(8) Income Taxes

Income tax expense (benefit) consists of the following for the years ended December 31 (in millions):



	2013			2012			2011

Current:
Federal	$	54		$	(112	)	$	(151	)
State	13			(3		)	(10		)
Total	67			(115		)	(161		)

Deferred:
Federal	204			283			338
State	29			33			40
Total	233			316			378

Investment tax credits	(3		)	(4		)	(4		)
Total income tax expense	$	297		$	197		$	213

A reconciliation of the federal statutory income tax rate to the effective income tax rate applicable to income before income tax expense is as follows for the years ended December 31:



	2013		2012		2011

Federal statutory income tax rate	35	%	35	%	35	%
State income taxes, net of federal income tax benefit	3		3		2
Federal income tax credits⁽¹⁾	(7	)	(9	)	(10	)
Other	(1	)	(2	)	1
Effective income tax rate	30	%	27	%	28	%


(1)	Primarily attributable to the impact of federal renewable electricity production tax credits for qualifying wind-powered generating facilities that extend 10 years from the date the facilities were placed in service.

The net deferred income tax liability consists of the following as of December 31 (in millions):



	2013			2012

Deferred income tax assets:
Regulatory liabilities	$	355		$	346
Employee benefits	98			219
Derivative contracts and unamortized contract values	76			109
State carryforwards	68			69
Loss contingencies	67			61
Asset retirement obligations	48			46
Other	86			106
	798			956
Deferred income tax liabilities:
Property, plant and equipment	(4,528		)	(4,269		)
Regulatory assets	(525		)	(695		)
Other	(38		)	(48		)
	(5,091		)	(5,012		)
Net deferred income tax liability	$	(4,293	)	$	(4,056	)

Reflected as:
Deferred income taxes - current assets	$	66		$	112
Deferred income taxes - noncurrent liabilities	(4,359		)	(4,168		)
	$	(4,293	)	$	(4,056	)

The following table provides PacifiCorp's net operating loss and tax credit carryforwards and expiration dates as of December 31, 2013 (in millions):



	State

Net operating loss carryforwards	$	1,451
Deferred income taxes on net operating loss carryforwards	$	52
Expiration dates	2014 - 2032

Tax credit carryforwards	$	16
Expiration dates	2014 - indefinite

The United States Internal Revenue Service has effectively settled its examination of PacifiCorp's income tax returns through December 31, 2009. State agencies have closed their examinations of PacifiCorp's income tax returns through March 31, 2003, except for the 1995 and 1997 tax years in Utah.

As of December 31, 2013 and 2012, PacifiCorp had unrecognized tax benefits totaling $13 million and $47 million, respectively, related to tax positions for which ultimate deductibility is highly certain but for which there is uncertainty as to the timing of such deductibility. Recognition of these tax benefits, other than applicable interest and penalties, would not affect PacifiCorp's effective income tax rate.