employment benefits	(20,420		)	149,680			(6,628		)	(8,939		)	(16,703		)	(1,037		)
Sale and leaseback	—			37,236			—			—			—			102,484
Accumulated deferred investment tax credit	14,320			56,635			1,777			290			4,842			17,385
Provision for allowances and contingencies	1,024			123,007			18,735			33,843			7,266			134
Power purchase agreements	(1,279		)	13,840			1,901			13			575			—
Unbilled/deferred revenues	9,815			(32,365		)	7,154			2,126			10,851			—
Compensation	1,842			4,182			601			880			4,496			—
Net operating loss carryforwards	—			90,241			—			—			—			—
Other	128			21,982			1,995			316			1,672			—
Total	133,761			728,925			33,322			49,417			20,306			173,313
Non-current accrued taxes (including unrecognized tax benefits)	(22,978		)	(641,120		)	(402		)	(29,846		)	(40,693		)	(416,996		)
Accumulated deferred income taxes and taxes accrued		($1,982,812	)		($2,506,956	)		($810,635	)		($214,061	)		($1,006,834	)		($1,019,075	)

2014	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($1,657,503	)		($2,748,852	)		($753,576	)		($186,153	)		($771,135	)		($668,779	)
Regulatory assets	(198,662		)	(380,719		)	(30,114		)	—			(202,402		)	(110,087		)
Nuclear decommissioning trusts	(130,524		)	(106,162		)	—			—			—			(74,063		)
Pension, net funding	(93,355		)	(99,593		)	(27,861		)	(13,285		)	(25,616		)	(23,440		)
Deferred fuel	(82,050		)	(3,534		)	(5,303		)	(407		)	2,045			(120		)
Power purchase agreements	(17,073		)	(67,083		)	2,129			13			847			—
Other	(33,827		)	(84,282		)	(11,423		)	(11,500		)	(22,546		)	(19,802		)
Total	(2,212,994		)	(3,490,225		)	(826,148		)	(211,332		)	(1,018,807		)	(896,291		)
Deferred tax assets:
Regulatory liabilities	145,466			181,601			7,214			29,580			4,079			90,290
Nuclear decommissioning liabilities	(43,134		)	146,138			—			—			—			(62,571		)
Pension and other post-employment benefits	(17,534		)	158,661			(7,288		)	(7,504		)	(15,053		)	(1,413		)
Sale and leaseback	—			45,136			—			—			—			108,172
Accumulated deferred investment tax credit	14,791			58,863			2,436			332			5,158			18,862
Provision for allowances and contingencies	(7,149		)	125,805			19,590			10,986			8,017			133
Unbilled/deferred revenues	12,322			(25,016		)	12,956			3,395			11,573			—
Compensation	2,085			158			(846		)	475			4,155			—
Net operating loss carryforwards	105,063			241,803			—			—			—			—
Capital losses and miscellaneous tax credits	—			—			3,504			—			—			—
Other	258			15,508			5,887			2,891			3,850			2,000
Total	212,168			948,657			43,453			40,155			21,779			155,473
Non-current accrued taxes (including unrecognized tax benefits)	9,367			(412,508		)	(12,481		)	(19,502		)	(48,921		)	(81,528		)
Accumulated deferred income taxes and taxes accrued		($1,991,459	)		($2,954,076	)		($795,176	)		($190,679	)		($1,045,949	)		($822,346	)

The Registrant Subsidiaries’ estimated tax attributes carryovers and their expiration dates as of December 31, 2015 are as follows:

	Entergy Arkansas	Entergy Louisiana	Entergy Mississippi	Entergy New Orleans	Entergy Texas	System Energy
Federal net operating losses	$7 million	$2.4 billion	—	—	—	$242 million
Year(s) of expiration	2030-2035	2035	N/A	N/A	N/A	2030-2035
State net operating losses	—	$2.5 billion	—	$6 million	—	$833 million
Year(s) of expiration	N/A	2035	N/A	2032	N/A	2035
Misc. federal credits	$1 million	—	$1 million	—	—	$1 million
Year(s) of expiration	2029-2033	N/A	2029-2034	N/A	N/A	2029-2033
State credits	—	—	—	—	$3.3 million	$6 million
Year(s) of expiration	N/A	N/A	N/A	N/A	2026	2017-2020

As a result of the accounting for uncertain tax positions, the amount of the deferred tax assets reflected in the financial statements is less than the amount of the tax effect of the federal and state net operating loss carryovers and tax credit carryovers.

Unrecognized tax benefits

Accounting standards establish a “more-likely-than-not” recognition threshold that must be met before a tax benefit can be recognized in the financial statements.  If a tax deduction is taken on a tax return, but does not meet the more-likely-than-not recognition threshold, an increase in income tax liability, above what is payable on the tax return, is required to be recorded.  A reconciliation of Entergy’s beginning and ending amount of unrecognized tax benefits is as follows:

	2015			2014			2013
	(In Thousands)
Gross balance at January 1		$4,736,785			$4,593,224			$4,170,403
Additions based on tax positions related to the current year	1,850,705			348,543			162,338
Additions for tax positions of prior years	59,815			11,637			410,108
Reductions for tax positions of prior years (a)	(3,966,535		)	(213,401		)	(103,360		)
Settlements	(68,227		)	—			(43,620		)
Lapse of statute of limitations	(958		)	(3,218		)	(2,645		)
Gross balance at December 31	2,611,585			4,736,785			4,593,224
Offsets to gross unrecognized tax benefits:
Credit and loss carryovers	(1,264,483		)	(4,295,643		)	(4,400,498		)
Unrecognized tax benefits net of unused tax attributes and payments (b)		$1,347,102			$441,142			$192,726

(a) The primary reduction is related to the nuclear decommissioning costs treatment discussed in “Income Tax Audits - 2008-2009 IRS Audit” below.

(b) Potential tax liability above what is payable on tax returns

The balances of unrecognized tax benefits include $955 million, $516 million, and $176 million as of December 31, 2015, 2014, and 2013, respectively, which, if recognized, would lower the effective income tax rates.  Because of the effect of deferred tax accounting, the remaining balances of unrecognized tax benefits of $1.657 billion, $4.221 billion, and $4.417 billion as of December 31, 2015, 2014, and 2013, respectively, if disallowed, would not affect the annual effective income tax rate but would accelerate the payment of cash to the taxing authority to an earlier period.

Entergy accrues interest expense, if any, related to unrecognized tax benefits in income tax expense.  Entergy’s December 31, 2015, 2014, and 2013 accrued balance for the possible payment of interest is approximately $27 million, $127 million, and $96.4 million, respectively.

A reconciliation of the Registrant Subsidiaries’ beginning and ending amount of unrecognized tax benefits for 2015, 2014, and 2013 is as follows:

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Gross balance at January 1, 2015		$362,912			$1,205,929			$20,144			$53,763			$17,264			$258,242
Additions based on tax positions related to the current year (a)	2,196			1,367,058			566			472			657			472,304
Additions for tax positions of prior years	1,057			7,992			8,140			48			2,914			913
Reductions for tax positions of prior years	(340,720		)	(859,430		)	—			(386		)	(3,981		)	(253,141		)
Settlements	—			(30,888		)	(9,368		)	—			(3,392		)	—
Gross balance at December 31, 2015	25,445			1,690,661			19,482			53,897			13,462			478,318
Offsets to gross unrecognized tax benefits:
Loss carryovers	(3,613		)	(893,764		)	(1,016		)	(506		)	(276		)	(133,611		)
Unrecognized tax benefits net of unused tax attributes and payments		$21,832			$796,897			$18,466			$53,391			$13,186			$344,707

(a) The primary addition for Entergy Louisiana and System Energy is related to the nuclear decommissioning costs treatment discussed in “Other Tax Matters” below.

2014	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Gross balance at January 1, 2014		$347,713			$1,076,680			$16,186			$51,679			$13,017			$265,185
Additions based on tax positions related to the current year	14,511			151,249			3,928			2,235			4,225			2,744
Additions for tax positions of prior years	1,767			6,924			319			37			303			566
Reductions for tax positions of prior years	(1,079		)	(28,924		)	(289		)	(188		)	(267		)	(10,253		)
Settlements	—			—			—			—			(14		)	—
Gross balance at December 31, 2014	362,912			1,205,929			20,144			53,763			17,264			258,242
Offsets to gross unrecognized tax benefits:
Loss carryovers	(361,043		)	(739,988		)	(6,992		)	(20,735		)	(241		)	(163,124		)
Unrecognized tax benefits net of unused tax attributes and payments		$1,869			$465,941			$13,152			$33,028			$17,023			$95,118

2013	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Gross balance at January 1, 2013		$344,669			$1,002,394			$16,841			$52,018			$13,954			$260,346
Additions based on tax positions related to the current year	6,427			17,887			957			583			2,170			4,170
Additions for tax positions of prior years	1,228			125,214			401			3,506			587			8,391
Reductions for tax positions of prior years	(3,943		)	(53,473		)	(1,941		)	(962		)	(4,186		)	(967		)
Settlements	(668		)	(15,342		)	(72		)	(3,466		)	492			(6,755		)
Gross balance at December 31, 2013	347,713			1,076,680			16,186			51,679			13,017			265,185
Offsets to gross unrecognized tax benefits:
Loss carryovers	(345,674		)	(747,756		)	(16,186		)	(22,078		)	(266		)	(225,286		)
Unrecognized tax benefits net of unused tax attributes and payments		$2,039			$328,924			$—			$29,601			$12,751			$39,899

The Registrant Subsidiaries’ balances of unrecognized tax benefits included amounts which, if recognized, would have reduced income tax expense as follows:

	December 31,
	2015		2014		2013
	(In Millions)
Entergy Arkansas		$4.5		$2.6		$0.6
Entergy Louisiana		$692.7		$267.3		$131.9
Entergy Mississippi		$8.1		$3.9		$3.9
Entergy New Orleans		$50.7		$50.7		$—
Entergy Texas		$5.2		$10.5		$10.1
System Energy		$0.7		$3.7		$3.3

The Registrant Subsidiaries accrue interest and penalties related to unrecognized tax benefits in income tax expense.  Penalties have not been accrued.  Accrued balances for the possible payment of interest are as follows:

	December 31,
	2015		2014		2013
	(In Millions)
Entergy Arkansas		$1.3		$17.0		$15.2
Entergy Louisiana		$9.3		$22.2		$18.0
Entergy Mississippi		$0.4		$2.8		$2.1
Entergy New Orleans		$1.8		$1.3		$0.9
Entergy Texas		$1.2		$1.0		$0.8
System Energy		$0.7		$23.8		$19.0

Income Tax Audits

Entergy and its subsidiaries file U.S. federal and various state and foreign income tax returns.  IRS examinations are complete for years before 2010. All state taxing authorities’ examinations are completed for years before 2009.

2006-2007 IRS Audit

In the first quarter 2015, the IRS finalized tax and interest computations from the 2006-2007 audit that resulted in a reversal of Entergy’s provision for uncertain tax positions related to accrued interest of approximately $20 million, including decreases of approximately $4 million for Entergy Arkansas, $11 million for Entergy Louisiana, and $1 million for System Energy.

2008-2009 IRS Audit

In the fourth quarter 2009, Entergy filed Applications for Change in Accounting Method (the “2009 CAM”) for tax purposes with the IRS for certain costs under Section 263A of the Internal Revenue Code.  In the Applications, Entergy proposed to treat the nuclear decommissioning liability associated with the operation of its nuclear power plants as a production cost properly includable in cost of goods sold.  The effect of the 2009 CAM was a $5.7 billion reduction in 2009 taxable income.  The 2009 CAM was adjusted to $9.3 billion in 2012.

In the fourth quarter 2012 the IRS disallowed the reduction to 2009 taxable income related to the 2009 CAM.  In the third quarter 2013, the Internal Revenue Service issued its RAR for the tax years 2008-2009. As a result of the issuance of this RAR, Entergy and the IRS resolved all of the 2008-2009 issues described above except for the 2009 CAM. Entergy disagreed with the IRS’s disallowance of the 2009 CAM and filed a protest with the IRS Appeals Division in October 2013.

In August 2015, Entergy and the IRS agreed on the treatment of the 2009 position regarding nuclear decommissioning liabilities from the 2008-2009 audit. The agreement provides that Entergy is entitled to deduct approximately $118 million of the $9.3 billion claimed in 2009. The agreement effectively settled all matters pertaining to the 2009 tax year and increased Entergy’s 2009 federal income tax liability by $2.4 million.

2010-2011 IRS Audit

The IRS examination of the 2010 and 2011 years is ongoing and the audit field work is expected to be completed by the end of the first quarter of 2016. The IRS has not issued any significant notices of proposed adjustments other than for the decommissioning liability position discussed above. The Revenue Agent’s Report is expected to be received shortly after the completion of field work.

Other Tax Matters

Entergy regularly negotiates with the IRS to achieve settlements.  The resolution of audit issues could result in significant changes to the amounts of unrecognized tax benefits in the next twelve months.

In September 2013 the U.S. Treasury Department and the IRS issued final regulations that provide guidance on the deductibility and capitalization of costs incurred associated with tangible property. Entergy and the Registrant Subsidiaries filed with the IRS an automatic application for change in accounting method which is in compliance with the final regulations and the safe harbor provisions of the relevant IRS Revenue Procedures. Entergy estimates that the effect of this accounting method change will result in a net increase to Entergy’s taxable income of approximately $585 million, which will be recognized generally over a four year period beginning with the tax year ended 2014. The adoption of the final regulations and safe harbor method results in approximate changes in the Registrant Subsidiaries taxable income as follows: an increase of $177 million for Entergy Arkansas, an increase of $78 million for Entergy Louisiana, an increase of $26 million for Entergy Mississippi, an increase of $183 million for Entergy Texas, a decrease of $2 million for Entergy New Orleans, and an increase of $22 million for System Energy.

In October 2015 two of Entergy’s Louisiana utilities, Entergy Gulf States Louisiana and Entergy Louisiana, combined their businesses into a legal entity which is identified as Entergy Louisiana herein. Entergy Louisiana maintained a carryover tax basis in the assets received. Additionally, the tax consequences provided for an increase in tax basis as well. To the extent that this increase in tax basis will provide additional tax depreciation, Entergy recorded a deferred tax asset and current tax expense resulting in a net increase in tax basis of approximately $334 million and Entergy Louisiana obtained a corresponding deferred tax asset. Consistent with the terms of an agreement with the LPSC, electric customers of Entergy Louisiana will realize customer credits associated with the business combination. Accordingly, in October 2015, Entergy recorded a regulatory liability of $107 million ($66 million net-of-tax) which partially offsets the effect of the aforementioned deferred tax asset. The deferred tax asset and the regulatory liability, net-of-tax, increased Entergy Louisiana’s member’s equity by $268 million. See Note 2 to the financial statements for further discussion of the business combination.

In the fourth quarter 2015, System Energy and Entergy Louisiana adopted a new method of accounting for income tax purposes in which the companies’ nuclear decommissioning costs will be treated as production costs of electricity includable in cost of goods sold. The new method results in a reduction of taxable income of $1.2 billion for System Energy and $2.2 billion for Entergy Louisiana.

The Protecting Americans from Tax Hikes Act of 2015 was enacted in December 2015. The most significant provisions affecting Entergy and the Registrant Subsidiaries were a five-year extension of bonus depreciation and permanent extension of the research and experimentation tax credit. The effect of the bonus depreciation extension on 2015 increased Entergy’s tax net operating loss.

Entergy Arkansas [Member]

Income Taxes

INCOME TAXES (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

Income taxes for 2015, 2014, and 2013 for Entergy Corporation and Subsidiaries consist of the following:

	2015			2014			2013
	(In Thousands)
Current:
Federal		$77,166			$90,061			$88,291
Foreign	97			90			101
State	157,829			(12,637		)	20,584
Total	235,092			77,514			108,976
Deferred and non-current - net	(864,799		)	528,326			126,935
Investment tax credit adjustments - net	(13,220		)	(16,243		)	(9,930		)
Income taxes		($642,927	)		$589,597			$225,981

Income taxes for 2015, 2014, and 2013 for Entergy’s Registrant Subsidiaries consist of the following:

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Current:
Federal		$66,966			$101,382			$25,628			($9,346	)		$53,313			($63,302	)
State	6,265			35,406			6,832			1,784			2,450			26,755
Total	73,231			136,788			32,460			(7,562		)	55,763			(36,547		)
Deferred and non-current - net	(31,463		)	47,220			31,149			32,890			(17,599		)	93,491
Investment tax credit adjustments - net	(1,227		)	(5,337		)	(1,737		)	(138		)	(914		)	(3,867		)
Income taxes		$40,541			$178,671			$61,872			$25,190			$37,250			$53,077

2014	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Current:
Federal		($34,258	)		($44,909	)		$8,103			($1,428	)		$48,610			$19,908
State	(678		)	(1,191		)	7,474			510			4,877			15,379
Total	(34,936		)	(46,100		)	15,577			(918		)	53,487			35,287
Deferred and non-current - net	119,841			236,794			42,305			14,592			(2,418		)	53,501
Investment tax credit adjustments - net	(1,276		)	(5,642		)	(2,172		)	(224		)	(1,425		)	(5,478		)
Income taxes		$83,629			$185,052			$55,710			$13,450			$49,644			$83,310

2013	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi		Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Current:
Federal		($13,574	)		($18,797	)		$2,498		$14,823			$37,199			($6,199	)
State	6,122			(15,631		)	4,849		(1,267		)	(843		)	15,845
Total	(7,452		)	(34,428		)	7,347		13,556			36,356			9,646
Deferred and non-current - net	101,253			179,036			41,150		(11,033		)	(4,639		)	60,614
Investment tax credit adjustments - net	(2,014		)	(5,912		)	1,260		(246		)	(1,609		)	(1,407		)
Income taxes		$91,787			$138,696			$49,757		$2,277			$30,108			$68,853

Total income taxes for Entergy Corporation and Subsidiaries differ from the amounts computed by applying the statutory income tax rate to income before income taxes.  The reasons for the differences for the years 2015, 2014, and 2013 are:

	2015			2014			2013
	(In Thousands)
Net income (loss) attributable to Entergy Corporation		($176,562	)		$940,721			$711,902
Preferred dividend requirements of subsidiaries	19,828			19,536			18,670
Consolidated net income (loss)	(156,734		)	960,257			730,572
Income taxes	(642,927		)	589,597			225,981
Income (loss) before income taxes		($799,661	)		$1,549,854			$956,553
Computed at statutory rate (35%)		($279,881	)		$542,449			$334,794
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	29,944			44,708			13,599
Regulatory differences - utility plant items	32,089			39,321			32,324
Equity component of AFUDC	(18,191		)	(21,108		)	(22,356		)
Amortization of investment tax credits	(11,136		)	(12,211		)	(13,535		)
Flow-through / permanent differences	(7,872		)	(18,003		)	(301		)
Net-of-tax regulatory liability	—			—			(2,899		)
New York tax law change (a)	—			(21,500		)	—
Louisiana business combination	(333,655		)	—			—
Termination of business reorganization	—			—			(27,192		)
Provision for uncertain tax positions (b)	(56,683		)	32,573			(59,249		)
Valuation allowance	—			—			(31,573		)
Other - net	2,458			3,368			2,369
Total income taxes as reported		($642,927	)		$589,597			$225,981
Effective Income Tax Rate	80.4		%	38.0		%	23.6		%

(a) In March 2014, New York enacted legislation that substantially modifies various aspects of New York tax law. The most significant effect of the legislation for Entergy is the adoption of full water’s-edge unitary combined reporting, meaning that all of Entergy’s domestic entities will be included in New York’s combined filing group. The effect of the tax law change resulted in a deferred state income tax reduction of approximately $21.5 million as shown in the table above.

(b) See “Income Tax Audits- 2008-2009 IRS Audit” below for discussion of the most significant items for 2015 and 2013.

Total income taxes for the Registrant Subsidiaries differ from the amounts computed by applying the statutory income tax rate to income before taxes.  The reasons for the differences for the years 2015, 2014, and 2013 are:

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Net income		$74,272			$446,639			$92,708			$44,925			$69,625			$111,318
Income taxes	40,541			178,671			61,872			25,190			37,250			53,077
Pretax income		$114,813			$625,310			$154,580			$70,115			$106,875			$164,395
Computed at statutory rate (35%)		$40,185			$218,859			$54,103			$24,540			$37,406			$57,538
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	6,643			23,650			5,219			2,887			1,621			6,403
Regulatory differences - utility plant items	7,299			3,013			2,383			2,201			3,703			12,167
Equity component of AFUDC	(4,979		)	(5,420		)	(1,083		)	(451		)	(1,987		)	(2,973		)
Amortization of investment tax credits	(1,201		)	(5,252		)	(160		)	(111		)	(900		)	(3,476		)
Flow-through / permanent differences	(4,062		)	2,460			431			(4,539		)	530			618
Non-taxable dividend income	—			(44,658		)	—			—			—			—
Provision for uncertain tax positions (a)	(3,978		)	(15,377		)	756			525			(3,365		)	(17,313		)
Other - net	634			1,396			223			138			242			113
Total income taxes		$40,541			$178,671			$61,872			$25,190			$37,250			$53,077
Effective Income Tax Rate	35.3		%	28.6		%	40.0		%	35.9		%	34.9		%	32.3		%

(a) See “Income Tax Audits- 2008-2009 IRS Audit” below for discussion of the most significant items for Entergy Louisiana and System Energy.

