INCOME TAXES

The following table is a summary of income tax expense for each of the years ended December 31:



Income Taxes	2014			2013			2012
	(Millions of Dollars)

Current tax expense	$	33.6		$	25.2		$	13.1
Deferred income taxes, net	329.2			313.8			294.4
Investment tax credit, net	(1.1		)	(1.1		)	(1.2		)
Total Income Tax Expense	$	361.7		$	337.9		$	306.3

The provision for income taxes for each of the years ended December 31 differs from the amount of income tax determined by applying the applicable U.S. statutory federal income tax rate to income before income taxes as a result of the following:



	2014					2013					2012
				Effective					Effective					Effective
Income Tax Expense	Amount			Tax Rate		Amount			Tax Rate		Amount			Tax Rate
	(Millions of Dollars)
Expected tax at statutory federal tax rates	$	332.5		35.0	%	$	320.3		35.0	%	$	298.4		35.0	%
State income taxes net of federal tax benefit	50.5			5.3	%	49.0			5.3	%	43.3			5.1	%
Production tax credits	(17.4		)	(1.8	)%	(16.7		)	(1.8	)%	(15.9		)	(1.9	)%
Treasury Grant	(3.8		)	(0.4	)%	(7.4		)	(0.8	)%	—			—	%
AFUDC - Equity	(1.9		)	(0.2	)%	(6.4		)	(0.7	)%	(12.3		)	(1.4	)%
Investment tax credit restored	(1.1		)	(0.1	)%	(1.1		)	(0.1	)%	(1.2		)	(0.1	)%
Domestic production activities deduction	—			—	%	—			—	%	(12.6		)	(1.5	)%
Other, net	2.9			0.3	%	0.2			—	%	6.6			0.7	%
Total Income Tax Expense	$	361.7		38.1	%	$	337.9		36.9	%	$	306.3		35.9	%

The components of deferred income taxes classified as net current assets and net long-term liabilities as of December 31 are as follows:



Deferred Tax Assets	2014		2013
	(Millions of Dollars)
Current
Future federal tax benefits	$	221.7	$	309.7
Employee benefits and compensation	13.7		13.8
Other	47.7		56.0
Total Current Deferred Tax Assets	283.1		379.5

Non-current
Deferred revenues	221.3		237.0
Employee benefits and compensation	98.2		95.6
Future federal tax benefits	—		32.5
Property-related	28.8		28.2
Construction advances	18.9		18.3
Other	51.8		62.9
Total Non-Current Deferred Tax Assets	419.0		474.5
Total Deferred Tax Assets	$	702.1	$	854.0



Deferred Tax Liabilities	2014		2013
	(Millions of Dollars)
Current
Prepaid items	$	40.4	$	69.5
Total Current Deferred Tax Liabilities	40.4		69.5

Non-current
Property-related	2,750.4		2,574.4
Employee benefits and compensation	242.5		238.5
Investment in transmission affiliate	188.6		169.9
Deferred transmission costs	58.5		50.8
Other	85.7		74.9
Total Non-current Deferred Tax Liabilities	3,325.7		3,108.5
Total Deferred Tax Liabilities	$	3,366.1	$	3,178.0

Consolidated Balance Sheet Presentation	2014		2013
Current Deferred Tax Asset	$	242.7	$	310.0
Non-Current Deferred Tax Liability	$	2,906.7	$	2,634.0

Consistent with rate-making treatment, deferred taxes are offset in the above table for temporary differences which have related regulatory assets or liabilities.

As of December 31, 2014, we had approximately $416.2 million and $76.0 million of net operating loss and tax credit carryforwards resulting in deferred tax assets of $145.7 million and $76.0 million, respectively. As of December 31, 2013, we had approximately $810.3 million and $58.6 million of net operating loss and tax credit carryforwards resulting in deferred tax assets of $283.6 million and $58.6 million, respectively. The tax credit and net operating loss carryforwards begin to expire in 2029. We anticipate that we will have future taxable income sufficient to utilize these deferred tax assets.

We previously adopted accounting guidance related to uncertainty in income taxes. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:



	2014			2013
	(Millions of Dollars)

Balance as of January 1	$	8.4		$	11.3
Reductions for tax positions of prior years	(1.2		)	(2.9		)
Balance as of December 31	$	7.2		$	8.4

The amount of unrecognized tax benefits as of December 31, 2014 and 2013 excludes deferred tax assets related to uncertainty in income taxes of $7.2 million and $8.4 million, respectively. As of December 31, 2014 and 2013, there were no unrecognized tax benefits that, if recognized, would impact the effective tax rate for continuing operations.

We recognize interest and penalties accrued related to unrecognized tax benefits as a component of income tax expense. For the years ended December 31, 2014, 2013 and 2012, we recognized approximately $0.3 million, $0.2 million and $0.2 million, respectively, of accrued interest in the Consolidated Income Statements. For the years ended December 31, 2014, 2013 and 2012, we recognized no penalties in the Consolidated Income Statements. We had approximately $0.7 million and $0.4 million of interest accrued and no penalties accrued on the Consolidated Balance Sheets as of December 31, 2014 and 2013, respectively.

We do not anticipate any significant increases or decreases in the total amounts of unrecognized tax benefits within the next 12 months.

Our primary tax jurisdictions include the United States and the state of Wisconsin. Currently, the tax years of 2011 through 2014 are subject to Federal examination, and the tax years 2010 through 2014 are subject to examination by the state of Wisconsin.