Income Taxes (Tables)

12 Months Ended

Dec. 31, 2014

Sources of income (loss) before income taxes

Edison International's sources of income (loss) before income taxes are:



	Years ended December 31,
(in millions)	2014			2013		2012
Income from continuing operations before income taxes	$	1,979		$	1,221	$	1,861
Discontinued operations before income taxes	(525		)	—		(2,235		)
Income (loss) before income tax	$	1,454		$	1,221	$	(374	)

Components of income tax expense (benefit) by location of taxing jurisdiction

The components of income tax expense (benefit) by location of taxing jurisdiction are:



	Edison International									SCE
	Years ended December 31,
(in millions)	2014			2013			2012			2014			2013			2012
Current:
Federal	$	(99	)	$	(97	)	$	—		$	(89	)	$	(119	)	$	—
State	20			(9		)	—			101			(19		)	50
	(79		)	(106		)	—			12			(138		)	50
Deferred:
Federal	454			317			132			476			345			136
State	68			31			135			(14		)	72			28
	522			348			267			462			417			164
Total continuing operations	443			242			267			474			279			214
Discontinued operations¹	(710		)	(36		)	(549		)	—			—			—
Total	$	(267	)	$	206		$	(282	)	$	474		$	279		$	214

Components of net accumulated deferred income tax liability

The components of net accumulated deferred income tax liability are:



	Edison International						SCE
	December 31,
(in millions)	2014			2013			2014		2013
Deferred tax assets:
Property and software related	$	572		$	523		$	571	$	523
Nuclear decommissioning trust assets in excess of nuclear ARO liability	441			569			441		569
Loss and credit carryforwards	1,657			2,228			205		427
Regulatory balancing accounts	18			139			18		139
Pension and PBOPs	510			283			321		105
Other	582			712			445		544
Sub-total	3,780			4,454			2,001		2,307
Less valuation allowance	29			1,380			—		—
Total	3,751			3,074			2,001		2,307
Deferred tax liabilities:
Property-related	8,709			7,879			8,699		7,869
Capitalized software costs	285			318			285		318
Regulatory balancing accounts	577			625			577		625
Nuclear decommissioning trust assets	441			569			441		569
PBOPs	227			6			227		6
Other	274			497			171		393
Total	10,513			9,894			10,400		9,780
Accumulated deferred income tax liability, net	$	6,762		$	6,820		$	8,399	$	7,473
Classification of accumulated deferred income taxes, net:
Included in deferred credits and other liabilities	$	7,214		$	7,241		$	8,190	$	7,737
Included in current liabilities (assets)	(452		)	(421		)	209		(264		)

Summary of Tax Credit Carryforwards

The amounts of loss and credit carryforwards (after-tax) are as follows:



	Edison International				SCE
	December 31, 2014
(in millions)	Loss Carryforwards		Credit Carryforwards		Loss Carryforwards		Credit Carryforwards
2015 to 2019	$	3	$	—	$	14	$	—
2020 to 2033	1,213		405		132		39
No expiration date	—		36		—		20
Total	$	1,216	$	441	$	146	$	59

Reconciliation of income tax expense

The table below provides a reconciliation of income tax expense computed at the federal statutory income tax rate to the income tax provision:



	Edison International									SCE
	Years ended December 31,
(in millions)	2014			2013			2012			2014			2013			2012
Income from continuing operations before income taxes	$	1,979		$	1,221		$	1,861		$	2,039		$	1,279		$	1,874
Provision for income tax at federal statutory rate of 35%	693			427			652			714			448			656
Increase (decrease) in income tax from:
Items presented with related state income tax, net:
Repair deductions	—			—			(231		)	—			—			(231		)
State tax, net of federal benefit	56			18			108			55			34			54
Property-related¹	(252		)	(216		)	(223		)	(252		)	(216		)	(223		)
Accumulated deferred income tax adjustments	—			—			(41		)	—			—			(41		)
Change related to uncertain tax positions	5			14			40			12			14			36
San Onofre OII settlement	(23		)	24			—			(23		)	24			—
Other	(36		)	(25		)	(38		)	(32		)	(25		)	(37		)
Total income tax expense from continuing operations	$	443		$	242		$	267		$	474		$	279		$	214
Effective tax rate	22.4		%	19.8		%	14.3		%	23.2		%	21.8		%	11.4		%


¹	Includes incremental repair benefit recorded in 2012 to 2014. See discussion of repair deductions below.

Reconciliation of unrecognized tax benefits

The following table provides a reconciliation of unrecognized tax benefits for continuing and discontinued operations:



	Edison International									SCE
	December 31,
(in millions)	2014			2013			2012			2014			2013			2012
Balance at January 1,	$	815		$	812		$	631		$	532		$	571		$	373
Tax positions taken during the current year:
Increases	65			19			33			57			22			35
Tax positions taken during a prior year:
Increases	1			43			177			—			45			169
Decreases¹	(143		)	(109		)	(11		)	(93		)	(106		)	(6		)
Increases (decreases) – deconsolidation of EME²	—			50			(18		)	—			—			—
Decreases for settlements during the period³	(162		)	—			—			(55		)	—			—
Balance at December 31,	$	576		$	815		$	812		$	441		$	532		$	571


¹	Decreases in prior year tax positions relate primarily to re-measurement of uncertain tax positions in connection with the settlement of the 2003 – 2006 IRS audit.

Unrecognized tax benefits of EME have been deconsolidated as a result of the bankruptcy filing by EME, except for tax liabilities for which Edison International and EME are jointly liable under the Internal Revenue Code and applicable state statutes. See Note 15 for further information. During 2013, Edison International increased the amount of unrecognized tax benefits related to the taxable gain on sale of EME’s international assets by approximately $50 million as a result of unfavorable developments during the fourth quarter of 2013.


³	In the fourth quarter of 2014, Edison International has settled all open tax positions with the IRS for taxable year 2003 through 2006. Edison International has previously made cash deposits which are sufficient to settle all outstanding liabilities for this audit cycle. Total liabilities included tax reserves, previously settled issues and the associated interest and penalties.

Schedule of interest and penalties related to income tax liabilities

The total amount of accrued interest and penalties related to income tax liabilities for continuing and discontinued operations are:



	Edison International				SCE
	Years ended December 31,
(in millions)	2014		2013		2014		2013
Accrued interest and penalties	$	338	$	406	$	64	$	88

The net after-tax interest and penalties recognized in income tax expense for continuing and discontinued operations are:



	Edison International								SCE
	December 31,
(in millions)	2014		2013			2012			2014		2013		2012
Net after-tax interest and penalties tax benefit (expense)	$	41	$	(3	)	$	(10	)	$	16	$	2	$	(11	)