2014	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Net income		$121,392			$446,022			$74,821			$31,030			$74,804			$96,334
Income taxes	83,629			185,052			55,710			13,450			49,644			83,310
Pretax income		$205,021			$631,074			$130,531			$44,480			$124,448			$179,644
Computed at statutory rate (35%)		$71,757			$220,876			$45,686			$15,568			$43,557			$62,875
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	9,591			11,666			5,180			1,562			3,221			6,877
Regulatory differences - utility plant items	8,653			7,487			4,448			777			4,165			13,791
Equity component of AFUDC	(2,533		)	(14,612		)	(833		)	(320		)	(1,035		)	(1,774		)
Amortization of investment tax credits	(1,251		)	(5,594		)	(260		)	(218		)	(1,412		)	(3,476		)
Flow-through / permanent differences	(5,082		)	(225		)	555			(4,458		)	393			(327		)
Non-taxable dividend income	—			(41,255		)	—			—			—			—
Provision for uncertain tax positions	1,881			5,336			718			405			522			5,235
Other - net	613			1,373			216			134			233			109
Total income taxes		$83,629			$185,052			$55,710			$13,450			$49,644			$83,310
Effective Income Tax Rate	40.8		%	29.3		%	42.7		%	30.2		%	39.9		%	46.4		%

2013	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Net income		$161,948			$414,126			$82,159			$12,608			$57,881			$113,664
Income taxes	91,787			138,696			49,757			2,277			30,108			68,853
Pretax income		$253,735			$552,822			$131,916			$14,885			$87,989			$182,517
Computed at statutory rate (35%)		$88,807			$193,488			$46,171			$5,210			$30,796			$63,881
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	10,954			19,084			4,564			1,116			(897		)	5,900
Regulatory differences - utility plant items	7,938			7,005			2,603			453			3,256			11,070
Equity component of AFUDC	(3,820		)	(13,100		)	(764		)	(322		)	(1,626		)	(2,724		)
Amortization of investment tax credits	(1,989		)	(5,864		)	(260		)	(216		)	(1,596		)	(3,476		)
Flow-through / permanent differences	2,540			3,646			1,702			(4,402		)	2,467			(491		)
Net-of-tax regulatory liability	—			(2,899		)	—			—			—			—
Termination of business organization	(6,753		)	(7,453		)	(4,177		)	(501		)	(3,542		)	(13		)
Non-taxable dividend income	—			(36,953		)	—			—			—			—
Provision for uncertain tax positions (a)	(6,527		)	(18,645		)	(326		)	795			1,027			(5,353		)
Other - net	637			387			244			144			223			59
Total income taxes		$91,787			$138,696			$49,757			$2,277			$30,108			$68,853
Effective Income Tax Rate	36.2		%	25.1		%	37.7		%	15.3		%	34.2		%	37.7		%

(a) See “Income Tax Audits- 2008-2009 IRS Audit” below for discussion of the most significant items for Entergy Louisiana and System Energy.

Significant components of accumulated deferred income taxes and taxes accrued for Entergy Corporation and Subsidiaries as of December 31, 2015 and 2014 are as follows:

	2015			2014
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($6,804,225	)		($8,128,096	)
Regulatory assets	(646,392		)	(922,161		)
Nuclear decommissioning trusts	(1,254,463		)	(1,248,737		)
Pension, net funding	(365,111		)	(324,881		)
Combined unitary state taxes	(45,078		)	(162,340		)
Power purchase agreements	—			(110,889		)
Other	(315,844		)	(500,424		)
Total	(9,431,113		)	(11,397,528		)
Deferred tax assets:
Nuclear decommissioning liabilities	828,983			874,493
Regulatory liabilities	284,432			458,230
Pension and other post-employment benefits	525,524			586,455
Sale and leaseback	139,720			153,308
Compensation	69,432			74,692
Accumulated deferred investment tax credit	95,248			100,442
Provision for allowances and contingencies	188,282			160,551
Power purchase agreements	38,401			—
Net operating loss carryforwards	360,188			457,758
Capital losses and miscellaneous tax credits	11,075			12,146
Valuation allowance	(91,532		)	(27,387		)
Other	68,204			58,334
Total	2,517,957			2,909,022
Non-current accrued taxes (including unrecognized tax benefits)	(1,338,806		)	(606,560		)
Accumulated deferred income taxes and taxes accrued		($8,251,962	)		($9,095,066	)

Entergy’s estimated tax attributes carryovers and their expiration dates as of December 31, 2015 are as follows:

Carryover Description	Carryover Amount	Year(s) of expiration
Federal net operating losses	$3.6 billion	2023-2035
State net operating losses	$5.2 billion	2016-2035
Miscellaneous federal and state credits	$77.9 million	2016-2035

As a result of the accounting for uncertain tax positions, the amount of the deferred tax assets reflected in the financial statements is less than the amount of the tax effect of the federal and state net operating loss carryovers, tax credit carryovers, and other tax attributes reflected on income tax returns. Because it is more likely than not that the benefit from certain state net operating loss carryovers will not be utilized, valuation allowances of $46 million as of December 31, 2015 and $21 million as of December 31, 2014 have been provided on the deferred tax assets relating to these state net operating loss carryovers. Additionally, valuation allowances totaling $45.5 million as of December 31, 2015 have been provided on deferred tax assets related to state jurisdictions in which Entergy does not currently expect to be able to utilize separate company tax return losses, preventing realization of such deferred tax assets.

Significant components of accumulated deferred income taxes and taxes accrued for the Registrant Subsidiaries as of December 31, 2015 and 2014 are as follows:

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($1,710,444	)		($2,041,968	)		($781,427	)		($167,294	)		($778,270	)		($611,745	)
Regulatory assets	(108,422		)	(254,316		)	(24,918		)	(39,451		)	(172,117		)	(46,990		)
Nuclear decommissioning trusts	(121,326		)	(99,980		)	—			—			—			(68,370		)
Pension, net funding	(107,073		)	(109,709		)	(30,901		)	(14,459		)	(28,001		)	(25,791		)
Deferred fuel	(7,647		)	(2,513		)	(684		)	(175		)	2,050			(18		)
Other	(38,683		)	(86,275		)	(5,625		)	(12,253		)	(10,109		)	(22,478		)
Total	(2,093,595		)	(2,594,761		)	(843,555		)	(233,632		)	(986,447		)	(775,392		)
Deferred tax assets:
Regulatory liabilities	18,369			215,154			7,787			20,888			7,307			14,927
Nuclear decommissioning liabilities	109,962			49,333			—			—			—			39,420
Pension and other post-employment benefits	(20,420		)	149,680			(6,628		)	(8,939		)	(16,703		)	(1,037		)
Sale and leaseback	—			37,236			—			—			—			102,484
Accumulated deferred investment tax credit	14,320			56,635			1,777			290			4,842			17,385
Provision for allowances and contingencies	1,024			123,007			18,735			33,843			7,266			134
Power purchase agreements	(1,279		)	13,840			1,901			13			575			—
Unbilled/deferred revenues	9,815			(32,365		)	7,154			2,126			10,851			—
Compensation	1,842			4,182			601			880			4,496			—
Net operating loss carryforwards	—			90,241			—			—			—			—
Other	128			21,982			1,995			316			1,672			—
Total	133,761			728,925			33,322			49,417			20,306			173,313
Non-current accrued taxes (including unrecognized tax benefits)	(22,978		)	(641,120		)	(402		)	(29,846		)	(40,693		)	(416,996		)
Accumulated deferred income taxes and taxes accrued		($1,982,812	)		($2,506,956	)		($810,635	)		($214,061	)		($1,006,834	)		($1,019,075	)

2014	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($1,657,503	)		($2,748,852	)		($753,576	)		($186,153	)		($771,135	)		($668,779	)
Regulatory assets	(198,662		)	(380,719		)	(30,114		)	—			(202,402		)	(110,087		)
Nuclear decommissioning trusts	(130,524		)	(106,162		)	—			—			—			(74,063		)
Pension, net funding	(93,355		)	(99,593		)	(27,861		)	(13,285		)	(25,616		)	(23,440		)
Deferred fuel	(82,050		)	(3,534		)	(5,303		)	(407		)	2,045			(120		)
Power purchase agreements	(17,073		)	(67,083		)	2,129			13			847			—
Other	(33,827		)	(84,282		)	(11,423		)	(11,500		)	(22,546		)	(19,802		)
Total	(2,212,994		)	(3,490,225		)	(826,148		)	(211,332		)	(1,018,807		)	(896,291		)
Deferred tax assets:
Regulatory liabilities	145,466			181,601			7,214			29,580			4,079			90,290
Nuclear decommissioning liabilities	(43,134		)	146,138			—			—			—			(62,571		)
Pension and other post-employment benefits	(17,534		)	158,661			(7,288		)	(7,504		)	(15,053		)	(1,413		)
Sale and leaseback	—			45,136			—			—			—			108,172
Accumulated deferred investment tax credit	14,791			58,863			2,436			332			5,158			18,862
Provision for allowances and contingencies	(7,149		)	125,805			19,590			10,986			8,017			133
Unbilled/deferred revenues	12,322			(25,016		)	12,956			3,395			11,573			—
Compensation	2,085			158			(846		)	475			4,155			—
Net operating loss carryforwards	105,063			241,803			—			—			—			—
Capital losses and miscellaneous tax credits	—			—			3,504			—			—			—
Other	258			15,508			5,887			2,891			3,850			2,000
Total	212,168			948,657			43,453			40,155			21,779			155,473
Non-current accrued taxes (including unrecognized tax benefits)	9,367			(412,508		)	(12,481		)	(19,502		)	(48,921		)	(81,528		)
Accumulated deferred income taxes and taxes accrued		($1,991,459	)		($2,954,076	)		($795,176	)		($190,679	)		($1,045,949	)		($822,346	)

The Registrant Subsidiaries’ estimated tax attributes carryovers and their expiration dates as of December 31, 2015 are as follows:

	Entergy Arkansas	Entergy Louisiana	Entergy Mississippi	Entergy New Orleans	Entergy Texas	System Energy
Federal net operating losses	$7 million	$2.4 billion	—	—	—	$242 million
Year(s) of expiration	2030-2035	2035	N/A	N/A	N/A	2030-2035
State net operating losses	—	$2.5 billion	—	$6 million	—	$833 million
Year(s) of expiration	N/A	2035	N/A	2032	N/A	2035
Misc. federal credits	$1 million	—	$1 million	—	—	$1 million
Year(s) of expiration	2029-2033	N/A	2029-2034	N/A	N/A	2029-2033
State credits	—	—	—	—	$3.3 million	$6 million
Year(s) of expiration	N/A	N/A	N/A	N/A	2026	2017-2020

As a result of the accounting for uncertain tax positions, the amount of the deferred tax assets reflected in the financial statements is less than the amount of the tax effect of the federal and state net operating loss carryovers and tax credit carryovers.

Unrecognized tax benefits

Accounting standards establish a “more-likely-than-not” recognition threshold that must be met before a tax benefit can be recognized in the financial statements.  If a tax deduction is taken on a tax return, but does not meet the more-likely-than-not recognition threshold, an increase in income tax liability, above what is payable on the tax return, is required to be recorded.  A reconciliation of Entergy’s beginning and ending amount of unrecognized tax benefits is as follows:

	2015			2014			2013
	(In Thousands)
Gross balance at January 1		$4,736,785			$4,593,224			$4,170,403
Additions based on tax positions related to the current year	1,850,705			348,543			162,338
Additions for tax positions of prior years	59,815			11,637			410,108
Reductions for tax positions of prior years (a)	(3,966,535		)	(213,401		)	(103,360		)
Settlements	(68,227		)	—			(43,620		)
Lapse of statute of limitations	(958		)	(3,218		)	(2,645		)
Gross balance at December 31	2,611,585			4,736,785			4,593,224
Offsets to gross unrecognized tax benefits:
Credit and loss carryovers	(1,264,483		)	(4,295,643		)	(4,400,498		)
Unrecognized tax benefits net of unused tax attributes and payments (b)		$1,347,102			$441,142			$192,726

(a) The primary reduction is related to the nuclear decommissioning costs treatment discussed in “Income Tax Audits - 2008-2009 IRS Audit” below.

(b) Potential tax liability above what is payable on tax returns

The balances of unrecognized tax benefits include $955 million, $516 million, and $176 million as of December 31, 2015, 2014, and 2013, respectively, which, if recognized, would lower the effective income tax rates.  Because of the effect of deferred tax accounting, the remaining balances of unrecognized tax benefits of $1.657 billion, $4.221 billion, and $4.417 billion as of December 31, 2015, 2014, and 2013, respectively, if disallowed, would not affect the annual effective income tax rate but would accelerate the payment of cash to the taxing authority to an earlier period.

Entergy accrues interest expense, if any, related to unrecognized tax benefits in income tax expense.  Entergy’s December 31, 2015, 2014, and 2013 accrued balance for the possible payment of interest is approximately $27 million, $127 million, and $96.4 million, respectively.

A reconciliation of the Registrant Subsidiaries’ beginning and ending amount of unrecognized tax benefits for 2015, 2014, and 2013 is as follows:

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Gross balance at January 1, 2015		$362,912			$1,205,929			$20,144			$53,763			$17,264			$258,242
Additions based on tax positions related to the current year (a)	2,196			1,367,058			566			472			657			472,304
Additions for tax positions of prior years	1,057			7,992			8,140			48			2,914			913
Reductions for tax positions of prior years	(340,720		)	(859,430		)	—			(386		)	(3,981		)	(253,141		)
Settlements	—			(30,888		)	(9,368		)	—			(3,392		)	—
Gross balance at December 31, 2015	25,445			1,690,661			19,482			53,897			13,462			478,318
Offsets to gross unrecognized tax benefits:
Loss carryovers	(3,613		)	(893,764		)	(1,016		)	(506		)	(276		)	(133,611		)
Unrecognized tax benefits net of unused tax attributes and payments		$21,832			$796,897			$18,466			$53,391			$13,186			$344,707

(a) The primary addition for Entergy Louisiana and System Energy is related to the nuclear decommissioning costs treatment discussed in “Other Tax Matters” below.

2014	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Gross balance at January 1, 2014		$347,713			$1,076,680			$16,186			$51,679			$13,017			$265,185
Additions based on tax positions related to the current year	14,511			151,249			3,928			2,235			4,225			2,744
Additions for tax positions of prior years	1,767			6,924			319			37			303			566
Reductions for tax positions of prior years	(1,079		)	(28,924		)	(289		)	(188		)	(267		)	(10,253		)
Settlements	—			—			—			—			(14		)	—
Gross balance at December 31, 2014	362,912			1,205,929			20,144			53,763			17,264			258,242
Offsets to gross unrecognized tax benefits:
Loss carryovers	(361,043		)	(739,988		)	(6,992		)	(20,735		)	(241		)	(163,124		)
Unrecognized tax benefits net of unused tax attributes and payments		$1,869			$465,941			$13,152			$33,028			$17,023			$95,118

2013	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Gross balance at January 1, 2013		$344,669			$1,002,394			$16,841			$52,018			$13,954			$260,346
Additions based on tax positions related to the current year	6,427			17,887			957			583			2,170			4,170
Additions for tax positions of prior years	1,228			125,214			401			3,506			587			8,391
Reductions for tax positions of prior years	(3,943		)	(53,473		)	(1,941		)	(962		)	(4,186		)	(967		)
Settlements	(668		)	(15,342		)	(72		)	(3,466		)	492			(6,755		)
Gross balance at December 31, 2013	347,713			1,076,680			16,186			51,679			13,017			265,185
Offsets to gross unrecognized tax benefits:
Loss carryovers	(345,674		)	(747,756		)	(16,186		)	(22,078		)	(266		)	(225,286		)
Unrecognized tax benefits net of unused tax attributes and payments		$2,039			$328,924			$—			$29,601			$12,751			$39,899

The Registrant Subsidiaries’ balances of unrecognized tax benefits included amounts which, if recognized, would have reduced income tax expense as follows:

	December 31,
	2015		2014		2013
	(In Millions)
Entergy Arkansas		$4.5		$2.6		$0.6
Entergy Louisiana		$692.7		$267.3		$131.9
Entergy Mississippi		$8.1		$3.9		$3.9
Entergy New Orleans		$50.7		$50.7		$—
Entergy Texas		$5.2		$10.5		$10.1
System Energy		$0.7		$3.7		$3.3

The Registrant Subsidiaries accrue interest and penalties related to unrecognized tax benefits in income tax expense.  Penalties have not been accrued.  Accrued balances for the possible payment of interest are as follows:

	December 31,
	2015		2014		2013
	(In Millions)
Entergy Arkansas		$1.3		$17.0		$15.2
Entergy Louisiana		$9.3		$22.2		$18.0
Entergy Mississippi		$0.4		$2.8		$2.1
Entergy New Orleans		$1.8		$1.3		$0.9
Entergy Texas		$1.2		$1.0		$0.8
System Energy		$0.7		$23.8		$19.0

Income Tax Audits

Entergy and its subsidiaries file U.S. federal and various state and foreign income tax returns.  IRS examinations are complete for years before 2010. All state taxing authorities’ examinations are completed for years before 2009.

2006-2007 IRS Audit

In the first quarter 2015, the IRS finalized tax and interest computations from the 2006-2007 audit that resulted in a reversal of Entergy’s provision for uncertain tax positions related to accrued interest of approximately $20 million, including decreases of approximately $4 million for Entergy Arkansas, $11 million for Entergy Louisiana, and $1 million for System Energy.

2008-2009 IRS Audit

In the fourth quarter 2009, Entergy filed Applications for Change in Accounting Method (the “2009 CAM”) for tax purposes with the IRS for certain costs under Section 263A of the Internal Revenue Code.  In the Applications, Entergy proposed to treat the nuclear decommissioning liability associated with the operation of its nuclear power plants as a production cost properly includable in cost of goods sold.  The effect of the 2009 CAM was a $5.7 billion reduction in 2009 taxable income.  The 2009 CAM was adjusted to $9.3 billion in 2012.

In the fourth quarter 2012 the IRS disallowed the reduction to 2009 taxable income related to the 2009 CAM.  In the third quarter 2013, the Internal Revenue Service issued its RAR for the tax years 2008-2009. As a result of the issuance of this RAR, Entergy and the IRS resolved all of the 2008-2009 issues described above except for the 2009 CAM. Entergy disagreed with the IRS’s disallowance of the 2009 CAM and filed a protest with the IRS Appeals Division in October 2013.

In August 2015, Entergy and the IRS agreed on the treatment of the 2009 position regarding nuclear decommissioning liabilities from the 2008-2009 audit. The agreement provides that Entergy is entitled to deduct approximately $118 million of the $9.3 billion claimed in 2009. The agreement effectively settled all matters pertaining to the 2009 tax year and increased Entergy’s 2009 federal income tax liability by $2.4 million.

2010-2011 IRS Audit

The IRS examination of the 2010 and 2011 years is ongoing and the audit field work is expected to be completed by the end of the first quarter of 2016. The IRS has not issued any significant notices of proposed adjustments other than for the decommissioning liability position discussed above. The Revenue Agent’s Report is expected to be received shortly after the completion of field work.

Other Tax Matters

Entergy regularly negotiates with the IRS to achieve settlements.  The resolution of audit issues could result in significant changes to the amounts of unrecognized tax benefits in the next twelve months.

In September 2013 the U.S. Treasury Department and the IRS issued final regulations that provide guidance on the deductibility and capitalization of costs incurred associated with tangible property. Entergy and the Registrant Subsidiaries filed with the IRS an automatic application for change in accounting method which is in compliance with the final regulations and the safe harbor provisions of the relevant IRS Revenue Procedures. Entergy estimates that the effect of this accounting method change will result in a net increase to Entergy’s taxable income of approximately $585 million, which will be recognized generally over a four year period beginning with the tax year ended 2014. The adoption of the final regulations and safe harbor method results in approximate changes in the Registrant Subsidiaries taxable income as follows: an increase of $177 million for Entergy Arkansas, an increase of $78 million for Entergy Louisiana, an increase of $26 million for Entergy Mississippi, an increase of $183 million for Entergy Texas, a decrease of $2 million for Entergy New Orleans, and an increase of $22 million for System Energy.

In October 2015 two of Entergy’s Louisiana utilities, Entergy Gulf States Louisiana and Entergy Louisiana, combined their businesses into a legal entity which is identified as Entergy Louisiana herein. Entergy Louisiana maintained a carryover tax basis in the assets received. Additionally, the tax consequences provided for an increase in tax basis as well. To the extent that this increase in tax basis will provide additional tax depreciation, Entergy recorded a deferred tax asset and current tax expense resulting in a net increase in tax basis of approximately $334 million and Entergy Louisiana obtained a corresponding deferred tax asset. Consistent with the terms of an agreement with the LPSC, electric customers of Entergy Louisiana will realize customer credits associated with the business combination. Accordingly, in October 2015, Entergy recorded a regulatory liability of $107 million ($66 million net-of-tax) which partially offsets the effect of the aforementioned deferred tax asset. The deferred tax asset and the regulatory liability, net-of-tax, increased Entergy Louisiana’s member’s equity by $268 million. See Note 2 to the financial statements for further discussion of the business combination.

In the fourth quarter 2015, System Energy and Entergy Louisiana adopted a new method of accounting for income tax purposes in which the companies’ nuclear decommissioning costs will be treated as production costs of electricity includable in cost of goods sold. The new method results in a reduction of taxable income of $1.2 billion for System Energy and $2.2 billion for Entergy Louisiana.

The Protecting Americans from Tax Hikes Act of 2015 was enacted in December 2015. The most significant provisions affecting Entergy and the Registrant Subsidiaries were a five-year extension of bonus depreciation and permanent extension of the research and experimentation tax credit. The effect of the bonus depreciation extension on 2015 increased Entergy’s tax net operating loss.

Entergy Louisiana [Member]

Income Taxes

INCOME TAXES (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

Income taxes for 2015, 2014, and 2013 for Entergy Corporation and Subsidiaries consist of the following:

	2015			2014			2013
	(In Thousands)
Current:
Federal		$77,166			$90,061			$88,291
Foreign	97			90			101
State	157,829			(12,637		)	20,584
Total	235,092			77,514			108,976
Deferred and non-current - net	(864,799		)	528,326			126,935
Investment tax credit adjustments - net	(13,220		)	(16,243		)	(9,930		)
Income taxes		($642,927	)		$589,597			$225,981

Income taxes for 2015, 2014, and 2013 for Entergy’s Registrant Subsidiaries consist of the following:

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Current:
Federal		$66,966			$101,382			$25,628			($9,346	)		$53,313			($63,302	)
State	6,265			35,406			6,832			1,784			2,450			26,755
Total	73,231			136,788			32,460			(7,562		)	55,763			(36,547		)
Deferred and non-current - net	(31,463		)	47,220			31,149			32,890			(17,599		)	93,491
Investment tax credit adjustments - net	(1,227		)	(5,337		)	(1,737		)	(138		)	(914		)	(3,867		)
Income taxes		$40,541			$178,671			$61,872			$25,190			$37,250			$53,077

2014	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Current:
Federal		($34,258	)		($44,909	)		$8,103			($1,428	)		$48,610			$19,908
State	(678		)	(1,191		)	7,474			510			4,877			15,379
Total	(34,936		)	(46,100		)	15,577			(918		)	53,487			35,287
Deferred and non-current - net	119,841			236,794			42,305			14,592			(2,418		)	53,501
Investment tax credit adjustments - net	(1,276		)	(5,642		)	(2,172		)	(224		)	(1,425		)	(5,478		)
Income taxes		$83,629			$185,052			$55,710			$13,450			$49,644			$83,310

2013	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi		Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Current:
Federal		($13,574	)		($18,797	)		$2,498		$14,823			$37,199			($6,199	)
State	6,122			(15,631		)	4,849		(1,267		)	(843		)	15,845
Total	(7,452		)	(34,428		)	7,347		13,556			36,356			9,646
Deferred and non-current - net	101,253			179,036			41,150		(11,033		)	(4,639		)	60,614
Investment tax credit adjustments - net	(2,014		)	(5,912		)	1,260		(246		)	(1,609		)	(1,407		)
Income taxes		$91,787			$138,696			$49,757		$2,277			$30,108			$68,853

Total income taxes for Entergy Corporation and Subsidiaries differ from the amounts computed by applying the statutory income tax rate to income before income taxes.  The reasons for the differences for the years 2015, 2014, and 2013 are:

	2015			2014			2013
	(In Thousands)
Net income (loss) attributable to Entergy Corporation		($176,562	)		$940,721			$711,902
Preferred dividend requirements of subsidiaries	19,828			19,536			18,670
Consolidated net income (loss)	(156,734		)	960,257			730,572
Income taxes	(642,927		)	589,597			225,981
Income (loss) before income taxes		($799,661	)		$1,549,854			$956,553
Computed at statutory rate (35%)		($279,881	)		$542,449			$334,794
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	29,944			44,708			13,599
Regulatory differences - utility plant items	32,089			39,321			32,324
Equity component of AFUDC	(18,191		)	(21,108		)	(22,356		)
Amortization of investment tax credits	(11,136		)	(12,211		)	(13,535		)
Flow-through / permanent differences	(7,872		)	(18,003		)	(301		)
Net-of-tax regulatory liability	—			—			(2,899		)
New York tax law change (a)	—			(21,500		)	—
Louisiana business combination	(333,655		)	—			—
Termination of business reorganization	—			—			(27,192		)
Provision for uncertain tax positions (b)	(56,683		)	32,573			(59,249		)
Valuation allowance	—			—			(31,573		)
Other - net	2,458			3,368			2,369
Total income taxes as reported		($642,927	)		$589,597			$225,981
Effective Income Tax Rate	80.4		%	38.0		%	23.6		%

(a) In March 2014, New York enacted legislation that substantially modifies various aspects of New York tax law. The most significant effect of the legislation for Entergy is the adoption of full water’s-edge unitary combined reporting, meaning that all of Entergy’s domestic entities will be included in New York’s combined filing group. The effect of the tax law change resulted in a deferred state income tax reduction of approximately $21.5 million as shown in the table above.

(b) See “Income Tax Audits- 2008-2009 IRS Audit” below for discussion of the most significant items for 2015 and 2013.

Total income taxes for the Registrant Subsidiaries differ from the amounts computed by applying the statutory income tax rate to income before taxes.  The reasons for the differences for the years 2015, 2014, and 2013 are:

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Net income		$74,272			$446,639			$92,708			$44,925			$69,625			$111,318
Income taxes	40,541			178,671			61,872			25,190			37,250			53,077
Pretax income		$114,813			$625,310			$154,580			$70,115			$106,875			$164,395
Computed at statutory rate (35%)		$40,185			$218,859			$54,103			$24,540			$37,406			$57,538
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	6,643			23,650			5,219			2,887			1,621			6,403
Regulatory differences - utility plant items	7,299			3,013			2,383			2,201			3,703			12,167
Equity component of AFUDC	(4,979		)	(5,420		)	(1,083		)	(451		)	(1,987		)	(2,973		)
Amortization of investment tax credits	(1,201		)	(5,252		)	(160		)	(111		)	(900		)	(3,476		)
Flow-through / permanent differences	(4,062		)	2,460			431			(4,539		)	530			618
Non-taxable dividend income	—			(44,658		)	—			—			—			—
Provision for uncertain tax positions (a)	(3,978		)	(15,377		)	756			525			(3,365		)	(17,313		)
Other - net	634			1,396			223			138			242			113
Total income taxes		$40,541			$178,671			$61,872			$25,190			$37,250			$53,077
Effective Income Tax Rate	35.3		%	28.6		%	40.0		%	35.9		%	34.9		%	32.3		%

(a) See “Income Tax Audits- 2008-2009 IRS Audit” below for discussion of the most significant items for Entergy Louisiana and System Energy.

2014	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Net income		$121,392			$446,022			$74,821			$31,030			$74,804			$96,334
Income taxes	83,629			185,052			55,710			13,450			49,644			83,310
Pretax income		$205,021			$631,074			$130,531			$44,480			$124,448			$179,644
Computed at statutory rate (35%)		$71,757			$220,876			$45,686			$15,568			$43,557			$62,875
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	9,591			11,666			5,180			1,562			3,221			6,877
Regulatory differences - utility plant items	8,653			7,487			4,448			777			4,165			13,791
Equity component of AFUDC	(2,533		)	(14,612		)	(833		)	(320		)	(1,035		)	(1,774		)
Amortization of investment tax credits	(1,251		)	(5,594		)	(260		)	(218		)	(1,412		)	(3,476		)
Flow-through / permanent differences	(5,082		)	(225		)	555			(4,458		)	393			(327		)
Non-taxable dividend income	—			(41,255		)	—			—			—			—
Provision for uncertain tax positions	1,881			5,336			718			405			522			5,235
Other - net	613			1,373			216			134			233			109
Total income taxes		$83,629			$185,052			$55,710			$13,450			$49,644			$83,310
Effective Income Tax Rate	40.8		%	29.3		%	42.7		%	30.2		%	39.9		%	46.4		%

2013	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Net income		$161,948			$414,126			$82,159			$12,608			$57,881			$113,664
Income taxes	91,787			138,696			49,757			2,277			30,108			68,853
Pretax income		$253,735			$552,822			$131,916			$14,885			$87,989			$182,517
Computed at statutory rate (35%)		$88,807			$193,488			$46,171			$5,210			$30,796			$63,881
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	10,954			19,084			4,564			1,116			(897		)	5,900
Regulatory differences - utility plant items	7,938			7,005			2,603			453			3,256			11,070
Equity component of AFUDC	(3,820		)	(13,100		)	(764		)	(322		)	(1,626		)	(2,724		)
Amortization of investment tax credits	(1,989		)	(5,864		)	(260		)	(216		)	(1,596		)	(3,476		)
Flow-through / permanent differences	2,540			3,646			1,702			(4,402		)	2,467			(491		)
Net-of-tax regulatory liability	—			(2,899		)	—			—			—			—
Termination of business organization	(6,753		)	(7,453		)	(4,177		)	(501		)	(3,542		)	(13		)
Non-taxable dividend income	—			(36,953		)	—			—			—			—
Provision for uncertain tax positions (a)	(6,527		)	(18,645		)	(326		)	795			1,027			(5,353		)
Other - net	637			387			244			144			223			59
Total income taxes		$91,787			$138,696			$49,757			$2,277			$30,108			$68,853
Effective Income Tax Rate	36.2		%	25.1		%	37.7		%	15.3		%	34.2		%	37.7		%

(a) See “Income Tax Audits- 2008-2009 IRS Audit” below for discussion of the most significant items for Entergy Louisiana and System Energy.

Significant components of accumulated deferred income taxes and taxes accrued for Entergy Corporation and Subsidiaries as of December 31, 2015 and 2014 are as follows:

	2015			2014
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($6,804,225	)		($8,128,096	)
Regulatory assets	(646,392		)	(922,161		)
Nuclear decommissioning trusts	(1,254,463		)	(1,248,737		)
Pension, net funding	(365,111		)	(324,881		)
Combined unitary state taxes	(45,078		)	(162,340		)
Power purchase agreements	—			(110,889		)
Other	(315,844		)	(500,424		)
Total	(9,431,113		)	(11,397,528		)
Deferred tax assets:
Nuclear decommissioning liabilities	828,983			874,493
Regulatory liabilities	284,432			458,230
Pension and other post-employment benefits	525,524			586,455
Sale and leaseback	139,720			153,308
Compensation	69,432			74,692
Accumulated deferred investment tax credit	95,248			100,442
Provision for allowances and contingencies	188,282			160,551
Power purchase agreements	38,401			—
Net operating loss carryforwards	360,188			457,758
Capital losses and miscellaneous tax credits	11,075			12,146
Valuation allowance	(91,532		)	(27,387		)
Other	68,204			58,334
Total	2,517,957			2,909,022
Non-current accrued taxes (including unrecognized tax benefits)	(1,338,806		)	(606,560		)
Accumulated deferred income taxes and taxes accrued		($8,251,962	)		($9,095,066	)

Entergy’s estimated tax attributes carryovers and their expiration dates as of December 31, 2015 are as follows:

Carryover Description	Carryover Amount	Year(s) of expiration
Federal net operating losses	$3.6 billion	2023-2035
State net operating losses	$5.2 billion	2016-2035
Miscellaneous federal and state credits	$77.9 million	2016-2035

As a result of the accounting for uncertain tax positions, the amount of the deferred tax assets reflected in the financial statements is less than the amount of the tax effect of the federal and state net operating loss carryovers, tax credit carryovers, and other tax attributes reflected on income tax returns. Because it is more likely than not that the benefit from certain state net operating loss carryovers will not be utilized, valuation allowances of $46 million as of December 31, 2015 and $21 million as of December 31, 2014 have been provided on the deferred tax assets relating to these state net operating loss carryovers. Additionally, valuation allowances totaling $45.5 million as of December 31, 2015 have been provided on deferred tax assets related to state jurisdictions in which Entergy does not currently expect to be able to utilize separate company tax return losses, preventing realization of such deferred tax assets.

Significant components of accumulated deferred income taxes and taxes accrued for the Registrant Subsidiaries as of December 31, 2015 and 2014 are as follows:

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($1,710,444	)		($2,041,968	)		($781,427	)		($167,294	)		($778,270	)		($611,745	)
Regulatory assets	(108,422		)	(254,316		)	(24,918		)	(39,451		)	(172,117		)	(46,990		)
Nuclear decommissioning trusts	(121,326		)	(99,980		)	—			—			—			(68,370		)
Pension, net funding	(107,073		)	(109,709		)	(30,901		)	(14,459		)	(28,001		)	(25,791		)
Deferred fuel	(7,647		)	(2,513		)	(684		)	(175		)	2,050			(18		)
Other	(38,683		)	(86,275		)	(5,625		)	(12,253		)	(10,109		)	(22,478		)
Total	(2,093,595		)	(2,594,761		)	(843,555		)	(233,632		)	(986,447		)	(775,392		)
Deferred tax assets:
Regulatory liabilities	18,369			215,154			7,787			20,888			7,307			14,927
Nuclear decommissioning liabilities	109,962			49,333			—			—			—			39,420
Pension and other post-employment benefits	(20,420		)	149,680			(6,628		)	(8,939		)	(16,703		)	(1,037		)
Sale and leaseback	—			37,236			—			—			—			102,484
Accumulated deferred investment tax credit	14,320			56,635			1,777			290			4,842			17,385
Provision for allowances and contingencies	1,024			123,007			18,735			33,843			7,266			134
Power purchase agreements	(1,279		)	13,840			1,901			13			575			—
Unbilled/deferred revenues	9,815			(32,365		)	7,154			2,126			10,851			—
Compensation	1,842			4,182			601			880			4,496			—
Net operating loss carryforwards	—			90,241			—			—			—			—
Other	128			21,982			1,995			316			1,672			—
Total	133,761			728,925			33,322			49,417			20,306			173,313
Non-current accrued taxes (including unrecognized tax benefits)	(22,978		)	(641,120		)	(402		)	(29,846		)	(40,693		)	(416,996		)
Accumulated deferred income taxes and taxes accrued		($1,982,812	)		($2,506,956	)		($810,635	)		($214,061	)		($1,006,834	)		($1,019,075	)

2014	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($1,657,503	)		($2,748,852	)		($753,576	)		($186,153	)		($771,135	)		($668,779	)
Regulatory assets	(198,662		)	(380,719		)	(30,114		)	—			(202,402		)	(110,087		)
Nuclear decommissioning trusts	(130,524		)	(106,162		)	—			—			—			(74,063		)
Pension, net funding	(93,355		)	(99,593		)	(27,861		)	(13,285		)	(25,616		)	(23,440		)
Deferred fuel	(82,050		)	(3,534		)	(5,303		)	(407		)	2,045			(120		)
Power purchase agreements	(17,073		)	(67,083		)	2,129			13			847			—
Other	(33,827		)	(84,282		)	(11,423		)	(11,500		)	(22,546		)	(19,802		)
Total	(2,212,994		)	(3,490,225		)	(826,148		)	(211,332		)	(1,018,807		)	(896,291		)
Deferred tax assets:
Regulatory liabilities	145,466			181,601			7,214			29,580			4,079			90,290
Nuclear decommissioning liabilities	(43,134		)	146,138			—			—			—			(62,571		)
Pension and other post-employment benefits	(17,534		)	158,661			(7,288		)	(7,504		)	(15,053		)	(1,413		)
Sale and leaseback	—			45,136			—			—			—			108,172
Accumulated deferred investment tax credit	14,791			58,863			2,436			332			5,158			18,862
Provision for allowances and contingencies	(7,149		)	125,805			19,590			10,986			8,017			133
Unbilled/deferred revenues	12,322			(25,016		)	12,956			3,395			11,573			—
Compensation	2,085			158			(846		)	475			4,155			—
Net operating loss carryforwards	105,063			241,803			—			—			—			—
Capital losses and miscellaneous tax credits	—			—			3,504			—			—			—
Other	258			15,508			5,887			2,891			3,850			2,000
Total	212,168			948,657			43,453			40,155			21,779			155,473
Non-current accrued taxes (including unrecognized tax benefits)	9,367			(412,508		)	(12,481		)	(19,502		)	(48,921		)	(81,528		)
Accumulated deferred income taxes and taxes accrued		($1,991,459	)		($2,954,076	)		($795,176	)		($190,679	)		($1,045,949	)		($822,346	)

The Registrant Subsidiaries’ estimated tax attributes carryovers and their expiration dates as of December 31, 2015 are as follows:

	Entergy Arkansas	Entergy Louisiana	Entergy Mississippi	Entergy New Orleans	Entergy Texas	System Energy
Federal net operating losses	$7 million	$2.4 billion	—	—	—	$242 million
Year(s) of expiration	2030-2035	2035	N/A	N/A	N/A	2030-2035
State net operating losses	—	$2.5 billion	—	$6 million	—	$833 million
Year(s) of expiration	N/A	2035	N/A	2032	N/A	2035
Misc. federal credits	$1 million	—	$1 million	—	—	$1 million
Year(s) of expiration	2029-2033	N/A	2029-2034	N/A	N/A	2029-2033
State credits	—	—	—	—	$3.3 million	$6 million
Year(s) of expiration	N/A	N/A	N/A	N/A	2026	2017-2020

As a result of the accounting for uncertain tax positions, the amount of the deferred tax assets reflected in the financial statements is less than the amount of the tax effect of the federal and state net operating loss carryovers and tax credit carryovers.

Unrecognized tax benefits

Accounting standards establish a “more-likely-than-not” recognition threshold that must be met before a tax benefit can be recognized in the financial statements.  If a tax deduction is taken on a tax return, but does not meet the more-likely-than-not recognition threshold, an increase in income tax liability, above what is payable on the tax return, is required to be recorded.  A reconciliation of Entergy’s beginning and ending amount of unrecognized tax benefits is as follows:

	2015			2014			2013
	(In Thousands)
Gross balance at January 1		$4,736,785			$4,593,224			$4,170,403
Additions based on tax positions related to the current year	1,850,705			348,543			162,338
Additions for tax positions of prior years	59,815			11,637			410,108
Reductions for tax positions of prior years (a)	(3,966,535		)	(213,401		)	(103,360		)
Settlements	(68,227		)	—			(43,620		)
Lapse of statute of limitations	(958		)	(3,218		)	(2,645		)
Gross balance at December 31	2,611,585			4,736,785			4,593,224
Offsets to gross unrecognized tax benefits:
Credit and loss carryovers	(1,264,483		)	(4,295,643		)	(4,400,498		)
Unrecognized tax benefits net of unused tax attributes and payments (b)		$1,347,102			$441,142			$192,726

(a) The primary reduction is related to the nuclear decommissioning costs treatment discussed in “Income Tax Audits - 2008-2009 IRS Audit” below.

(b) Potential tax liability above what is payable on tax returns

The balances of unrecognized tax benefits include $955 million, $516 million, and $176 million as of December 31, 2015, 2014, and 2013, respectively, which, if recognized, would lower the effective income tax rates.  Because of the effect of deferred tax accounting, the remaining balances of unrecognized tax benefits of $1.657 billion, $4.221 billion, and $4.417 billion as of December 31, 2015, 2014, and 2013, respectively, if disallowed, would not affect the annual effective income tax rate but would accelerate the payment of cash to the taxing authority to an earlier period.

Entergy accrues interest expense, if any, related to unrecognized tax benefits in income tax expense.  Entergy’s December 31, 2015, 2014, and 2013 accrued balance for the possible payment of interest is approximately $27 million, $127 million, and $96.4 million, respectively.

A reconciliation of the Registrant Subsidiaries’ beginning and ending amount of unrecognized tax benefits for 2015, 2014, and 2013 is as follows:

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Gross balance at January 1, 2015		$362,912			$1,205,929			$20,144			$53,763			$17,264			$258,242
Additions based on tax positions related to the current year (a)	2,196			1,367,058			566			472			657			472,304
Additions for tax positions of prior years	1,057			7,992			8,140			48			2,914			913
Reductions for tax positions of prior years	(340,720		)	(859,430		)	—			(386		)	(3,981		)	(253,141		)
Settlements	—			(30,888		)	(9,368		)	—			(3,392		)	—
Gross balance at December 31, 2015	25,445			1,690,661			19,482			53,897			13,462			478,318
Offsets to gross unrecognized tax benefits:
Loss carryovers	(3,613		)	(893,764		)	(1,016		)	(506		)	(276		)	(133,611		)
Unrecognized tax benefits net of unused tax attributes and payments		$21,832			$796,897			$18,466			$53,391			$13,186			$344,707

(a) The primary addition for Entergy Louisiana and System Energy is related to the nuclear decommissioning costs treatment discussed in “Other Tax Matters” below.

2014	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Gross balance at January 1, 2014		$347,713			$1,076,680			$16,186			$51,679			$13,017			$265,185
Additions based on tax positions related to the current year	14,511			151,249			3,928			2,235			4,225			2,744
Additions for tax positions of prior years	1,767			6,924			319			37			303			566
Reductions for tax positions of prior years	(1,079		)	(28,924		)	(289		)	(188		)	(267		)	(10,253		)
Settlements	—			—			—			—			(14		)	—
Gross balance at December 31, 2014	362,912			1,205,929			20,144			53,763			17,264			258,242
Offsets to gross unrecognized tax benefits:
Loss carryovers	(361,043		)	(739,988		)	(6,992		)	(20,735		)	(241		)	(163,124		)
Unrecognized tax benefits net of unused tax attributes and payments		$1,869			$465,941			$13,152			$33,028			$17,023			$95,118

2013	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Gross balance at January 1, 2013		$344,669			$1,002,394			$16,841			$52,018			$13,954			$260,346
Additions based on tax positions related to the current year	6,427			17,887			957			583			2,170			4,170
Additions for tax positions of prior years	1,228			125,214			401			3,506			587			8,391
Reductions for tax positions of prior years	(3,943		)	(53,473		)	(1,941		)	(962		)	(4,186		)	(967		)
Settlements	(668		)	(15,342		)	(72		)	(3,466		)	492			(6,755		)
Gross balance at December 31, 2013	347,713			1,076,680			16,186			51,679			13,017			265,185
Offsets to gross unrecognized tax benefits:
Loss carryovers	(345,674		)	(747,756		)	(16,186		)	(22,078		)	(266		)	(225,286		)
Unrecognized tax benefits net of unused tax attributes and payments		$2,039			$328,924			$—			$29,601			$12,751			$39,899

The Registrant Subsidiaries’ balances of unrecognized tax benefits included amounts which, if recognized, would have reduced income tax expense as follows:

	December 31,
	2015		2014		2013
	(In Millions)
Entergy Arkansas		$4.5		$2.6		$0.6
Entergy Louisiana		$692.7		$267.3		$131.9
Entergy Mississippi		$8.1		$3.9		$3.9
Entergy New Orleans		$50.7		$50.7		$—
Entergy Texas		$5.2		$10.5		$10.1
System Energy		$0.7		$3.7		$3.3

The Registrant Subsidiaries accrue interest and penalties related to unrecognized tax benefits in income tax expense.  Penalties have not been accrued.  Accrued balances for the possible payment of interest are as follows:

	December 31,
	2015		2014		2013
	(In Millions)
Entergy Arkansas		$1.3		$17.0		$15.2
Entergy Louisiana		$9.3		$22.2		$18.0
Entergy Mississippi		$0.4		$2.8		$2.1
Entergy New Orleans		$1.8		$1.3		$0.9
Entergy Texas		$1.2		$1.0		$0.8
System Energy		$0.7		$23.8		$19.0

Income Tax Audits

Entergy and its subsidiaries file U.S. federal and various state and foreign income tax returns.  IRS examinations are complete for years before 2010. All state taxing authorities’ examinations are completed for years before 2009.

2006-2007 IRS Audit

In the first quarter 2015, the IRS finalized tax and interest computations from the 2006-2007 audit that resulted in a reversal of Entergy’s provision for uncertain tax positions related to accrued interest of approximately $20 million, including decreases of approximately $4 million for Entergy Arkansas, $11 million for Entergy Louisiana, and $1 million for System Energy.

2008-2009 IRS Audit

In the fourth quarter 2009, Entergy filed Applications for Change in Accounting Method (the “2009 CAM”) for tax purposes with the IRS for certain costs under Section 263A of the Internal Revenue Code.  In the Applications, Entergy proposed to treat the nuclear decommissioning liability associated with the operation of its nuclear power plants as a production cost properly includable in cost of goods sold.  The effect of the 2009 CAM was a $5.7 billion reduction in 2009 taxable income.  The 2009 CAM was adjusted to $9.3 billion in 2012.

In the fourth quarter 2012 the IRS disallowed the reduction to 2009 taxable income related to the 2009 CAM.  In the third quarter 2013, the Internal Revenue Service issued its RAR for the tax years 2008-2009. As a result of the issuance of this RAR, Entergy and the IRS resolved all of the 2008-2009 issues described above except for the 2009 CAM. Entergy disagreed with the IRS’s disallowance of the 2009 CAM and filed a protest with the IRS Appeals Division in October 2013.

In August 2015, Entergy and the IRS agreed on the treatment of the 2009 position regarding nuclear decommissioning liabilities from the 2008-2009 audit. The agreement provides that Entergy is entitled to deduct approximately $118 million of the $9.3 billion claimed in 2009. The agreement effectively settled all matters pertaining to the 2009 tax year and increased Entergy’s 2009 federal income tax liability by $2.4 million.

2010-2011 IRS Audit

The IRS examination of the 2010 and 2011 years is ongoing and the audit field work is expected to be completed by the end of the first quarter of 2016. The IRS has not issued any significant notices of proposed adjustments other than for the decommissioning liability position discussed above. The Revenue Agent’s Report is expected to be received shortly after the completion of field work.

Other Tax Matters

Entergy regularly negotiates with the IRS to achieve settlements.  The resolution of audit issues could result in significant changes to the amounts of unrecognized tax benefits in the next twelve months.

In September 2013 the U.S. Treasury Department and the IRS issued final regulations that provide guidance on the deductibility and capitalization of costs incurred associated with tangible property. Entergy and the Registrant Subsidiaries filed with the IRS an automatic application for change in accounting method which is in compliance with the final regulations and the safe harbor provisions of the relevant IRS Revenue Procedures. Entergy estimates that the effect of this accounting method change will result in a net increase to Entergy’s taxable income of approximately $585 million, which will be recognized generally over a four year period beginning with the tax year ended 2014. The adoption of the final regulations and safe harbor method results in approximate changes in the Registrant Subsidiaries taxable income as follows: an increase of $177 million for Entergy Arkansas, an increase of $78 million for Entergy Louisiana, an increase of $26 million for Entergy Mississippi, an increase of $183 million for Entergy Texas, a decrease of $2 million for Entergy New Orleans, and an increase of $22 million for System Energy.

In October 2015 two of Entergy’s Louisiana utilities, Entergy Gulf States Louisiana and Entergy Louisiana, combined their businesses into a legal entity which is identified as Entergy Louisiana herein. Entergy Louisiana maintained a carryover tax basis in the assets received. Additionally, the tax consequences provided for an increase in tax basis as well. To the extent that this increase in tax basis will provide additional tax depreciation, Entergy recorded a deferred tax asset and current tax expense resulting in a net increase in tax basis of approximately $334 million and Entergy Louisiana obtained a corresponding deferred tax asset. Consistent with the terms of an agreement with the LPSC, electric customers of Entergy Louisiana will realize customer credits associated with the business combination. Accordingly, in October 2015, Entergy recorded a regulatory liability of $107 million ($66 million net-of-tax) which partially offsets the effect of the aforementioned deferred tax asset. The deferred tax asset and the regulatory liability, net-of-tax, increased Entergy Louisiana’s member’s equity by $268 million. See Note 2 to the financial statements for further discussion of the business combination.

In the fourth quarter 2015, System Energy and Entergy Louisiana adopted a new method of accounting for income tax purposes in which the companies’ nuclear decommissioning costs will be treated as production costs of electricity includable in cost of goods sold. The new method results in a reduction of taxable income of $1.2 billion for System Energy and $2.2 billion for Entergy Louisiana.

The Protecting Americans from Tax Hikes Act of 2015 was enacted in December 2015. The most significant provisions affecting Entergy and the Registrant Subsidiaries were a five-year extension of bonus depreciation and permanent extension of the research and experimentation tax credit. The effect of the bonus depreciation extension on 2015 increased Entergy’s tax net operating loss.

Entergy Mississippi [Member]

Income Taxes

INCOME TAXES (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

Income taxes for 2015, 2014, and 2013 for Entergy Corporation and Subsidiaries consist of the following:

	2015			2014			2013
	(In Thousands)
Current:
Federal		$77,166			$90,061			$88,291
Foreign	97			90			101
State	157,829			(12,637		)	20,584
Total	235,092			77,514			108,976
Deferred and non-current - net	(864,799		)	528,326			126,935
Investment tax credit adjustments - net	(13,220		)	(16,243		)	(9,930		)
Income taxes		($642,927	)		$589,597			$225,981

Income taxes for 2015, 2014, and 2013 for Entergy’s Registrant Subsidiaries consist of the following:

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Current:
Federal		$66,966			$101,382			$25,628			($9,346	)		$53,313			($63,302	)
State	6,265			35,406			6,832			1,784			2,450			26,755
Total	73,231			136,788			32,460			(7,562		)	55,763			(36,547		)
Deferred and non-current - net	(31,463		)	47,220			31,149			32,890			(17,599		)	93,491
Investment tax credit adjustments - net	(1,227		)	(5,337		)	(1,737		)	(138		)	(914		)	(3,867		)
Income taxes		$40,541			$178,671			$61,872			$25,190			$37,250			$53,077

2014	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Current:
Federal		($34,258	)		($44,909	)		$8,103			($1,428	)		$48,610			$19,908
State	(678		)	(1,191		)	7,474			510			4,877			15,379
Total	(34,936		)	(46,100		)	15,577			(918		)	53,487			35,287
Deferred and non-current - net	119,841			236,794			42,305			14,592			(2,418		)	53,501
Investment tax credit adjustments - net	(1,276		)	(5,642		)	(2,172		)	(224		)	(1,425		)	(5,478		)
Income taxes		$83,629			$185,052			$55,710			$13,450			$49,644			$83,310

2013	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi		Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Current:
Federal		($13,574	)		($18,797	)		$2,498		$14,823			$37,199			($6,199	)
State	6,122			(15,631		)	4,849		(1,267		)	(843		)	15,845
Total	(7,452		)	(34,428		)	7,347		13,556			36,356			9,646
Deferred and non-current - net	101,253			179,036			41,150		(11,033		)	(4,639		)	60,614
Investment tax credit adjustments - net	(2,014		)	(5,912		)	1,260		(246		)	(1,609		)	(1,407		)
Income taxes		$91,787			$138,696			$49,757		$2,277			$30,108			$68,853

Total income taxes for Entergy Corporation and Subsidiaries differ from the amounts computed by applying the statutory income tax rate to income before income taxes.  The reasons for the differences for the years 2015, 2014, and 2013 are:

	2015			2014			2013
	(In Thousands)
Net income (loss) attributable to Entergy Corporation		($176,562	)		$940,721			$711,902
Preferred dividend requirements of subsidiaries	19,828			19,536			18,670
Consolidated net income (loss)	(156,734		)	960,257			730,572
Income taxes	(642,927		)	589,597			225,981
Income (loss) before income taxes		($799,661	)		$1,549,854			$956,553
Computed at statutory rate (35%)		($279,881	)		$542,449			$334,794
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	29,944			44,708			13,599
Regulatory differences - utility plant items	32,089			39,321			32,324
Equity component of AFUDC	(18,191		)	(21,108		)	(22,356		)
Amortization of investment tax credits	(11,136		)	(12,211		)	(13,535		)
Flow-through / permanent differences	(7,872		)	(18,003		)	(301		)
Net-of-tax regulatory liability	—			—			(2,899		)
New York tax law change (a)	—			(21,500		)	—
Louisiana business combination	(333,655		)	—			—
Termination of business reorganization	—			—			(27,192		)
Provision for uncertain tax positions (b)	(56,683		)	32,573			(59,249		)
Valuation allowance	—			—			(31,573		)
Other - net	2,458			3,368			2,369
Total income taxes as reported		($642,927	)		$589,597			$225,981
Effective Income Tax Rate	80.4		%	38.0		%	23.6		%

(a) In March 2014, New York enacted legislation that substantially modifies various aspects of New York tax law. The most significant effect of the legislation for Entergy is the adoption of full water’s-edge unitary combined reporting, meaning that all of Entergy’s domestic entities will be included in New York’s combined filing group. The effect of the tax law change resulted in a deferred state income tax reduction of approximately $21.5 million as shown in the table above.

(b) See “Income Tax Audits- 2008-2009 IRS Audit” below for discussion of the most significant items for 2015 and 2013.

Total income taxes for the Registrant Subsidiaries differ from the amounts computed by applying the statutory income tax rate to income before taxes.  The reasons for the differences for the years 2015, 2014, and 2013 are:

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Net income		$74,272			$446,639			$92,708			$44,925			$69,625			$111,318
Income taxes	40,541			178,671			61,872			25,190			37,250			53,077
Pretax income		$114,813			$625,310			$154,580			$70,115			$106,875			$164,395
Computed at statutory rate (35%)		$40,185			$218,859			$54,103			$24,540			$37,406			$57,538
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	6,643			23,650			5,219			2,887			1,621			6,403
Regulatory differences - utility plant items	7,299			3,013			2,383			2,201			3,703			12,167
Equity component of AFUDC	(4,979		)	(5,420		)	(1,083		)	(451		)	(1,987		)	(2,973		)
Amortization of investment tax credits	(1,201		)	(5,252		)	(160		)	(111		)	(900		)	(3,476		)
Flow-through / permanent differences	(4,062		)	2,460			431			(4,539		)	530			618
Non-taxable dividend income	—			(44,658		)	—			—			—			—
Provision for uncertain tax positions (a)	(3,978		)	(15,377		)	756			525			(3,365		)	(17,313		)
Other - net	634			1,396			223			138			242			113
Total income taxes		$40,541			$178,671			$61,872			$25,190			$37,250			$53,077
Effective Income Tax Rate	35.3		%	28.6		%	40.0		%	35.9		%	34.9		%	32.3		%

(a) See “Income Tax Audits- 2008-2009 IRS Audit” below for discussion of the most significant items for Entergy Louisiana and System Energy.

2014	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Net income		$121,392			$446,022			$74,821			$31,030			$74,804			$96,334
Income taxes	83,629			185,052			55,710			13,450			49,644			83,310
Pretax income		$205,021			$631,074			$130,531			$44,480			$124,448			$179,644
Computed at statutory rate (35%)		$71,757			$220,876			$45,686			$15,568			$43,557			$62,875
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	9,591			11,666			5,180			1,562			3,221			6,877
Regulatory differences - utility plant items	8,653			7,487			4,448			777			4,165			13,791
Equity component of AFUDC	(2,533		)	(14,612		)	(833		)	(320		)	(1,035		)	(1,774		)
Amortization of investment tax credits	(1,251		)	(5,594		)	(260		)	(218		)	(1,412		)	(3,476		)
Flow-through / permanent differences	(5,082		)	(225		)	555			(4,458		)	393			(327		)
Non-taxable dividend income	—			(41,255		)	—			—			—			—
Provision for uncertain tax positions	1,881			5,336			718			405			522			5,235
Other - net	613			1,373			216			134			233			109
Total income taxes		$83,629			$185,052			$55,710			$13,450			$49,644			$83,310
Effective Income Tax Rate	40.8		%	29.3		%	42.7		%	30.2		%	39.9		%	46.4		%

2013	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Net income		$161,948			$414,126			$82,159			$12,608			$57,881			$113,664
Income taxes	91,787			138,696			49,757			2,277			30,108			68,853
Pretax income		$253,735			$552,822			$131,916			$14,885			$87,989			$182,517
Computed at statutory rate (35%)		$88,807			$193,488			$46,171			$5,210			$30,796			$63,881
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	10,954			19,084			4,564			1,116			(897		)	5,900
Regulatory differences - utility plant items	7,938			7,005			2,603			453			3,256			11,070
Equity component of AFUDC	(3,820		)	(13,100		)	(764		)	(322		)	(1,626		)	(2,724		)
Amortization of investment tax credits	(1,989		)	(5,864		)	(260		)	(216		)	(1,596		)	(3,476		)
Flow-through / permanent differences	2,540			3,646			1,702			(4,402		)	2,467			(491		)
Net-of-tax regulatory liability	—			(2,899		)	—			—			—			—
Termination of business organization	(6,753		)	(7,453		)	(4,177		)	(501		)	(3,542		)	(13		)
Non-taxable dividend income	—			(36,953		)	—			—			—			—
Provision for uncertain tax positions (a)	(6,527		)	(18,645		)	(326		)	795			1,027			(5,353		)
Other - net	637			387			244			144			223			59
Total income taxes		$91,787			$138,696			$49,757			$2,277			$30,108			$68,853
Effective Income Tax Rate	36.2		%	25.1		%	37.7		%	15.3		%	34.2		%	37.7		%

(a) See “Income Tax Audits- 2008-2009 IRS Audit” below for discussion of the most significant items for Entergy Louisiana and System Energy.

Significant components of accumulated deferred income taxes and taxes accrued for Entergy Corporation and Subsidiaries as of December 31, 2015 and 2014 are as follows:

	2015			2014
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($6,804,225	)		($8,128,096	)
Regulatory assets	(646,392		)	(922,161		)
Nuclear decommissioning trusts	(1,254,463		)	(1,248,737		)
Pension, net funding	(365,111		)	(324,881		)
Combined unitary state taxes	(45,078		)	(162,340		)
Power purchase agreements	—			(110,889		)
Other	(315,844		)	(500,424		)
Total	(9,431,113		)	(11,397,528		)
Deferred tax assets:
Nuclear decommissioning liabilities	828,983			874,493
Regulatory liabilities	284,432			458,230
Pension and other post-employment benefits	525,524			586,455
Sale and leaseback	139,720			153,308
Compensation	69,432			74,692
Accumulated deferred investment tax credit	95,248			100,442
Provision for allowances and contingencies	188,282			160,551
Power purchase agreements	38,401			—
Net operating loss carryforwards	360,188			457,758
Capital losses and miscellaneous tax credits	11,075			12,146
Valuation allowance	(91,532		)	(27,387		)
Other	68,204			58,334
Total	2,517,957			2,909,022
Non-current accrued taxes (including unrecognized tax benefits)	(1,338,806		)	(606,560		)
Accumulated deferred income taxes and taxes accrued		($8,251,962	)		($9,095,066	)

Entergy’s estimated tax attributes carryovers and their expiration dates as of December 31, 2015 are as follows:

Carryover Description	Carryover Amount	Year(s) of expiration
Federal net operating losses	$3.6 billion	2023-2035
State net operating losses	$5.2 billion	2016-2035
Miscellaneous federal and state credits	$77.9 million	2016-2035

As a result of the accounting for uncertain tax positions, the amount of the deferred tax assets reflected in the financial statements is less than the amount of the tax effect of the federal and state net operating loss carryovers, tax credit carryovers, and other tax attributes reflected on income tax returns. Because it is more likely than not that the benefit from certain state net operating loss carryovers will not be utilized, valuation allowances of $46 million as of December 31, 2015 and $21 million as of December 31, 2014 have been provided on the deferred tax assets relating to these state net operating loss carryovers. Additionally, valuation allowances totaling $45.5 million as of December 31, 2015 have been provided on deferred tax assets related to state jurisdictions in which Entergy does not currently expect to be able to utilize separate company tax return losses, preventing realization of such deferred tax assets.

Significant components of accumulated deferred income taxes and taxes accrued for the Registrant Subsidiaries as of December 31, 2015 and 2014 are as follows:

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($1,710,444	)		($2,041,968	)		($781,427	)		($167,294	)		($778,270	)		($611,745	)
Regulatory assets	(108,422		)	(254,316		)	(24,918		)	(39,451		)	(172,117		)	(46,990		)
Nuclear decommissioning trusts	(121,326		)	(99,980		)	—			—			—			(68,370		)
Pension, net funding	(107,073		)	(109,709		)	(30,901		)	(14,459		)	(28,001		)	(25,791		)
Deferred fuel	(7,647		)	(2,513		)	(684		)	(175		)	2,050			(18		)
Other	(38,683		)	(86,275		)	(5,625		)	(12,253		)	(10,109		)	(22,478		)
Total	(2,093,595		)	(2,594,761		)	(843,555		)	(233,632		)	(986,447		)	(775,392		)
Deferred tax assets:
Regulatory liabilities	18,369			215,154			7,787			20,888			7,307			14,927
Nuclear decommissioning liabilities	109,962			49,333			—			—			—			39,420
Pension and other post-employment benefits	(20,420		)	149,680			(6,628		)	(8,939		)	(16,703		)	(1,037		)
Sale and leaseback	—			37,236			—			—			—			102,484
Accumulated deferred investment tax credit	14,320			56,635			1,777			290			4,842			17,385
Provision for allowances and contingencies	1,024			123,007			18,735			33,843			7,266			134
Power purchase agreements	(1,279		)	13,840			1,901			13			575			—
Unbilled/deferred revenues	9,815			(32,365		)	7,154			2,126			10,851			—
Compensation	1,842			4,182			601			880			4,496			—
Net operating loss carryforwards	—			90,241			—			—			—			—
Other	128			21,982			1,995			316			1,672			—
Total	133,761			728,925			33,322			49,417			20,306			173,313
Non-current accrued taxes (including unrecognized tax benefits)	(22,978		)	(641,120		)	(402		)	(29,846		)	(40,693		)	(416,996		)
Accumulated deferred income taxes and taxes accrued		($1,982,812	)		($2,506,956	)		($810,635	)		($214,061	)		($1,006,834	)		($1,019,075	)

2014	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($1,657,503	)		($2,748,852	)		($753,576	)		($186,153	)		($771,135	)		($668,779	)
Regulatory assets	(198,662		)	(380,719		)	(30,114		)	—			(202,402		)	(110,087		)
Nuclear decommissioning trusts	(130,524		)	(106,162		)	—			—			—			(74,063		)
Pension, net funding	(93,355		)	(99,593		)	(27,861		)	(13,285		)	(25,616		)	(23,440		)
Deferred fuel	(82,050		)	(3,534		)	(5,303		)	(407		)	2,045			(120		)
Power purchase agreements	(17,073		)	(67,083		)	2,129			13			847			—
Other	(33,827		)	(84,282		)	(11,423		)	(11,500		)	(22,546		)	(19,802		)
Total	(2,212,994		)	(3,490,225		)	(826,148		)	(211,332		)	(1,018,807		)	(896,291		)
Deferred tax assets:
Regulatory liabilities	145,466			181,601			7,214			29,580			4,079			90,290
Nuclear decommissioning liabilities	(43,134		)	146,138			—			—			—			(62,571		)
Pension and other post-employment benefits	(17,534		)	158,661			(7,288		)	(7,504		)	(15,053		)	(1,413		)
Sale and leaseback	—			45,136			—			—			—			108,172
Accumulated deferred investment tax credit	14,791			58,863			2,436			332			5,158			18,862
Provision for allowances and contingencies	(7,149		)	125,805			19,590			10,986			8,017			133
Unbilled/deferred revenues	12,322			(25,016		)	12,956			3,395			11,573			—
Compensation	2,085			158			(846		)	475			4,155			—
Net operating loss carryforwards	105,063			241,803			—			—			—			—
Capital losses and miscellaneous tax credits	—			—			3,504			—			—			—
Other	258			15,508			5,887			2,891			3,850			2,000
Total	212,168			948,657			43,453			40,155			21,779			155,473
Non-current accrued taxes (including unrecognized tax benefits)	9,367			(412,508		)	(12,481		)	(19,502		)	(48,921		)	(81,528		)
Accumulated deferred income taxes and taxes accrued		($1,991,459	)		($2,954,076	)		($795,176	)		($190,679	)		($1,045,949	)		($822,346	)

The Registrant Subsidiaries’ estimated tax attributes carryovers and their expiration dates as of December 31, 2015 are as follows:

	Entergy Arkansas	Entergy Louisiana	Entergy Mississippi	Entergy New Orleans	Entergy Texas	System Energy
Federal net operating losses	$7 million	$2.4 billion	—	—	—	$242 million
Year(s) of expiration	2030-2035	2035	N/A	N/A	N/A	2030-2035
State net operating losses	—	$2.5 billion	—	$6 million	—	$833 million
Year(s) of expiration	N/A	2035	N/A	2032	N/A	2035
Misc. federal credits	$1 million	—	$1 million	—	—	$1 million
Year(s) of expiration	2029-2033	N/A	2029-2034	N/A	N/A	2029-2033
State credits	—	—	—	—	$3.3 million	$6 million
Year(s) of expiration	N/A	N/A	N/A	N/A	2026	2017-2020

As a result of the accounting for uncertain tax positions, the amount of the deferred tax assets reflected in the financial statements is less than the amount of the tax effect of the federal and state net operating loss carryovers and tax credit carryovers.

Unrecognized tax benefits

Accounting standards establish a “more-likely-than-not” recognition threshold that must be met before a tax benefit can be recognized in the financial statements.  If a tax deduction is taken on a tax return, but does not meet the more-likely-than-not recognition threshold, an increase in income tax liability, above what is payable on the tax return, is required to be recorded.  A reconciliation of Entergy’s beginning and ending amount of unrecognized tax benefits is as follows:

	2015			2014			2013
	(In Thousands)
Gross balance at January 1		$4,736,785			$4,593,224			$4,170,403
Additions based on tax positions related to the current year	1,850,705			348,543			162,338
Additions for tax positions of prior years	59,815			11,637			410,108
Reductions for tax positions of prior years (a)	(3,966,535		)	(213,401		)	(103,360		)
Settlements	(68,227		)	—			(43,620		)
Lapse of statute of limitations	(958		)	(3,218		)	(2,645		)
Gross balance at December 31	2,611,585			4,736,785			4,593,224
Offsets to gross unrecognized tax benefits:
Credit and loss carryovers	(1,264,483		)	(4,295,643		)	(4,400,498		)
Unrecognized tax benefits net of unused tax attributes and payments (b)		$1,347,102			$441,142			$192,726

(a) The primary reduction is related to the nuclear decommissioning costs treatment discussed in “Income Tax Audits - 2008-2009 IRS Audit” below.

(b) Potential tax liability above what is payable on tax returns

The balances of unrecognized tax benefits include $955 million, $516 million, and $176 million as of December 31, 2015, 2014, and 2013, respectively, which, if recognized, would lower the effective income tax rates.  Because of the effect of deferred tax accounting, the remaining balances of unrecognized tax benefits of $1.657 billion, $4.221 billion, and $4.417 billion as of December 31, 2015, 2014, and 2013, respectively, if disallowed, would not affect the annual effective income tax rate but would accelerate the payment of cash to the taxing authority to an earlier period.

Entergy accrues interest expense, if any, related to unrecognized tax benefits in income tax expense.  Entergy’s December 31, 2015, 2014, and 2013 accrued balance for the possible payment of interest is approximately $27 million, $127 million, and $96.4 million, respectively.

A reconciliation of the Registrant Subsidiaries’ beginning and ending amount of unrecognized tax benefits for 2015, 2014, and 2013 is as follows:

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Gross balance at January 1, 2015		$362,912			$1,205,929			$20,144			$53,763			$17,264			$258,242
Additions based on tax positions related to the current year (a)	2,196			1,367,058			566			472			657			472,304
Additions for tax positions of prior years	1,057			7,992			8,140			48			2,914			913
Reductions for tax positions of prior years	(340,720		)	(859,430		)	—			(386		)	(3,981		)	(253,141		)
Settlements	—			(30,888		)	(9,368		)	—			(3,392		)	—
Gross balance at December 31, 2015	25,445			1,690,661			19,482			53,897			13,462			478,318
Offsets to gross unrecognized tax benefits:
Loss carryovers	(3,613		)	(893,764		)	(1,016		)	(506		)	(276		)	(133,611		)
Unrecognized tax benefits net of unused tax attributes and payments		$21,832			$796,897			$18,466			$53,391			$13,186			$344,707

(a) The primary addition for Entergy Louisiana and System Energy is related to the nuclear decommissioning costs treatment discussed in “Other Tax Matters” below.

2014	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Gross balance at January 1, 2014		$347,713			$1,076,680			$16,186			$51,679			$13,017			$265,185
Additions based on tax positions related to the current year	14,511			151,249			3,928			2,235			4,225			2,744
Additions for tax positions of prior years	1,767			6,924			319			37			303			566
Reductions for tax positions of prior years	(1,079		)	(28,924		)	(289		)	(188		)	(267		)	(10,253		)
Settlements	—			—			—			—			(14		)	—
Gross balance at December 31, 2014	362,912			1,205,929			20,144			53,763			17,264			258,242
Offsets to gross unrecognized tax benefits:
Loss carryovers	(361,043		)	(739,988		)	(6,992		)	(20,735		)	(241		)	(163,124		)
Unrecognized tax benefits net of unused tax attributes and payments		$1,869			$465,941			$13,152			$33,028			$17,023			$95,118

2013	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Gross balance at January 1, 2013		$344,669			$1,002,394			$16,841			$52,018			$13,954			$260,346
Additions based on tax positions related to the current year	6,427			17,887			957			583			2,170			4,170
Additions for tax positions of prior years	1,228			125,214			401			3,506			587			8,391
Reductions for tax positions of prior years	(3,943		)	(53,473		)	(1,941		)	(962		)	(4,186		)	(967		)
Settlements	(668		)	(15,342		)	(72		)	(3,466		)	492			(6,755		)
Gross balance at December 31, 2013	347,713			1,076,680			16,186			51,679			13,017			265,185
Offsets to gross unrecognized tax benefits:
Loss carryovers	(345,674		)	(747,756		)	(16,186		)	(22,078		)	(266		)	(225,286		)
Unrecognized tax benefits net of unused tax attributes and payments		$2,039			$328,924			$—			$29,601			$12,751			$39,899

The Registrant Subsidiaries’ balances of unrecognized tax benefits included amounts which, if recognized, would have reduced income tax expense as follows:

	December 31,
	2015		2014		2013
	(In Millions)
Entergy Arkansas		$4.5		$2.6		$0.6
Entergy Louisiana		$692.7		$267.3		$131.9
Entergy Mississippi		$8.1		$3.9		$3.9
Entergy New Orleans		$50.7		$50.7		$—
Entergy Texas		$5.2		$10.5		$10.1
System Energy		$0.7		$3.7		$3.3

The Registrant Subsidiaries accrue interest and penalties related to unrecognized tax benefits in income tax expense.  Penalties have not been accrued.  Accrued balances for the possible payment of interest are as follows:

	December 31,
	2015		2014		2013
	(In Millions)
Entergy Arkansas		$1.3		$17.0		$15.2
Entergy Louisiana		$9.3		$22.2		$18.0
Entergy Mississippi		$0.4		$2.8		$2.1
Entergy New Orleans		$1.8		$1.3		$0.9
Entergy Texas		$1.2		$1.0		$0.8
System Energy		$0.7		$23.8		$19.0

Income Tax Audits

Entergy and its subsidiaries file U.S. federal and various state and foreign income tax returns.  IRS examinations are complete for years before 2010. All state taxing authorities’ examinations are completed for years before 2009.

2006-2007 IRS Audit

In the first quarter 2015, the IRS finalized tax and interest computations from the 2006-2007 audit that resulted in a reversal of Entergy’s provision for uncertain tax positions related to accrued interest of approximately $20 million, including decreases of approximately $4 million for Entergy Arkansas, $11 million for Entergy Louisiana, and $1 million for System Energy.

2008-2009 IRS Audit

In the fourth quarter 2009, Entergy filed Applications for Change in Accounting Method (the “2009 CAM”) for tax purposes with the IRS for certain costs under Section 263A of the Internal Revenue Code.  In the Applications, Entergy proposed to treat the nuclear decommissioning liability associated with the operation of its nuclear power plants as a production cost properly includable in cost of goods sold.  The effect of the 2009 CAM was a $5.7 billion reduction in 2009 taxable income.  The 2009 CAM was adjusted to $9.3 billion in 2012.

In the fourth quarter 2012 the IRS disallowed the reduction to 2009 taxable income related to the 2009 CAM.  In the third quarter 2013, the Internal Revenue Service issued its RAR for the tax years 2008-2009. As a result of the issuance of this RAR, Entergy and the IRS resolved all of the 2008-2009 issues described above except for the 2009 CAM. Entergy disagreed with the IRS’s disallowance of the 2009 CAM and filed a protest with the IRS Appeals Division in October 2013.

In August 2015, Entergy and the IRS agreed on the treatment of the 2009 position regarding nuclear decommissioning liabilities from the 2008-2009 audit. The agreement provides that Entergy is entitled to deduct approximately $118 million of the $9.3 billion claimed in 2009. The agreement effectively settled all matters pertaining to the 2009 tax year and increased Entergy’s 2009 federal income tax liability by $2.4 million.

2010-2011 IRS Audit

The IRS examination of the 2010 and 2011 years is ongoing and the audit field work is expected to be completed by the end of the first quarter of 2016. The IRS has not issued any significant notices of proposed adjustments other than for the decommissioning liability position discussed above. The Revenue Agent’s Report is expected to be received shortly after the completion of field work.

Other Tax Matters

Entergy regularly negotiates with the IRS to achieve settlements.  The resolution of audit issues could result in significant changes to the amounts of unrecognized tax benefits in the next twelve months.

In September 2013 the U.S. Treasury Department and the IRS issued final regulations that provide guidance on the deductibility and capitalization of costs incurred associated with tangible property. Entergy and the Registrant Subsidiaries filed with the IRS an automatic application for change in accounting method which is in compliance with the final regulations and the safe harbor provisions of the relevant IRS Revenue Procedures. Entergy estimates that the effect of this accounting method change will result in a net increase to Entergy’s taxable income of approximately $585 million, which will be recognized generally over a four year period beginning with the tax year ended 2014. The adoption of the final regulations and safe harbor method results in approximate changes in the Registrant Subsidiaries taxable income as follows: an increase of $177 million for Entergy Arkansas, an increase of $78 million for Entergy Louisiana, an increase of $26 million for Entergy Mississippi, an increase of $183 million for Entergy Texas, a decrease of $2 million for Entergy New Orleans, and an increase of $22 million for System Energy.

In October 2015 two of Entergy’s Louisiana utilities, Entergy Gulf States Louisiana and Entergy Louisiana, combined their businesses into a legal entity which is identified as Entergy Louisiana herein. Entergy Louisiana maintained a carryover tax basis in the assets received. Additionally, the tax consequences provided for an increase in tax basis as well. To the extent that this increase in tax basis will provide additional tax depreciation, Entergy recorded a deferred tax asset and current tax expense resulting in a net increase in tax basis of approximately $334 million and Entergy Louisiana obtained a corresponding deferred tax asset. Consistent with the terms of an agreement with the LPSC, electric customers of Entergy Louisiana will realize customer credits associated with the business combination. Accordingly, in October 2015, Entergy recorded a regulatory liability of $107 million ($66 million net-of-tax) which partially offsets the effect of the aforementioned deferred tax asset. The deferred tax asset and the regulatory liability, net-of-tax, increased Entergy Louisiana’s member’s equity by $268 million. See Note 2 to the financial statements for further discussion of the business combination.

In the fourth quarter 2015, System Energy and Entergy Louisiana adopted a new method of accounting for income tax purposes in which the companies’ nuclear decommissioning costs will be treated as production costs of electricity includable in cost of goods sold. The new method results in a reduction of taxable income of $1.2 billion for System Energy and $2.2 billion for Entergy Louisiana.

The Protecting Americans from Tax Hikes Act of 2015 was enacted in December 2015. The most significant provisions affecting Entergy and the Registrant Subsidiaries were a five-year extension of bonus depreciation and permanent extension of the research and experimentation tax credit. The effect of the bonus depreciation extension on 2015 increased Entergy’s tax net operating loss.

Entergy New Orleans [Member]

Income Taxes

INCOME TAXES (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

Income taxes for 2015, 2014, and 2013 for Entergy Corporation and Subsidiaries consist of the following:

	2015			2014			2013
	(In Thousands)
Current:
Federal		$77,166			$90,061			$88,291
Foreign	97			90			101
State	157,829			(12,637		)	20,584
Total	235,092			77,514			108,976
Deferred and non-current - net	(864,799		)	528,326			126,935
Investment tax credit adjustments - net	(13,220		)	(16,243		)	(9,930		)
Income taxes		($642,927	)		$589,597			$225,981

Income taxes for 2015, 2014, and 2013 for Entergy’s Registrant Subsidiaries consist of the following:

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Current:
Federal		$66,966			$101,382			$25,628			($9,346	)		$53,313			($63,302	)
State	6,265			35,406			6,832			1,784			2,450			26,755
Total	73,231			136,788			32,460			(7,562		)	55,763			(36,547		)
Deferred and non-current - net	(31,463		)	47,220			31,149			32,890			(17,599		)	93,491
Investment tax credit adjustments - net	(1,227		)	(5,337		)	(1,737		)	(138		)	(914		)	(3,867		)
Income taxes		$40,541			$178,671			$61,872			$25,190			$37,250			$53,077

2014	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Current:
Federal		($34,258	)		($44,909	)		$8,103			($1,428	)		$48,610			$19,908
State	(678		)	(1,191		)	7,474			510			4,877			15,379
Total	(34,936		)	(46,100		)	15,577			(918		)	53,487			35,287
Deferred and non-current - net	119,841			236,794			42,305			14,592			(2,418		)	53,501
Investment tax credit adjustments - net	(1,276		)	(5,642		)	(2,172		)	(224		)	(1,425		)	(5,478		)
Income taxes		$83,629			$185,052			$55,710			$13,450			$49,644			$83,310

2013	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi		Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Current:
Federal		($13,574	)		($18,797	)		$2,498		$14,823			$37,199			($6,199	)
State	6,122			(15,631		)	4,849		(1,267		)	(843		)	15,845
Total	(7,452		)	(34,428		)	7,347		13,556			36,356			9,646
Deferred and non-current - net	101,253			179,036			41,150		(11,033		)	(4,639		)	60,614
Investment tax credit adjustments - net	(2,014		)	(5,912		)	1,260		(246		)	(1,609		)	(1,407		)
Income taxes		$91,787			$138,696			$49,757		$2,277			$30,108			$68,853

Total income taxes for Entergy Corporation and Subsidiaries differ from the amounts computed by applying the statutory income tax rate to income before income taxes.  The reasons for the differences for the years 2015, 2014, and 2013 are:

	2015			2014			2013
	(In Thousands)
Net income (loss) attributable to Entergy Corporation		($176,562	)		$940,721			$711,902
Preferred dividend requirements of subsidiaries	19,828			19,536			18,670
Consolidated net income (loss)	(156,734		)	960,257			730,572
Income taxes	(642,927		)	589,597			225,981
Income (loss) before income taxes		($799,661	)		$1,549,854			$956,553
Computed at statutory rate (35%)		($279,881	)		$542,449			$334,794
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	29,944			44,708			13,599
Regulatory differences - utility plant items	32,089			39,321			32,324
Equity component of AFUDC	(18,191		)	(21,108		)	(22,356		)
Amortization of investment tax credits	(11,136		)	(12,211		)	(13,535		)
Flow-through / permanent differences	(7,872		)	(18,003		)	(301		)
Net-of-tax regulatory liability	—			—			(2,899		)
New York tax law change (a)	—			(21,500		)	—
Louisiana business combination	(333,655		)	—			—
Termination of business reorganization	—			—			(27,192		)
Provision for uncertain tax positions (b)	(56,683		)	32,573			(59,249		)
Valuation allowance	—			—			(31,573		)
Other - net	2,458			3,368			2,369
Total income taxes as reported		($642,927	)		$589,597			$225,981
Effective Income Tax Rate	80.4		%	38.0		%	23.6		%

(a) In March 2014, New York enacted legislation that substantially modifies various aspects of New York tax law. The most significant effect of the legislation for Entergy is the adoption of full water’s-edge unitary combined reporting, meaning that all of Entergy’s domestic entities will be included in New York’s combined filing group. The effect of the tax law change resulted in a deferred state income tax reduction of approximately $21.5 million as shown in the table above.

(b) See “Income Tax Audits- 2008-2009 IRS Audit” below for discussion of the most significant items for 2015 and 2013.

Total income taxes for the Registrant Subsidiaries differ from the amounts computed by applying the statutory income tax rate to income before taxes.  The reasons for the differences for the years 2015, 2014, and 2013 are:

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Net income		$74,272			$446,639			$92,708			$44,925			$69,625			$111,318
Income taxes	40,541			178,671			61,872			25,190			37,250			53,077
Pretax income		$114,813			$625,310			$154,580			$70,115			$106,875			$164,395
Computed at statutory rate (35%)		$40,185			$218,859			$54,103			$24,540			$37,406			$57,538
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	6,643			23,650			5,219			2,887			1,621			6,403
Regulatory differences - utility plant items	7,299			3,013			2,383			2,201			3,703			12,167
Equity component of AFUDC	(4,979		)	(5,420		)	(1,083		)	(451		)	(1,987		)	(2,973		)
Amortization of investment tax credits	(1,201		)	(5,252		)	(160		)	(111		)	(900		)	(3,476		)
Flow-through / permanent differences	(4,062		)	2,460			431			(4,539		)	530			618
Non-taxable dividend income	—			(44,658		)	—			—			—			—
Provision for uncertain tax positions (a)	(3,978		)	(15,377		)	756			525			(3,365		)	(17,313		)
Other - net	634			1,396			223			138			242			113
Total income taxes		$40,541			$178,671			$61,872			$25,190			$37,250			$53,077
Effective Income Tax Rate	35.3		%	28.6		%	40.0		%	35.9		%	34.9		%	32.3		%

(a) See “Income Tax Audits- 2008-2009 IRS Audit” below for discussion of the most significant items for Entergy Louisiana and System Energy.

2014	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Net income		$121,392			$446,022			$74,821			$31,030			$74,804			$96,334
Income taxes	83,629			185,052			55,710			13,450			49,644			83,310
Pretax income		$205,021			$631,074			$130,531			$44,480			$124,448			$179,644
Computed at statutory rate (35%)		$71,757			$220,876			$45,686			$15,568			$43,557			$62,875
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	9,591			11,666			5,180			1,562			3,221			6,877
Regulatory differences - utility plant items	8,653			7,487			4,448			777			4,165			13,791
Equity component of AFUDC	(2,533		)	(14,612		)	(833		)	(320		)	(1,035		)	(1,774		)
Amortization of investment tax credits	(1,251		)	(5,594		)	(260		)	(218		)	(1,412		)	(3,476		)
Flow-through / permanent differences	(5,082		)	(225		)	555			(4,458		)	393			(327		)
Non-taxable dividend income	—			(41,255		)	—			—			—			—
Provision for uncertain tax positions	1,881			5,336			718			405			522			5,235
Other - net	613			1,373			216			134			233			109
Total income taxes		$83,629			$185,052			$55,710			$13,450			$49,644			$83,310
Effective Income Tax Rate	40.8		%	29.3		%	42.7		%	30.2		%	39.9		%	46.4		%

2013	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Net income		$161,948			$414,126			$82,159			$12,608			$57,881			$113,664
Income taxes	91,787			138,696			49,757			2,277			30,108			68,853
Pretax income		$253,735			$552,822			$131,916			$14,885			$87,989			$182,517
Computed at statutory rate (35%)		$88,807			$193,488			$46,171			$5,210			$30,796			$63,881
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	10,954			19,084			4,564			1,116			(897		)	5,900
Regulatory differences - utility plant items	7,938			7,005			2,603			453			3,256			11,070
Equity component of AFUDC	(3,820		)	(13,100		)	(764		)	(322		)	(1,626		)	(2,724		)
Amortization of investment tax credits	(1,989		)	(5,864		)	(260		)	(216		)	(1,596		)	(3,476		)
Flow-through / permanent differences	2,540			3,646			1,702			(4,402		)	2,467			(491		)
Net-of-tax regulatory liability	—			(2,899		)	—			—			—			—
Termination of business organization	(6,753		)	(7,453		)	(4,177		)	(501		)	(3,542		)	(13		)
Non-taxable dividend income	—			(36,953		)	—			—			—			—
Provision for uncertain tax positions (a)	(6,527		)	(18,645		)	(326		)	795			1,027			(5,353		)
Other - net	637			387			244			144			223			59
Total income taxes		$91,787			$138,696			$49,757			$2,277			$30,108			$68,853
Effective Income Tax Rate	36.2		%	25.1		%	37.7		%	15.3		%	34.2		%	37.7		%

(a) See “Income Tax Audits- 2008-2009 IRS Audit” below for discussion of the most significant items for Entergy Louisiana and System Energy.

Significant components of accumulated deferred income taxes and taxes accrued for Entergy Corporation and Subsidiaries as of December 31, 2015 and 2014 are as follows:

	2015			2014
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($6,804,225	)		($8,128,096	)
Regulatory assets	(646,392		)	(922,161		)
Nuclear decommissioning trusts	(1,254,463		)	(1,248,737		)
Pension, net funding	(365,111		)	(324,881		)
Combined unitary state taxes	(45,078		)	(162,340		)
Power purchase agreements	—			(110,889		)
Other	(315,844		)	(500,424		)
Total	(9,431,113		)	(11,397,528		)
Deferred tax assets:
Nuclear decommissioning liabilities	828,983			874,493
Regulatory liabilities	284,432			458,230
Pension and other post-employment benefits	525,524			586,455
Sale and leaseback	139,720			153,308
Compensation	69,432			74,692
Accumulated deferred investment tax credit	95,248			100,442
Provision for allowances and contingencies	188,282			160,551
Power purchase agreements	38,401			—
Net operating loss carryforwards	360,188			457,758
Capital losses and miscellaneous tax credits	11,075			12,146
Valuation allowance	(91,532		)	(27,387		)
Other	68,204			58,334
Total	2,517,957			2,909,022
Non-current accrued taxes (including unrecognized tax benefits)	(1,338,806		)	(606,560		)
Accumulated deferred income taxes and taxes accrued		($8,251,962	)		($9,095,066	)

Entergy’s estimated tax attributes carryovers and their expiration dates as of December 31, 2015 are as follows:

Carryover Description	Carryover Amount	Year(s) of expiration
Federal net operating losses	$3.6 billion	2023-2035
State net operating losses	$5.2 billion	2016-2035
Miscellaneous federal and state credits	$77.9 million	2016-2035

As a result of the accounting for uncertain tax positions, the amount of the deferred tax assets reflected in the financial statements is less than the amount of the tax effect of the federal and state net operating loss carryovers, tax credit carryovers, and other tax attributes reflected on income tax returns. Because it is more likely than not that the benefit from certain state net operating loss carryovers will not be utilized, valuation allowances of $46 million as of December 31, 2015 and $21 million as of December 31, 2014 have been provided on the deferred tax assets relating to these state net operating loss carryovers. Additionally, valuation allowances totaling $45.5 million as of December 31, 2015 have been provided on deferred tax assets related to state jurisdictions in which Entergy does not currently expect to be able to utilize separate company tax return losses, preventing realization of such deferred tax assets.

Significant components of accumulated deferred income taxes and taxes accrued for the Registrant Subsidiaries as of December 31, 2015 and 2014 are as follows:

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($1,710,444	)		($2,041,968	)		($781,427	)		($167,294	)		($778,270	)		($611,745	)
Regulatory assets	(108,422		)	(254,316		)	(24,918		)	(39,451		)	(172,117		)	(46,990		)
Nuclear decommissioning trusts	(121,326		)	(99,980		)	—			—			—			(68,370		)
Pension, net funding	(107,073		)	(109,709		)	(30,901		)	(14,459		)	(28,001		)	(25,791		)
Deferred fuel	(7,647		)	(2,513		)	(684		)	(175		)	2,050			(18		)
Other	(38,683		)	(86,275		)	(5,625		)	(12,253		)	(10,109		)	(22,478		)
Total	(2,093,595		)	(2,594,761		)	(843,555		)	(233,632		)	(986,447		)	(775,392		)
Deferred tax assets:
Regulatory liabilities	18,369			215,154			7,787			20,888			7,307			14,927
Nuclear decommissioning liabilities	109,962			49,333			—			—			—			39,420
Pension and other post-employment benefits	(20,420		)	149,680			(6,628		)	(8,939		)	(16,703		)	(1,037		)
Sale and leaseback	—			37,236			—			—			—			102,484
Accumulated deferred investment tax credit	14,320			56,635			1,777			290			4,842			17,385
Provision for allowances and contingencies	1,024			123,007			18,735			33,843			7,266			134
Power purchase agreements	(1,279		)	13,840			1,901			13			575			—
Unbilled/deferred revenues	9,815			(32,365		)	7,154			2,126			10,851			—
Compensation	1,842			4,182			601			880			4,496			—
Net operating loss carryforwards	—			90,241			—			—			—			—
Other	128			21,982			1,995			316			1,672			—
Total	133,761			728,925			33,322			49,417			20,306			173,313
Non-current accrued taxes (including unrecognized tax benefits)	(22,978		)	(641,120		)	(402		)	(29,846		)	(40,693		)	(416,996		)
Accumulated deferred income taxes and taxes accrued		($1,982,812	)		($2,506,956	)		($810,635	)		($214,061	)		($1,006,834	)		($1,019,075	)

2014	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($1,657,503	)		($2,748,852	)		($753,576	)		($186,153	)		($771,135	)		($668,779	)
Regulatory assets	(198,662		)	(380,719		)	(30,114		)	—			(202,402		)	(110,087		)
Nuclear decommissioning trusts	(130,524		)	(106,162		)	—			—			—			(74,063		)
Pension, net funding	(93,355		)	(99,593		)	(27,861		)	(13,285		)	(25,616		)	(23,440		)
Deferred fuel	(82,050		)	(3,534		)	(5,303		)	(407		)	2,045			(120		)
Power purchase agreements	(17,073		)	(67,083		)	2,129			13			847			—
Other	(33,827		)	(84,282		)	(11,423		)	(11,500		)	(22,546		)	(19,802		)
Total	(2,212,994		)	(3,490,225		)	(826,148		)	(211,332		)	(1,018,807		)	(896,291		)
Deferred tax assets:
Regulatory liabilities	145,466			181,601			7,214			29,580			4,079			90,290
Nuclear decommissioning liabilities	(43,134		)	146,138			—			—			—			(62,571		)
Pension and other post-employment benefits	(17,534		)	158,661			(7,288		)	(7,504		)	(15,053		)	(1,413		)
Sale and leaseback	—			45,136			—			—			—			108,172
Accumulated deferred investment tax credit	14,791			58,863			2,436			332			5,158			18,862
Provision for allowances and contingencies	(7,149		)	125,805			19,590			10,986			8,017			133
Unbilled/deferred revenues	12,322			(25,016		)	12,956			3,395			11,573			—
Compensation	2,085			158			(846		)	475			4,155			—
Net operating loss carryforwards	105,063			241,803			—			—			—			—
Capital losses and miscellaneous tax credits	—			—			3,504			—			—			—
Other	258			15,508			5,887			2,891			3,850			2,000
Total	212,168			948,657			43,453			40,155			21,779			155,473
Non-current accrued taxes (including unrecognized tax benefits)	9,367			(412,508		)	(12,481		)	(19,502		)	(48,921		)	(81,528		)
Accumulated deferred income taxes and taxes accrued		($1,991,459	)		($2,954,076	)		($795,176	)		($190,679	)		($1,045,949	)		($822,346	)

The Registrant Subsidiaries’ estimated tax attributes carryovers and their expiration dates as of December 31, 2015 are as follows:

	Entergy Arkansas	Entergy Louisiana	Entergy Mississippi	Entergy New Orleans	Entergy Texas	System Energy
Federal net operating losses	$7 million	$2.4 billion	—	—	—	$242 million
Year(s) of expiration	2030-2035	2035	N/A	N/A	N/A	2030-2035
State net operating losses	—	$2.5 billion	—	$6 million	—	$833 million
Year(s) of expiration	N/A	2035	N/A	2032	N/A	2035
Misc. federal credits	$1 million	—	$1 million	—	—	$1 million
Year(s) of expiration	2029-2033	N/A	2029-2034	N/A	N/A	2029-2033
State credits	—	—	—	—	$3.3 million	$6 million
Year(s) of expiration	N/A	N/A	N/A	N/A	2026	2017-2020

As a result of the accounting for uncertain tax positions, the amount of the deferred tax assets reflected in the financial statements is less than the amount of the tax effect of the federal and state net operating loss carryovers and tax credit carryovers.

Unrecognized tax benefits

Accounting standards establish a “more-likely-than-not” recognition threshold that must be met before a tax benefit can be recognized in the financial statements.  If a tax deduction is taken on a tax return, but does not meet the more-likely-than-not recognition threshold, an increase in income tax liability, above what is payable on the tax return, is required to be recorded.  A reconciliation of Entergy’s beginning and ending amount of unrecognized tax benefits is as follows:

	2015			2014			2013
	(In Thousands)
Gross balance at January 1		$4,736,785			$4,593,224			$4,170,403
Additions based on tax positions related to the current year	1,850,705			348,543			162,338
Additions for tax positions of prior years	59,815			11,637			410,108
Reductions for tax positions of prior years (a)	(3,966,535		)	(213,401		)	(103,360		)
Settlements	(68,227		)	—			(43,620		)
Lapse of statute of limitations	(958		)	(3,218		)	(2,645		)
Gross balance at December 31	2,611,585			4,736,785			4,593,224
Offsets to gross unrecognized tax benefits:
Credit and loss carryovers	(1,264,483		)	(4,295,643		)	(4,400,498		)
Unrecognized tax benefits net of unused tax attributes and payments (b)		$1,347,102			$441,142			$192,726

(a) The primary reduction is related to the nuclear decommissioning costs treatment discussed in “Income Tax Audits - 2008-2009 IRS Audit” below.

(b) Potential tax liability above what is payable on tax returns

The balances of unrecognized tax benefits include $955 million, $516 million, and $176 million as of December 31, 2015, 2014, and 2013, respectively, which, if recognized, would lower the effective income tax rates.  Because of the effect of deferred tax accounting, the remaining balances of unrecognized tax benefits of $1.657 billion, $4.221 billion, and $4.417 billion as of December 31, 2015, 2014, and 2013, respectively, if disallowed, would not affect the annual effective income tax rate but would accelerate the payment of cash to the taxing authority to an earlier period.

Entergy accrues interest expense, if any, related to unrecognized tax benefits in income tax expense.  Entergy’s December 31, 2015, 2014, and 2013 accrued balance for the possible payment of interest is approximately $27 million, $127 million, and $96.4 million, respectively.

A reconciliation of the Registrant Subsidiaries’ beginning and ending amount of unrecognized tax benefits for 2015, 2014, and 2013 is as follows:

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Gross balance at January 1, 2015		$362,912			$1,205,929			$20,144			$53,763			$17,264			$258,242
Additions based on tax positions related to the current year (a)	2,196			1,367,058			566			472			657			472,304
Additions for tax positions of prior years	1,057			7,992			8,140			48			2,914			913
Reductions for tax positions of prior years	(340,720		)	(859,430		)	—			(386		)	(3,981		)	(253,141		)
Settlements	—			(30,888		)	(9,368		)	—			(3,392		)	—
Gross balance at December 31, 2015	25,445			1,690,661			19,482			53,897			13,462			478,318
Offsets to gross unrecognized tax benefits:
Loss carryovers	(3,613		)	(893,764		)	(1,016		)	(506		)	(276		)	(133,611		)
Unrecognized tax benefits net of unused tax attributes and payments		$21,832			$796,897			$18,466			$53,391			$13,186			$344,707

(a) The primary addition for Entergy Louisiana and System Energy is related to the nuclear decommissioning costs treatment discussed in “Other Tax Matters” below.

2014	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Gross balance at January 1, 2014		$347,713			$1,076,680			$16,186			$51,679			$13,017			$265,185
Additions based on tax positions related to the current year	14,511			151,249			3,928			2,235			4,225			2,744
Additions for tax positions of prior years	1,767			6,924			319			37			303			566
Reductions for tax positions of prior years	(1,079		)	(28,924		)	(289		)	(188		)	(267		)	(10,253		)
Settlements	—			—			—			—			(14		)	—
Gross balance at December 31, 2014	362,912			1,205,929			20,144			53,763			17,264			258,242
Offsets to gross unrecognized tax benefits:
Loss carryovers	(361,043		)	(739,988		)	(6,992		)	(20,735		)	(241		)	(163,124		)
Unrecognized tax benefits net of unused tax attributes and payments		$1,869			$465,941			$13,152			$33,028			$17,023			$95,118

2013	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Gross balance at January 1, 2013		$344,669			$1,002,394			$16,841			$52,018			$13,954			$260,346
Additions based on tax positions related to the current year	6,427			17,887			957			583			2,170			4,170
Additions for tax positions of prior years	1,228			125,214			401			3,506			587			8,391
Reductions for tax positions of prior years	(3,943		)	(53,473		)	(1,941		)	(962		)	(4,186		)	(967		)
Settlements	(668		)	(15,342		)	(72		)	(3,466		)	492			(6,755		)
Gross balance at December 31, 2013	347,713			1,076,680			16,186			51,679			13,017			265,185
Offsets to gross unrecognized tax benefits:
Loss carryovers	(345,674		)	(747,756		)	(16,186		)	(22,078		)	(266		)	(225,286		)
Unrecognized tax benefits net of unused tax attributes and payments		$2,039			$328,924			$—			$29,601			$12,751			$39,899

The Registrant Subsidiaries’ balances of unrecognized tax benefits included amounts which, if recognized, would have reduced income tax expense as follows:

	December 31,
	2015		2014		2013
	(In Millions)
Entergy Arkansas		$4.5		$2.6		$0.6
Entergy Louisiana		$692.7		$267.3		$131.9
Entergy Mississippi		$8.1		$3.9		$3.9
Entergy New Orleans		$50.7		$50.7		$—
Entergy Texas		$5.2		$10.5		$10.1
System Energy		$0.7		$3.7		$3.3

The Registrant Subsidiaries accrue interest and penalties related to unrecognized tax benefits in income tax expense.  Penalties have not been accrued.  Accrued balances for the possible payment of interest are as follows:

	December 31,
	2015		2014		2013
	(In Millions)
Entergy Arkansas		$1.3		$17.0		$15.2
Entergy Louisiana		$9.3		$22.2		$18.0
Entergy Mississippi		$0.4		$2.8		$2.1
Entergy New Orleans		$1.8		$1.3		$0.9
Entergy Texas		$1.2		$1.0		$0.8
System Energy		$0.7		$23.8		$19.0

Income Tax Audits

Entergy and its subsidiaries file U.S. federal and various state and foreign income tax returns.  IRS examinations are complete for years before 2010. All state taxing authorities’ examinations are completed for years before 2009.

2006-2007 IRS Audit

In the first quarter 2015, the IRS finalized tax and interest computations from the 2006-2007 audit that resulted in a reversal of Entergy’s provision for uncertain tax positions related to accrued interest of approximately $20 million, including decreases of approximately $4 million for Entergy Arkansas, $11 million for Entergy Louisiana, and $1 million for System Energy.

2008-2009 IRS Audit

In the fourth quarter 2009, Entergy filed Applications for Change in Accounting Method (the “2009 CAM”) for tax purposes with the IRS for certain costs under Section 263A of the Internal Revenue Code.  In the Applications, Entergy proposed to treat the nuclear decommissioning liability associated with the operation of its nuclear power plants as a production cost properly includable in cost of goods sold.  The effect of the 2009 CAM was a $5.7 billion reduction in 2009 taxable income.  The 2009 CAM was adjusted to $9.3 billion in 2012.

In the fourth quarter 2012 the IRS disallowed the reduction to 2009 taxable income related to the 2009 CAM.  In the third quarter 2013, the Internal Revenue Service issued its RAR for the tax years 2008-2009. As a result of the issuance of this RAR, Entergy and the IRS resolved all of the 2008-2009 issues described above except for the 2009 CAM. Entergy disagreed with the IRS’s disallowance of the 2009 CAM and filed a protest with the IRS Appeals Division in October 2013.

In August 2015, Entergy and the IRS agreed on the treatment of the 2009 position regarding nuclear decommissioning liabilities from the 2008-2009 audit. The agreement provides that Entergy is entitled to deduct approximately $118 million of the $9.3 billion claimed in 2009. The agreement effectively settled all matters pertaining to the 2009 tax year and increased Entergy’s 2009 federal income tax liability by $2.4 million.

2010-2011 IRS Audit

The IRS examination of the 2010 and 2011 years is ongoing and the audit field work is expected to be completed by the end of the first quarter of 2016. The IRS has not issued any significant notices of proposed adjustments other than for the decommissioning liability position discussed above. The Revenue Agent’s Report is expected to be received shortly after the completion of field work.

Other Tax Matters

Entergy regularly negotiates with the IRS to achieve settlements.  The resolution of audit issues could result in significant changes to the amounts of unrecognized tax benefits in the next twelve months.

In September 2013 the U.S. Treasury Department and the IRS issued final regulations that provide guidance on the deductibility and capitalization of costs incurred associated with tangible property. Entergy and the Registrant Subsidiaries filed with the IRS an automatic application for change in accounting method which is in compliance with the final regulations and the safe harbor provisions of the relevant IRS Revenue Procedures. Entergy estimates that the effect of this accounting method change will result in a net increase to Entergy’s taxable income of approximately $585 million, which will be recognized generally over a four year period beginning with the tax year ended 2014. The adoption of the final regulations and safe harbor method results in approximate changes in the Registrant Subsidiaries taxable income as follows: an increase of $177 million for Entergy Arkansas, an increase of $78 million for Entergy Louisiana, an increase of $26 million for Entergy Mississippi, an increase of $183 million for Entergy Texas, a decrease of $2 million for Entergy New Orleans, and an increase of $22 million for System Energy.

In October 2015 two of Entergy’s Louisiana utilities, Entergy Gulf States Louisiana and Entergy Louisiana, combined their businesses into a legal entity which is identified as Entergy Louisiana herein. Entergy Louisiana maintained a carryover tax basis in the assets received. Additionally, the tax consequences provided for an increase in tax basis as well. To the extent that this increase in tax basis will provide additional tax depreciation, Entergy recorded a deferred tax asset and current tax expense resulting in a net increase in tax basis of approximately $334 million and Entergy Louisiana obtained a corresponding deferred tax asset. Consistent with the terms of an agreement with the LPSC, electric customers of Entergy Louisiana will realize customer credits associated with the business combination. Accordingly, in October 2015, Entergy recorded a regulatory liability of $107 million ($66 million net-of-tax) which partially offsets the effect of the aforementioned deferred tax asset. The deferred tax asset and the regulatory liability, net-of-tax, increased Entergy Louisiana’s member’s equity by $268 million. See Note 2 to the financial statements for further discussion of the business combination.

In the fourth quarter 2015, System Energy and Entergy Louisiana adopted a new method of accounting for income tax purposes in which the companies’ nuclear decommissioning costs will be treated as production costs of electricity includable in cost of goods sold. The new method results in a reduction of taxable income of $1.2 billion for System Energy and $2.2 billion for Entergy Louisiana.

The Protecting Americans from Tax Hikes Act of 2015 was enacted in December 2015. The most significant provisions affecting Entergy and the Registrant Subsidiaries were a five-year extension of bonus depreciation and permanent extension of the research and experimentation tax credit. The effect of the bonus depreciation extension on 2015 increased Entergy’s tax net operating loss.

Entergy Texas [Member]

Income Taxes

INCOME TAXES (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

Income taxes for 2015, 2014, and 2013 for Entergy Corporation and Subsidiaries consist of the following:

	2015			2014			2013
	(In Thousands)
Current:
Federal		$77,166			$90,061			$88,291
Foreign	97			90			101
State	157,829			(12,637		)	20,584
Total	235,092			77,514			108,976
Deferred and non-current - net	(864,799		)	528,326			126,935
Investment tax credit adjustments - net	(13,220		)	(16,243		)	(9,930		)
Income taxes		($642,927	)		$589,597			$225,981

Income taxes for 2015, 2014, and 2013 for Entergy’s Registrant Subsidiaries consist of the following:

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Current:
Federal		$66,966			$101,382			$25,628			($9,346	)		$53,313			($63,302	)
State	6,265			35,406			6,832			1,784			2,450			26,755
Total	73,231			136,788			32,460			(7,562		)	55,763			(36,547		)
Deferred and non-current - net	(31,463		)	47,220			31,149			32,890			(17,599		)	93,491
Investment tax credit adjustments - net	(1,227		)	(5,337		)	(1,737		)	(138		)	(914		)	(3,867		)
Income taxes		$40,541			$178,671			$61,872			$25,190			$37,250			$53,077

2014	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Current:
Federal		($34,258	)		($44,909	)		$8,103			($1,428	)		$48,610			$19,908
State	(678		)	(1,191		)	7,474			510			4,877			15,379
Total	(34,936		)	(46,100		)	15,577			(918		)	53,487			35,287
Deferred and non-current - net	119,841			236,794			42,305			14,592			(2,418		)	53,501
Investment tax credit adjustments - net	(1,276		)	(5,642		)	(2,172		)	(224		)	(1,425		)	(5,478		)
Income taxes		$83,629			$185,052			$55,710			$13,450			$49,644			$83,310

2013	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi		Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Current:
Federal		($13,574	)		($18,797	)		$2,498		$14,823			$37,199			($6,199	)
State	6,122			(15,631		)	4,849		(1,267		)	(843		)	15,845
Total	(7,452		)	(34,428		)	7,347		13,556			36,356			9,646
Deferred and non-current - net	101,253			179,036			41,150		(11,033		)	(4,639		)	60,614
Investment tax credit adjustments - net	(2,014		)	(5,912		)	1,260		(246		)	(1,609		)	(1,407		)
Income taxes		$91,787			$138,696			$49,757		$2,277			$30,108			$68,853

Total income taxes for Entergy Corporation and Subsidiaries differ from the amounts computed by applying the statutory income tax rate to income before income taxes.  The reasons for the differences for the years 2015, 2014, and 2013 are:

	2015			2014			2013
	(In Thousands)
Net income (loss) attributable to Entergy Corporation		($176,562	)		$940,721			$711,902
Preferred dividend requirements of subsidiaries	19,828			19,536			18,670
Consolidated net income (loss)	(156,734		)	960,257			730,572
Income taxes	(642,927		)	589,597			225,981
Income (loss) before income taxes		($799,661	)		$1,549,854			$956,553
Computed at statutory rate (35%)		($279,881	)		$542,449			$334,794
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	29,944			44,708			13,599
Regulatory differences - utility plant items	32,089			39,321			32,324
Equity component of AFUDC	(18,191		)	(21,108		)	(22,356		)
Amortization of investment tax credits	(11,136		)	(12,211		)	(13,535		)
Flow-through / permanent differences	(7,872		)	(18,003		)	(301		)
Net-of-tax regulatory liability	—			—			(2,899		)
New York tax law change (a)	—			(21,500		)	—
Louisiana business combination	(333,655		)	—			—
Termination of business reorganization	—			—			(27,192		)
Provision for uncertain tax positions (b)	(56,683		)	32,573			(59,249		)
Valuation allowance	—			—			(31,573		)
Other - net	2,458			3,368			2,369
Total income taxes as reported		($642,927	)		$589,597			$225,981
Effective Income Tax Rate	80.4		%	38.0		%	23.6		%

(a) In March 2014, New York enacted legislation that substantially modifies various aspects of New York tax law. The most significant effect of the legislation for Entergy is the adoption of full water’s-edge unitary combined reporting, meaning that all of Entergy’s domestic entities will be included in New York’s combined filing group. The effect of the tax law change resulted in a deferred state income tax reduction of approximately $21.5 million as shown in the table above.

(b) See “Income Tax Audits- 2008-2009 IRS Audit” below for discussion of the most significant items for 2015 and 2013.

Total income taxes for the Registrant Subsidiaries differ from the amounts computed by applying the statutory income tax rate to income before taxes.  The reasons for the differences for the years 2015, 2014, and 2013 are:

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Net income		$74,272			$446,639			$92,708			$44,925			$69,625			$111,318
Income taxes	40,541			178,671			61,872			25,190			37,250			53,077
Pretax income		$114,813			$625,310			$154,580			$70,115			$106,875			$164,395
Computed at statutory rate (35%)		$40,185			$218,859			$54,103			$24,540			$37,406			$57,538
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	6,643			23,650			5,219			2,887			1,621			6,403
Regulatory differences - utility plant items	7,299			3,013			2,383			2,201			3,703			12,167
Equity component of AFUDC	(4,979		)	(5,420		)	(1,083		)	(451		)	(1,987		)	(2,973		)
Amortization of investment tax credits	(1,201		)	(5,252		)	(160		)	(111		)	(900		)	(3,476		)
Flow-through / permanent differences	(4,062		)	2,460			431			(4,539		)	530			618
Non-taxable dividend income	—			(44,658		)	—			—			—			—
Provision for uncertain tax positions (a)	(3,978		)	(15,377		)	756			525			(3,365		)	(17,313		)
Other - net	634			1,396			223			138			242			113
Total income taxes		$40,541			$178,671			$61,872			$25,190			$37,250			$53,077
Effective Income Tax Rate	35.3		%	28.6		%	40.0		%	35.9		%	34.9		%	32.3		%

(a) See “Income Tax Audits- 2008-2009 IRS Audit” below for discussion of the most significant items for Entergy Louisiana and System Energy.

2014	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Net income		$121,392			$446,022			$74,821			$31,030			$74,804			$96,334
Income taxes	83,629			185,052			55,710			13,450			49,644			83,310
Pretax income		$205,021			$631,074			$130,531			$44,480			$124,448			$179,644
Computed at statutory rate (35%)		$71,757			$220,876			$45,686			$15,568			$43,557			$62,875
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	9,591			11,666			5,180			1,562			3,221			6,877
Regulatory differences - utility plant items	8,653			7,487			4,448			777			4,165			13,791
Equity component of AFUDC	(2,533		)	(14,612		)	(833		)	(320		)	(1,035		)	(1,774		)
Amortization of investment tax credits	(1,251		)	(5,594		)	(260		)	(218		)	(1,412		)	(3,476		)
Flow-through / permanent differences	(5,082		)	(225		)	555			(4,458		)	393			(327		)
Non-taxable dividend income	—			(41,255		)	—			—			—			—
Provision for uncertain tax positions	1,881			5,336			718			405			522			5,235
Other - net	613			1,373			216			134			233			109
Total income taxes		$83,629			$185,052			$55,710			$13,450			$49,644			$83,310
Effective Income Tax Rate	40.8		%	29.3		%	42.7		%	30.2		%	39.9		%	46.4		%

2013	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Net income		$161,948			$414,126			$82,159			$12,608			$57,881			$113,664
Income taxes	91,787			138,696			49,757			2,277			30,108			68,853
Pretax income		$253,735			$552,822			$131,916			$14,885			$87,989			$182,517
Computed at statutory rate (35%)		$88,807			$193,488			$46,171			$5,210			$30,796			$63,881
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	10,954			19,084			4,564			1,116			(897		)	5,900
Regulatory differences - utility plant items	7,938			7,005			2,603			453			3,256			11,070
Equity component of AFUDC	(3,820		)	(13,100		)	(764		)	(322		)	(1,626		)	(2,724		)
Amortization of investment tax credits	(1,989		)	(5,864		)	(260		)	(216		)	(1,596		)	(3,476		)
Flow-through / permanent differences	2,540			3,646			1,702			(4,402		)	2,467			(491		)
Net-of-tax regulatory liability	—			(2,899		)	—			—			—			—
Termination of business organization	(6,753		)	(7,453		)	(4,177		)	(501		)	(3,542		)	(13		)
Non-taxable dividend income	—			(36,953		)	—			—			—			—
Provision for uncertain tax positions (a)	(6,527		)	(18,645		)	(326		)	795			1,027			(5,353		)
Other - net	637			387			244			144			223			59
Total income taxes		$91,787			$138,696			$49,757			$2,277			$30,108			$68,853
Effective Income Tax Rate	36.2		%	25.1		%	37.7		%	15.3		%	34.2		%	37.7		%

(a) See “Income Tax Audits- 2008-2009 IRS Audit” below for discussion of the most significant items for Entergy Louisiana and System Energy.

Significant components of accumulated deferred income taxes and taxes accrued for Entergy Corporation and Subsidiaries as of December 31, 2015 and 2014 are as follows:

	2015			2014
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($6,804,225	)		($8,128,096	)
Regulatory assets	(646,392		)	(922,161		)
Nuclear decommissioning trusts	(1,254,463		)	(1,248,737		)
Pension, net funding	(365,111		)	(324,881		)
Combined unitary state taxes	(45,078		)	(162,340		)
Power purchase agreements	—			(110,889		)
Other	(315,844		)	(500,424		)
Total	(9,431,113		)	(11,397,528		)
Deferred tax assets:
Nuclear decommissioning liabilities	828,983			874,493
Regulatory liabilities	284,432			458,230
Pension and other post-employment benefits	525,524			586,455
Sale and leaseback	139,720			153,308
Compensation	69,432			74,692
Accumulated deferred investment tax credit	95,248			100,442
Provision for allowances and contingencies	188,282			160,551
Power purchase agreements	38,401			—
Net operating loss carryforwards	360,188			457,758
Capital losses and miscellaneous tax credits	11,075			12,146
Valuation allowance	(91,532		)	(27,387		)
Other	68,204			58,334
Total	2,517,957			2,909,022
Non-current accrued taxes (including unrecognized tax benefits)	(1,338,806		)	(606,560		)
Accumulated deferred income taxes and taxes accrued		($8,251,962	)		($9,095,066	)

Entergy’s estimated tax attributes carryovers and their expiration dates as of December 31, 2015 are as follows:

Carryover Description	Carryover Amount	Year(s) of expiration
Federal net operating losses	$3.6 billion	2023-2035
State net operating losses	$5.2 billion	2016-2035
Miscellaneous federal and state credits	$77.9 million	2016-2035

As a result of the accounting for uncertain tax positions, the amount of the deferred tax assets reflected in the financial statements is less than the amount of the tax effect of the federal and state net operating loss carryovers, tax credit carryovers, and other tax attributes reflected on income tax returns. Because it is more likely than not that the benefit from certain state net operating loss carryovers will not be utilized, valuation allowances of $46 million as of December 31, 2015 and $21 million as of December 31, 2014 have been provided on the deferred tax assets relating to these state net operating loss carryovers. Additionally, valuation allowances totaling $45.5 million as of December 31, 2015 have been provided on deferred tax assets related to state jurisdictions in which Entergy does not currently expect to be able to utilize separate company tax return losses, preventing realization of such deferred tax assets.

Significant components of accumulated deferred income taxes and taxes accrued for the Registrant Subsidiaries as of December 31, 2015 and 2014 are as follows:

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($1,710,444	)		($2,041,968	)		($781,427	)		($167,294	)		($778,270	)		($611,745	)
Regulatory assets	(108,422		)	(254,316		)	(24,918		)	(39,451		)	(172,117		)	(46,990		)
Nuclear decommissioning trusts	(121,326		)	(99,980		)	—			—			—			(68,370		)
Pension, net funding	(107,073		)	(109,709		)	(30,901		)	(14,459		)	(28,001		)	(25,791		)
Deferred fuel	(7,647		)	(2,513		)	(684		)	(175		)	2,050			(18		)
Other	(38,683		)	(86,275		)	(5,625		)	(12,253		)	(10,109		)	(22,478		)
Total	(2,093,595		)	(2,594,761		)	(843,555		)	(233,632		)	(986,447		)	(775,392		)
Deferred tax assets:
Regulatory liabilities	18,369			215,154			7,787			20,888			7,307			14,927
Nuclear decommissioning liabilities	109,962			49,333			—			—			—			39,420
Pension and other post-employment benefits	(20,420		)	149,680			(6,628		)	(8,939		)	(16,703		)	(1,037		)
Sale and leaseback	—			37,236			—			—			—			102,484
Accumulated deferred investment tax credit	14,320			56,635			1,777			290			4,842			17,385
Provision for allowances and contingencies	1,024			123,007			18,735			33,843			7,266			134
Power purchase agreements	(1,279		)	13,840			1,901			13			575			—
Unbilled/deferred revenues	9,815			(32,365		)	7,154			2,126			10,851			—
Compensation	1,842			4,182			601			880			4,496			—
Net operating loss carryforwards	—			90,241			—			—			—			—
Other	128			21,982			1,995			316			1,672			—
Total	133,761			728,925			33,322			49,417			20,306			173,313
Non-current accrued taxes (including unrecognized tax benefits)	(22,978		)	(641,120		)	(402		)	(29,846		)	(40,693		)	(416,996		)
Accumulated deferred income taxes and taxes accrued		($1,982,812	)		($2,506,956	)		($810,635	)		($214,061	)		($1,006,834	)		($1,019,075	)

2014	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($1,657,503	)		($2,748,852	)		($753,576	)		($186,153	)		($771,135	)		($668,779	)
Regulatory assets	(198,662		)	(380,719		)	(30,114		)	—			(202,402		)	(110,087		)
Nuclear decommissioning trusts	(130,524		)	(106,162		)	—			—			—			(74,063		)
Pension, net funding	(93,355		)	(99,593		)	(27,861		)	(13,285		)	(25,616		)	(23,440		)
Deferred fuel	(82,050		)	(3,534		)	(5,303		)	(407		)	2,045			(120		)
Power purchase agreements	(17,073		)	(67,083		)	2,129			13			847			—
Other	(33,827		)	(84,282		)	(11,423		)	(11,500		)	(22,546		)	(19,802		)
Total	(2,212,994		)	(3,490,225		)	(826,148		)	(211,332		)	(1,018,807		)	(896,291		)
Deferred tax assets:
Regulatory liabilities	145,466			181,601			7,214			29,580			4,079			90,290
Nuclear decommissioning liabilities	(43,134		)	146,138			—			—			—			(62,571		)
Pension and other post-employment benefits	(17,534		)	158,661			(7,288		)	(7,504		)	(15,053		)	(1,413		)
Sale and leaseback	—			45,136			—			—			—			108,172
Accumulated deferred investment tax credit	14,791			58,863			2,436			332			5,158			18,862
Provision for allowances and contingencies	(7,149		)	125,805			19,590			10,986			8,017			133
Unbilled/deferred revenues	12,322			(25,016		)	12,956			3,395			11,573			—
Compensation	2,085			158			(846		)	475			4,155			—
Net operating loss carryforwards	105,063			241,803			—			—			—			—
Capital losses and miscellaneous tax credits	—			—			3,504			—			—			—
Other	258			15,508			5,887			2,891			3,850			2,000
Total	212,168			948,657			43,453			40,155			21,779			155,473
Non-current accrued taxes (including unrecognized tax benefits)	9,367			(412,508		)	(12,481		)	(19,502		)	(48,921		)	(81,528		)
Accumulated deferred income taxes and taxes accrued		($1,991,459	)		($2,954,076	)		($795,176	)		($190,679	)		($1,045,949	)		($822,346	)

The Registrant Subsidiaries’ estimated tax attributes carryovers and their expiration dates as of December 31, 2015 are as follows:

	Entergy Arkansas	Entergy Louisiana	Entergy Mississippi	Entergy New Orleans	Entergy Texas	System Energy
Federal net operating losses	$7 million	$2.4 billion	—	—	—	$242 million
Year(s) of expiration	2030-2035	2035	N/A	N/A	N/A	2030-2035
State net operating losses	—	$2.5 billion	—	$6 million	—	$833 million
Year(s) of expiration	N/A	2035	N/A	2032	N/A	2035
Misc. federal credits	$1 million	—	$1 million	—	—	$1 million
Year(s) of expiration	2029-2033	N/A	2029-2034	N/A	N/A	2029-2033
State credits	—	—	—	—	$3.3 million	$6 million
Year(s) of expiration	N/A	N/A	N/A	N/A	2026	2017-2020

As a result of the accounting for uncertain tax positions, the amount of the deferred tax assets reflected in the financial statements is less than the amount of the tax effect of the federal and state net operating loss carryovers and tax credit carryovers.

Unrecognized tax benefits

Accounting standards establish a “more-likely-than-not” recognition threshold that must be met before a tax benefit can be recognized in the financial statements.  If a tax deduction is taken on a tax return, but does not meet the more-likely-than-not recognition threshold, an increase in income tax liability, above what is payable on the tax return, is required to be recorded.  A reconciliation of Entergy’s beginning and ending amount of unrecognized tax benefits is as follows:

	2015			2014			2013
	(In Thousands)
Gross balance at January 1		$4,736,785			$4,593,224			$4,170,403
Additions based on tax positions related to the current year	1,850,705			348,543			162,338
Additions for tax positions of prior years	59,815			11,637			410,108
Reductions for tax positions of prior years (a)	(3,966,535		)	(213,401		)	(103,360		)
Settlements	(68,227		)	—			(43,620		)
Lapse of statute of limitations	(958		)	(3,218		)	(2,645		)
Gross balance at December 31	2,611,585			4,736,785			4,593,224
Offsets to gross unrecognized tax benefits:
Credit and loss carryovers	(1,264,483		)	(4,295,643		)	(4,400,498		)
Unrecognized tax benefits net of unused tax attributes and payments (b)		$1,347,102			$441,142			$192,726

(a) The primary reduction is related to the nuclear decommissioning costs treatment discussed in “Income Tax Audits - 2008-2009 IRS Audit” below.

(b) Potential tax liability above what is payable on tax returns

The balances of unrecognized tax benefits include $955 million, $516 million, and $176 million as of December 31, 2015, 2014, and 2013, respectively, which, if recognized, would lower the effective income tax rates.  Because of the effect of deferred tax accounting, the remaining balances of unrecognized tax benefits of $1.657 billion, $4.221 billion, and $4.417 billion as of December 31, 2015, 2014, and 2013, respectively, if disallowed, would not affect the annual effective income tax rate but would accelerate the payment of cash to the taxing authority to an earlier period.

Entergy accrues interest expense, if any, related to unrecognized tax benefits in income tax expense.  Entergy’s December 31, 2015, 2014, and 2013 accrued balance for the possible payment of interest is approximately $27 million, $127 million, and $96.4 million, respectively.

A reconciliation of the Registrant Subsidiaries’ beginning and ending amount of unrecognized tax benefits for 2015, 2014, and 2013 is as follows:

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Gross balance at January 1, 2015		$362,912			$1,205,929			$20,144			$53,763			$17,264			$258,242
Additions based on tax positions related to the current year (a)	2,196			1,367,058			566			472			657			472,304
Additions for tax positions of prior years	1,057			7,992			8,140			48			2,914			913
Reductions for tax positions of prior years	(340,720		)	(859,430		)	—			(386		)	(3,981		)	(253,141		)
Settlements	—			(30,888		)	(9,368		)	—			(3,392		)	—
Gross balance at December 31, 2015	25,445			1,690,661			19,482			53,897			13,462			478,318
Offsets to gross unrecognized tax benefits:
Loss carryovers	(3,613		)	(893,764		)	(1,016		)	(506		)	(276		)	(133,611		)
Unrecognized tax benefits net of unused tax attributes and payments		$21,832			$796,897			$18,466			$53,391			$13,186			$344,707

(a) The primary addition for Entergy Louisiana and System Energy is related to the nuclear decommissioning costs treatment discussed in “Other Tax Matters” below.

2014	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Gross balance at January 1, 2014		$347,713			$1,076,680			$16,186			$51,679			$13,017			$265,185
Additions based on tax positions related to the current year	14,511			151,249			3,928			2,235			4,225			2,744
Additions for tax positions of prior years	1,767			6,924			319			37			303			566
Reductions for tax positions of prior years	(1,079		)	(28,924		)	(289		)	(188		)	(267		)	(10,253		)
Settlements	—			—			—			—			(14		)	—
Gross balance at December 31, 2014	362,912			1,205,929			20,144			53,763			17,264			258,242
Offsets to gross unrecognized tax benefits:
Loss carryovers	(361,043		)	(739,988		)	(6,992		)	(20,735		)	(241		)	(163,124		)
Unrecognized tax benefits net of unused tax attributes and payments		$1,869			$465,941			$13,152			$33,028			$17,023			$95,118

2013	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Gross balance at January 1, 2013		$344,669			$1,002,394			$16,841			$52,018			$13,954			$260,346
Additions based on tax positions related to the current year	6,427			17,887			957			583			2,170			4,170
Additions for tax positions of prior years	1,228			125,214			401			3,506			587			8,391
Reductions for tax positions of prior years	(3,943		)	(53,473		)	(1,941		)	(962		)	(4,186		)	(967		)
Settlements	(668		)	(15,342		)	(72		)	(3,466		)	492			(6,755		)
Gross balance at December 31, 2013	347,713			1,076,680			16,186			51,679			13,017			265,185
Offsets to gross unrecognized tax benefits:
Loss carryovers	(345,674		)	(747,756		)	(16,186		)	(22,078		)	(266		)	(225,286		)
Unrecognized tax benefits net of unused tax attributes and payments		$2,039			$328,924			$—			$29,601			$12,751			$39,899

The Registrant Subsidiaries’ balances of unrecognized tax benefits included amounts which, if recognized, would have reduced income tax expense as follows:

	December 31,
	2015		2014		2013
	(In Millions)
Entergy Arkansas		$4.5		$2.6		$0.6
Entergy Louisiana		$692.7		$267.3		$131.9
Entergy Mississippi		$8.1		$3.9		$3.9
Entergy New Orleans		$50.7		$50.7		$—
Entergy Texas		$5.2		$10.5		$10.1
System Energy		$0.7		$3.7		$3.3

The Registrant Subsidiaries accrue interest and penalties related to unrecognized tax benefits in income tax expense.  Penalties have not been accrued.  Accrued balances for the possible payment of interest are as follows:

	December 31,
	2015		2014		2013
	(In Millions)
Entergy Arkansas		$1.3		$17.0		$15.2
Entergy Louisiana		$9.3		$22.2		$18.0
Entergy Mississippi		$0.4		$2.8		$2.1
Entergy New Orleans		$1.8		$1.3		$0.9
Entergy Texas		$1.2		$1.0		$0.8
System Energy		$0.7		$23.8		$19.0

Income Tax Audits

Entergy and its subsidiaries file U.S. federal and various state and foreign income tax returns.  IRS examinations are complete for years before 2010. All state taxing authorities’ examinations are completed for years before 2009.

2006-2007 IRS Audit

In the first quarter 2015, the IRS finalized tax and interest computations from the 2006-2007 audit that resulted in a reversal of Entergy’s provision for uncertain tax positions related to accrued interest of approximately $20 million, including decreases of approximately $4 million for Entergy Arkansas, $11 million for Entergy Louisiana, and $1 million for System Energy.

2008-2009 IRS Audit

In the fourth quarter 2009, Entergy filed Applications for Change in Accounting Method (the “2009 CAM”) for tax purposes with the IRS for certain costs under Section 263A of the Internal Revenue Code.  In the Applications, Entergy proposed to treat the nuclear decommissioning liability associated with the operation of its nuclear power plants as a production cost properly includable in cost of goods sold.  The effect of the 2009 CAM was a $5.7 billion reduction in 2009 taxable income.  The 2009 CAM was adjusted to $9.3 billion in 2012.

In the fourth quarter 2012 the IRS disallowed the reduction to 2009 taxable income related to the 2009 CAM.  In the third quarter 2013, the Internal Revenue Service issued its RAR for the tax years 2008-2009. As a result of the issuance of this RAR, Entergy and the IRS resolved all of the 2008-2009 issues described above except for the 2009 CAM. Entergy disagreed with the IRS’s disallowance of the 2009 CAM and filed a protest with the IRS Appeals Division in October 2013.

In August 2015, Entergy and the IRS agreed on the treatment of the 2009 position regarding nuclear decommissioning liabilities from the 2008-2009 audit. The agreement provides that Entergy is entitled to deduct approximately $118 million of the $9.3 billion claimed in 2009. The agreement effectively settled all matters pertaining to the 2009 tax year and increased Entergy’s 2009 federal income tax liability by $2.4 million.

2010-2011 IRS Audit

The IRS examination of the 2010 and 2011 years is ongoing and the audit field work is expected to be completed by the end of the first quarter of 2016. The IRS has not issued any significant notices of proposed adjustments other than for the decommissioning liability position discussed above. The Revenue Agent’s Report is expected to be received shortly after the completion of field work.

Other Tax Matters

Entergy regularly negotiates with the IRS to achieve settlements.  The resolution of audit issues could result in significant changes to the amounts of unrecognized tax benefits in the next twelve months.

In September 2013 the U.S. Treasury Department and the IRS issued final regulations that provide guidance on the deductibility and capitalization of costs incurred associated with tangible property. Entergy and the Registrant Subsidiaries filed with the IRS an automatic application for change in accounting method which is in compliance with the final regulations and the safe harbor provisions of the relevant IRS Revenue Procedures. Entergy estimates that the effect of this accounting method change will result in a net increase to Entergy’s taxable income of approximately $585 million, which will be recognized generally over a four year period beginning with the tax year ended 2014. The adoption of the final regulations and safe harbor method results in approximate changes in the Registrant Subsidiaries taxable income as follows: an increase of $177 million for Entergy Arkansas, an increase of $78 million for Entergy Louisiana, an increase of $26 million for Entergy Mississippi, an increase of $183 million for Entergy Texas, a decrease of $2 million for Entergy New Orleans, and an increase of $22 million for System Energy.

In October 2015 two of Entergy’s Louisiana utilities, Entergy Gulf States Louisiana and Entergy Louisiana, combined their businesses into a legal entity which is identified as Entergy Louisiana herein. Entergy Louisiana maintained a carryover tax basis in the assets received. Additionally, the tax consequences provided for an increase in tax basis as well. To the extent that this increase in tax basis will provide additional tax depreciation, Entergy recorded a deferred tax asset and current tax expense resulting in a net increase in tax basis of approximately $334 million and Entergy Louisiana obtained a corresponding deferred tax asset. Consistent with the terms of an agreement with the LPSC, electric customers of Entergy Louisiana will realize customer credits associated with the business combination. Accordingly, in October 2015, Entergy recorded a regulatory liability of $107 million ($66 million net-of-tax) which partially offsets the effect of the aforementioned deferred tax asset. The deferred tax asset and the regulatory liability, net-of-tax, increased Entergy Louisiana’s member’s equity by $268 million. See Note 2 to the financial statements for further discussion of the business combination.

In the fourth quarter 2015, System Energy and Entergy Louisiana adopted a new method of accounting for income tax purposes in which the companies’ nuclear decommissioning costs will be treated as production costs of electricity includable in cost of goods sold. The new method results in a reduction of taxable income of $1.2 billion for System Energy and $2.2 billion for Entergy Louisiana.

The Protecting Americans from Tax Hikes Act of 2015 was enacted in December 2015. The most significant provisions affecting Entergy and the Registrant Subsidiaries were a five-year extension of bonus depreciation and permanent extension of the research and experimentation tax credit. The effect of the bonus depreciation extension on 2015 increased Entergy’s tax net operating loss.

System Energy [Member]

Income Taxes

INCOME TAXES (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

Income taxes for 2015, 2014, and 2013 for Entergy Corporation and Subsidiaries consist of the following:

	2015			2014			2013
	(In Thousands)
Current:
Federal		$77,166			$90,061			$88,291
Foreign	97			90			101
State	157,829			(12,637		)	20,584
Total	235,092			77,514			108,976
Deferred and non-current - net	(864,799		)	528,326			126,935
Investment tax credit adjustments - net	(13,220		)	(16,243		)	(9,930		)
Income taxes		($642,927	)		$589,597			$225,981

Income taxes for 2015, 2014, and 2013 for Entergy’s Registrant Subsidiaries consist of the following:

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Current:
Federal		$66,966			$101,382			$25,628			($9,346	)		$53,313			($63,302	)
State	6,265			35,406			6,832			1,784			2,450			26,755
Total	73,231			136,788			32,460			(7,562		)	55,763			(36,547		)
Deferred and non-current - net	(31,463		)	47,220			31,149			32,890			(17,599		)	93,491
Investment tax credit adjustments - net	(1,227		)	(5,337		)	(1,737		)	(138		)	(914		)	(3,867		)
Income taxes		$40,541			$178,671			$61,872			$25,190			$37,250			$53,077

2014	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Current:
Federal		($34,258	)		($44,909	)		$8,103			($1,428	)		$48,610			$19,908
State	(678		)	(1,191		)	7,474			510			4,877			15,379
Total	(34,936		)	(46,100		)	15,577			(918		)	53,487			35,287
Deferred and non-current - net	119,841			236,794			42,305			14,592			(2,418		)	53,501
Investment tax credit adjustments - net	(1,276		)	(5,642		)	(2,172		)	(224		)	(1,425		)	(5,478		)
Income taxes		$83,629			$185,052			$55,710			$13,450			$49,644			$83,310

2013	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi		Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Current:
Federal		($13,574	)		($18,797	)		$2,498		$14,823			$37,199			($6,199	)
State	6,122			(15,631		)	4,849		(1,267		)	(843		)	15,845
Total	(7,452		)	(34,428		)	7,347		13,556			36,356			9,646
Deferred and non-current - net	101,253			179,036			41,150		(11,033		)	(4,639		)	60,614
Investment tax credit adjustments - net	(2,014		)	(5,912		)	1,260		(246		)	(1,609		)	(1,407		)
Income taxes		$91,787			$138,696			$49,757		$2,277			$30,108			$68,853

Total income taxes for Entergy Corporation and Subsidiaries differ from the amounts computed by applying the statutory income tax rate to income before income taxes.  The reasons for the differences for the years 2015, 2014, and 2013 are:

	2015			2014			2013
	(In Thousands)
Net income (loss) attributable to Entergy Corporation		($176,562	)		$940,721			$711,902
Preferred dividend requirements of subsidiaries	19,828			19,536			18,670
Consolidated net income (loss)	(156,734		)	960,257			730,572
Income taxes	(642,927		)	589,597			225,981
Income (loss) before income taxes		($799,661	)		$1,549,854			$956,553
Computed at statutory rate (35%)		($279,881	)		$542,449			$334,794
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	29,944			44,708			13,599
Regulatory differences - utility plant items	32,089			39,321			32,324
Equity component of AFUDC	(18,191		)	(21,108		)	(22,356		)
Amortization of investment tax credits	(11,136		)	(12,211		)	(13,535		)
Flow-through / permanent differences	(7,872		)	(18,003		)	(301		)
Net-of-tax regulatory liability	—			—			(2,899		)
New York tax law change (a)	—			(21,500		)	—
Louisiana business combination	(333,655		)	—			—
Termination of business reorganization	—			—			(27,192		)
Provision for uncertain tax positions (b)	(56,683		)	32,573			(59,249		)
Valuation allowance	—			—			(31,573		)
Other - net	2,458			3,368			2,369
Total income taxes as reported		($642,927	)		$589,597			$225,981
Effective Income Tax Rate	80.4		%	38.0		%	23.6		%

(a) In March 2014, New York enacted legislation that substantially modifies various aspects of New York tax law. The most significant effect of the legislation for Entergy is the adoption of full water’s-edge unitary combined reporting, meaning that all of Entergy’s domestic entities will be included in New York’s combined filing group. The effect of the tax law change resulted in a deferred state income tax reduction of approximately $21.5 million as shown in the table above.

(b) See “Income Tax Audits- 2008-2009 IRS Audit” below for discussion of the most significant items for 2015 and 2013.

Total income taxes for the Registrant Subsidiaries differ from the amounts computed by applying the statutory income tax rate to income before taxes.  The reasons for the differences for the years 2015, 2014, and 2013 are:

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Net income		$74,272			$446,639			$92,708			$44,925			$69,625			$111,318
Income taxes	40,541			178,671			61,872			25,190			37,250			53,077
Pretax income		$114,813			$625,310			$154,580			$70,115			$106,875			$164,395
Computed at statutory rate (35%)		$40,185			$218,859			$54,103			$24,540			$37,406			$57,538
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	6,643			23,650			5,219			2,887			1,621			6,403
Regulatory differences - utility plant items	7,299			3,013			2,383			2,201			3,703			12,167
Equity component of AFUDC	(4,979		)	(5,420		)	(1,083		)	(451		)	(1,987		)	(2,973		)
Amortization of investment tax credits	(1,201		)	(5,252		)	(160		)	(111		)	(900		)	(3,476		)
Flow-through / permanent differences	(4,062		)	2,460			431			(4,539		)	530			618
Non-taxable dividend income	—			(44,658		)	—			—			—			—
Provision for uncertain tax positions (a)	(3,978		)	(15,377		)	756			525			(3,365		)	(17,313		)
Other - net	634			1,396			223			138			242			113
Total income taxes		$40,541			$178,671			$61,872			$25,190			$37,250			$53,077
Effective Income Tax Rate	35.3		%	28.6		%	40.0		%	35.9		%	34.9		%	32.3		%

(a) See “Income Tax Audits- 2008-2009 IRS Audit” below for discussion of the most significant items for Entergy Louisiana and System Energy.

2014	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Net income		$121,392			$446,022			$74,821			$31,030			$74,804			$96,334
Income taxes	83,629			185,052			55,710			13,450			49,644			83,310
Pretax income		$205,021			$631,074			$130,531			$44,480			$124,448			$179,644
Computed at statutory rate (35%)		$71,757			$220,876			$45,686			$15,568			$43,557			$62,875
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	9,591			11,666			5,180			1,562			3,221			6,877
Regulatory differences - utility plant items	8,653			7,487			4,448			777			4,165			13,791
Equity component of AFUDC	(2,533		)	(14,612		)	(833		)	(320		)	(1,035		)	(1,774		)
Amortization of investment tax credits	(1,251		)	(5,594		)	(260		)	(218		)	(1,412		)	(3,476		)
Flow-through / permanent differences	(5,082		)	(225		)	555			(4,458		)	393			(327		)
Non-taxable dividend income	—			(41,255		)	—			—			—			—
Provision for uncertain tax positions	1,881			5,336			718			405			522			5,235
Other - net	613			1,373			216			134			233			109
Total income taxes		$83,629			$185,052			$55,710			$13,450			$49,644			$83,310
Effective Income Tax Rate	40.8		%	29.3		%	42.7		%	30.2		%	39.9		%	46.4		%

2013	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Net income		$161,948			$414,126			$82,159			$12,608			$57,881			$113,664
Income taxes	91,787			138,696			49,757			2,277			30,108			68,853
Pretax income		$253,735			$552,822			$131,916			$14,885			$87,989			$182,517
Computed at statutory rate (35%)		$88,807			$193,488			$46,171			$5,210			$30,796			$63,881
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	10,954			19,084			4,564			1,116			(897		)	5,900
Regulatory differences - utility plant items	7,938			7,005			2,603			453			3,256			11,070
Equity component of AFUDC	(3,820		)	(13,100		)	(764		)	(322		)	(1,626		)	(2,724		)
Amortization of investment tax credits	(1,989		)	(5,864		)	(260		)	(216		)	(1,596		)	(3,476		)
Flow-through / permanent differences	2,540			3,646			1,702			(4,402		)	2,467			(491		)
Net-of-tax regulatory liability	—			(2,899		)	—			—			—			—
Termination of business organization	(6,753		)	(7,453		)	(4,177		)	(501		)	(3,542		)	(13		)
Non-taxable dividend income	—			(36,953		)	—			—			—			—
Provision for uncertain tax positions (a)	(6,527		)	(18,645		)	(326		)	795			1,027			(5,353		)
Other - net	637			387			244			144			223			59
Total income taxes		$91,787			$138,696			$49,757			$2,277			$30,108			$68,853
Effective Income Tax Rate	36.2		%	25.1		%	37.7		%	15.3		%	34.2		%	37.7		%

(a) See “Income Tax Audits- 2008-2009 IRS Audit” below for discussion of the most significant items for Entergy Louisiana and System Energy.

Significant components of accumulated deferred income taxes and taxes accrued for Entergy Corporation and Subsidiaries as of December 31, 2015 and 2014 are as follows:

	2015			2014
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($6,804,225	)		($8,128,096	)
Regulatory assets	(646,392		)	(922,161		)
Nuclear decommissioning trusts	(1,254,463		)	(1,248,737		)
Pension, net funding	(365,111		)	(324,881		)
Combined unitary state taxes	(45,078		)	(162,340		)
Power purchase agreements	—			(110,889		)
Other	(315,844		)	(500,424		)
Total	(9,431,113		)	(11,397,528		)
Deferred tax assets:
Nuclear decommissioning liabilities	828,983			874,493
Regulatory liabilities	284,432			458,230
Pension and other post-employment benefits	525,524			586,455
Sale and leaseback	139,720			153,308
Compensation	69,432			74,692
Accumulated deferred investment tax credit	95,248			100,442
Provision for allowances and contingencies	188,282			160,551
Power purchase agreements	38,401			—
Net operating loss carryforwards	360,188			457,758
Capital losses and miscellaneous tax credits	11,075			12,146
Valuation allowance	(91,532		)	(27,387		)
Other	68,204			58,334
Total	2,517,957			2,909,022
Non-current accrued taxes (including unrecognized tax benefits)	(1,338,806		)	(606,560		)
Accumulated deferred income taxes and taxes accrued		($8,251,962	)		($9,095,066	)

Entergy’s estimated tax attributes carryovers and their expiration dates as of December 31, 2015 are as follows:

Carryover Description	Carryover Amount	Year(s) of expiration
Federal net operating losses	$3.6 billion	2023-2035
State net operating losses	$5.2 billion	2016-2035
Miscellaneous federal and state credits	$77.9 million	2016-2035

As a result of the accounting for uncertain tax positions, the amount of the deferred tax assets reflected in the financial statements is less than the amount of the tax effect of the federal and state net operating loss carryovers, tax credit carryovers, and other tax attributes reflected on income tax returns. Because it is more likely than not that the benefit from certain state net operating loss carryovers will not be utilized, valuation allowances of $46 million as of December 31, 2015 and $21 million as of December 31, 2014 have been provided on the deferred tax assets relating to these state net operating loss carryovers. Additionally, valuation allowances totaling $45.5 million as of December 31, 2015 have been provided on deferred tax assets related to state jurisdictions in which Entergy does not currently expect to be able to utilize separate company tax return losses, preventing realization of such deferred tax assets.

Significant components of accumulated deferred income taxes and taxes accrued for the Registrant Subsidiaries as of December 31, 2015 and 2014 are as follows:

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($1,710,444	)		($2,041,968	)		($781,427	)		($167,294	)		($778,270	)		($611,745	)
Regulatory assets	(108,422		)	(254,316		)	(24,918		)	(39,451		)	(172,117		)	(46,990		)
Nuclear decommissioning trusts	(121,326		)	(99,980		)	—			—			—			(68,370		)
Pension, net funding	(107,073		)	(109,709		)	(30,901		)	(14,459		)	(28,001		)	(25,791		)
Deferred fuel	(7,647		)	(2,513		)	(684		)	(175		)	2,050			(18		)
Other	(38,683		)	(86,275		)	(5,625		)	(12,253		)	(10,109		)	(22,478		)
Total	(2,093,595		)	(2,594,761		)	(843,555		)	(233,632		)	(986,447		)	(775,392		)
Deferred tax assets:
Regulatory liabilities	18,369			215,154			7,787			20,888			7,307			14,927
Nuclear decommissioning liabilities	109,962			49,333			—			—			—			39,420
Pension and other post-employment benefits	(20,420		)	149,680			(6,628		)	(8,939		)	(16,703		)	(1,037		)
Sale and leaseback	—			37,236			—			—			—			102,484
Accumulated deferred investment tax credit	14,320			56,635			1,777			290			4,842			17,385
Provision for allowances and contingencies	1,024			123,007			18,735			33,843			7,266			134
Power purchase agreements	(1,279		)	13,840			1,901			13			575			—
Unbilled/deferred revenues	9,815			(32,365		)	7,154			2,126			10,851			—
Compensation	1,842			4,182			601			880			4,496			—
Net operating loss carryforwards	—			90,241			—			—			—			—
Other	128			21,982			1,995			316			1,672			—
Total	133,761			728,925			33,322			49,417			20,306			173,313
Non-current accrued taxes (including unrecognized tax benefits)	(22,978		)	(641,120		)	(402		)	(29,846		)	(40,693		)	(416,996		)
Accumulated deferred income taxes and taxes accrued		($1,982,812	)		($2,506,956	)		($810,635	)		($214,061	)		($1,006,834	)		($1,019,075	)

2014	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($1,657,503	)		($2,748,852	)		($753,576	)		($186,153	)		($771,135	)		($668,779	)
Regulatory assets	(198,662		)	(380,719		)	(30,114		)	—			(202,402		)	(110,087		)
Nuclear decommissioning trusts	(130,524		)	(106,162		)	—			—			—			(74,063		)
Pension, net funding	(93,355		)	(99,593		)	(27,861		)	(13,285		)	(25,616		)	(23,440		)
Deferred fuel	(82,050		)	(3,534		)	(5,303		)	(407		)	2,045			(120		)
Power purchase agreements	(17,073		)	(67,083		)	2,129			13			847			—
Other	(33,827		)	(84,282		)	(11,423		)	(11,500		)	(22,546		)	(19,802		)
Total	(2,212,994		)	(3,490,225		)	(826,148		)	(211,332		)	(1,018,807		)	(896,291		)
Deferred tax assets:
Regulatory liabilities	145,466			181,601			7,214			29,580			4,079			90,290
Nuclear decommissioning liabilities	(43,134		)	146,138			—			—			—			(62,571		)
Pension and other post-employment benefits	(17,534		)	158,661			(7,288		)	(7,504		)	(15,053		)	(1,413		)
Sale and leaseback	—			45,136			—			—			—			108,172
Accumulated deferred investment tax credit	14,791			58,863			2,436			332			5,158			18,862
Provision for allowances and contingencies	(7,149		)	125,805			19,590			10,986			8,017			133
Unbilled/deferred revenues	12,322			(25,016		)	12,956			3,395			11,573			—
Compensation	2,085			158			(846		)	475			4,155			—
Net operating loss carryforwards	105,063			241,803			—			—			—			—
Capital losses and miscellaneous tax credits	—			—			3,504			—			—			—
Other	258			15,508			5,887			2,891			3,850			2,000
Total	212,168			948,657			43,453			40,155			21,779			155,473
Non-current accrued taxes (including unrecognized tax benefits)	9,367			(412,508		)	(12,481		)	(19,502		)	(48,921		)	(81,528		)
Accumulated deferred income taxes and taxes accrued		($1,991,459	)		($2,954,076	)		($795,176	)		($190,679	)		($1,045,949	)		($822,346	)

The Registrant Subsidiaries’ estimated tax attributes carryovers and their expiration dates as of December 31, 2015 are as follows:

	Entergy Arkansas	Entergy Louisiana	Entergy Mississippi	Entergy New Orleans	Entergy Texas	System Energy
Federal net operating losses	$7 million	$2.4 billion	—	—	—	$242 million
Year(s) of expiration	2030-2035	2035	N/A	N/A	N/A	2030-2035
State net operating losses	—	$2.5 billion	—	$6 million	—	$833 million
Year(s) of expiration	N/A	2035	N/A	2032	N/A	2035
Misc. federal credits	$1 million	—	$1 million	—	—	$1 million
Year(s) of expiration	2029-2033	N/A	2029-2034	N/A	N/A	2029-2033
State credits	—	—	—	—	$3.3 million	$6 million
Year(s) of expiration	N/A	N/A	N/A	N/A	2026	2017-2020

As a result of the accounting for uncertain tax positions, the amount of the deferred tax assets reflected in the financial statements is less than the amount of the tax effect of the federal and state net operating loss carryovers and tax credit carryovers.

Unrecognized tax benefits

Accounting standards establish a “more-likely-than-not” recognition threshold that must be met before a tax benefit can be recognized in the financial statements.  If a tax deduction is taken on a tax return, but does not meet the more-likely-than-not recognition threshold, an increase in income tax liability, above what is payable on the tax return, is required to be recorded.  A reconciliation of Entergy’s beginning and ending amount of unrecognized tax benefits is as follows:

	2015			2014			2013
	(In Thousands)
Gross balance at January 1		$4,736,785			$4,593,224			$4,170,403
Additions based on tax positions related to the current year	1,850,705			348,543			162,338
Additions for tax positions of prior years	59,815			11,637			410,108
Reductions for tax positions of prior years (a)	(3,966,535		)	(213,401		)	(103,360		)
Settlements	(68,227		)	—			(43,620		)
Lapse of statute of limitations	(958		)	(3,218		)	(2,645		)
Gross balance at December 31	2,611,585			4,736,785			4,593,224
Offsets to gross unrecognized tax benefits:
Credit and loss carryovers	(1,264,483		)	(4,295,643		)	(4,400,498		)
Unrecognized tax benefits net of unused tax attributes and payments (b)		$1,347,102			$441,142			$192,726

(a) The primary reduction is related to the nuclear decommissioning costs treatment discussed in “Income Tax Audits - 2008-2009 IRS Audit” below.

(b) Potential tax liability above what is payable on tax returns

The balances of unrecognized tax benefits include $955 million, $516 million, and $176 million as of December 31, 2015, 2014, and 2013, respectively, which, if recognized, would lower the effective income tax rates.  Because of the effect of deferred tax accounting, the remaining balances of unrecognized tax benefits of $1.657 billion, $4.221 billion, and $4.417 billion as of December 31, 2015, 2014, and 2013, respectively, if disallowed, would not affect the annual effective income tax rate but would accelerate the payment of cash to the taxing authority to an earlier period.

Entergy accrues interest expense, if any, related to unrecognized tax benefits in income tax expense.  Entergy’s December 31, 2015, 2014, and 2013 accrued balance for the possible payment of interest is approximately $27 million, $127 million, and $96.4 million, respectively.

A reconciliation of the Registrant Subsidiaries’ beginning and ending amount of unrecognized tax benefits for 2015, 2014, and 2013 is as follows:

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Gross balance at January 1, 2015		$362,912			$1,205,929			$20,144			$53,763			$17,264			$258,242
Additions based on tax positions related to the current year (a)	2,196			1,367,058			566			472			657			472,304
Additions for tax positions of prior years	1,057			7,992			8,140			48			2,914			913
Reductions for tax positions of prior years	(340,720		)	(859,430		)	—			(386		)	(3,981		)	(253,141		)
Settlements	—			(30,888		)	(9,368		)	—			(3,392		)	—
Gross balance at December 31, 2015	25,445			1,690,661			19,482			53,897			13,462			478,318
Offsets to gross unrecognized tax benefits:
Loss carryovers	(3,613		)	(893,764		)	(1,016		)	(506		)	(276		)	(133,611		)
Unrecognized tax benefits net of unused tax attributes and payments		$21,832			$796,897			$18,466			$53,391			$13,186			$344,707

(a) The primary addition for Entergy Louisiana and System Energy is related to the nuclear decommissioning costs treatment discussed in “Other Tax Matters” below.

2014	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Gross balance at January 1, 2014		$347,713			$1,076,680			$16,186			$51,679			$13,017			$265,185
Additions based on tax positions related to the current year	14,511			151,249			3,928			2,235			4,225			2,744
Additions for tax positions of prior years	1,767			6,924			319			37			303			566
Reductions for tax positions of prior years	(1,079		)	(28,924		)	(289		)	(188		)	(267		)	(10,253		)
Settlements	—			—			—			—			(14		)	—
Gross balance at December 31, 2014	362,912			1,205,929			20,144			53,763			17,264			258,242
Offsets to gross unrecognized tax benefits:
Loss carryovers	(361,043		)	(739,988		)	(6,992		)	(20,735		)	(241		)	(163,124		)
Unrecognized tax benefits net of unused tax attributes and payments		$1,869			$465,941			$13,152			$33,028			$17,023			$95,118

2013	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Gross balance at January 1, 2013		$344,669			$1,002,394			$16,841			$52,018			$13,954			$260,346
Additions based on tax positions related to the current year	6,427			17,887			957			583			2,170			4,170
Additions for tax positions of prior years	1,228			125,214			401			3,506			587			8,391
Reductions for tax positions of prior years	(3,943		)	(53,473		)	(1,941		)	(962		)	(4,186		)	(967		)
Settlements	(668		)	(15,342		)	(72		)	(3,466		)	492			(6,755		)
Gross balance at December 31, 2013	347,713			1,076,680			16,186			51,679			13,017			265,185
Offsets to gross unrecognized tax benefits:
Loss carryovers	(345,674		)	(747,756		)	(16,186		)	(22,078		)	(266		)	(225,286		)
Unrecognized tax benefits net of unused tax attributes and payments		$2,039			$328,924			$—			$29,601			$12,751			$39,899

The Registrant Subsidiaries’ balances of unrecognized tax benefits included amounts which, if recognized, would have reduced income tax expense as follows:

	December 31,
	2015		2014		2013
	(In Millions)
Entergy Arkansas		$4.5		$2.6		$0.6
Entergy Louisiana		$692.7		$267.3		$131.9
Entergy Mississippi		$8.1		$3.9		$3.9
Entergy New Orleans		$50.7		$50.7		$—
Entergy Texas		$5.2		$10.5		$10.1
System Energy		$0.7		$3.7		$3.3

The Registrant Subsidiaries accrue interest and penalties related to unrecognized tax benefits in income tax expense.  Penalties have not been accrued.  Accrued balances for the possible payment of interest are as follows:

	December 31,
	2015		2014		2013
	(In Millions)
Entergy Arkansas		$1.3		$17.0		$15.2
Entergy Louisiana		$9.3		$22.2		$18.0
Entergy Mississippi		$0.4		$2.8		$2.1
Entergy New Orleans		$1.8		$1.3		$0.9
Entergy Texas		$1.2		$1.0		$0.8
System Energy		$0.7		$23.8		$19.0

Income Tax Audits

Entergy and its subsidiaries file U.S. federal and various state and foreign income tax returns.  IRS examinations are complete for years before 2010. All state taxing authorities’ examinations are completed for years before 2009.

2006-2007 IRS Audit

In the first quarter 2015, the IRS finalized tax and interest computations from the 2006-2007 audit that resulted in a reversal of Entergy’s provision for uncertain tax positions related to accrued interest of approximately $20 million, including decreases of approximately $4 million for Entergy Arkansas, $11 million for Entergy Louisiana, and $1 million for System Energy.

2008-2009 IRS Audit

In the fourth quarter 2009, Entergy filed Applications for Change in Accounting Method (the “2009 CAM”) for tax purposes with the IRS for certain costs under Section 263A of the Internal Revenue Code.  In the Applications, Entergy proposed to treat the nuclear decommissioning liability associated with the operation of its nuclear power plants as a production cost properly includable in cost of goods sold.  The effect of the 2009 CAM was a $5.7 billion reduction in 2009 taxable income.  The 2009 CAM was adjusted to $9.3 billion in 2012.

In the fourth quarter 2012 the IRS disallowed the reduction to 2009 taxable income related to the 2009 CAM.  In the third quarter 2013, the Internal Revenue Service issued its RAR for the tax years 2008-2009. As a result of the issuance of this RAR, Entergy and the IRS resolved all of the 2008-2009 issues described above except for the 2009 CAM. Entergy disagreed with the IRS’s disallowance of the 2009 CAM and filed a protest with the IRS Appeals Division in October 2013.

In August 2015, Entergy and the IRS agreed on the treatment of the 2009 position regarding nuclear decommissioning liabilities from the 2008-2009 audit. The agreement provides that Entergy is entitled to deduct approximately $118 million of the $9.3 billion claimed in 2009. The agreement effectively settled all matters pertaining to the 2009 tax year and increased Entergy’s 2009 federal income tax liability by $2.4 million.

2010-2011 IRS Audit

The IRS examination of the 2010 and 2011 years is ongoing and the audit field work is expected to be completed by the end of the first quarter of 2016. The IRS has not issued any significant notices of proposed adjustments other than for the decommissioning liability position discussed above. The Revenue Agent’s Report is expected to be received shortly after the completion of field work.

Other Tax Matters

Entergy regularly negotiates with the IRS to achieve settlements.  The resolution of audit issues could result in significant changes to the amounts of unrecognized tax benefits in the next twelve months.

In September 2013 the U.S. Treasury Department and the IRS issued final regulations that provide guidance on the deductibility and capitalization of costs incurred associated with tangible property. Entergy and the Registrant Subsidiaries filed with the IRS an automatic application for change in accounting method which is in compliance with the final regulations and the safe harbor provisions of the relevant IRS Revenue Procedures. Entergy estimates that the effect of this accounting method change will result in a net increase to Entergy’s taxable income of approximately $585 million, which will be recognized generally over a four year period beginning with the tax year ended 2014. The adoption of the final regulations and safe harbor method results in approximate changes in the Registrant Subsidiaries taxable income as follows: an increase of $177 million for Entergy Arkansas, an increase of $78 million for Entergy Louisiana, an increase of $26 million for Entergy Mississippi, an increase of $183 million for Entergy Texas, a decrease of $2 million for Entergy New Orleans, and an increase of $22 million for System Energy.

In October 2015 two of Entergy’s Louisiana utilities, Entergy Gulf States Louisiana and Entergy Louisiana, combined their businesses into a legal entity which is identified as Entergy Louisiana herein. Entergy Louisiana maintained a carryover tax basis in the assets received. Additionally, the tax consequences provided for an increase in tax basis as well. To the extent that this increase in tax basis will provide additional tax depreciation, Entergy recorded a deferred tax asset and current tax expense resulting in a net increase in tax basis of approximately $334 million and Entergy Louisiana obtained a corresponding deferred tax asset. Consistent with the terms of an agreement with the LPSC, electric customers of Entergy Louisiana will realize customer credits associated with the business combination. Accordingly, in October 2015, Entergy recorded a regulatory liability of $107 million ($66 million net-of-tax) which partially offsets the effect of the aforementioned deferred tax asset. The deferred tax asset and the regulatory liability, net-of-tax, increased Entergy Louisiana’s member’s equity by $268 million. See Note 2 to the financial statements for further discussion of the business combination.

In the fourth quarter 2015, System Energy and Entergy Louisiana adopted a new method of accounting for income tax purposes in which the companies’ nuclear decommissioning costs will be treated as production costs of electricity includable in cost of goods sold. The new method results in a reduction of taxable income of $1.2 billion for System Energy and $2.2 billion for Entergy Louisiana.

The Protecting Americans from Tax Hikes Act of 2015 was enacted in December 2015. The most significant provisions affecting Entergy and the Registrant Subsidiaries were a five-year extension of bonus depreciation and permanent extension of the research and experimentation tax credit. The effect of the bonus depreciation extension on 2015 increased Entergy’s tax net operating loss.