Income Taxes (Tables)

12 Months Ended

Dec. 31, 2015

Sources of income (loss) before income taxes

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



	Years ended December 31,
(in millions)	2015		2014			2013
Income from continuing operations before income taxes	$	1,568	$	1,979		$	1,221
Income (loss) from discontinued operations before income taxes	15		(525		)	—
Income before income tax	$	1,583	$	1,454		$	1,221

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)	2015			2014			2013			2015		2014			2013
Current:
Federal	$	18		$	(99	)	$	(97	)	$	72	$	(89	)	$	(119	)
State	19			20			(9		)	127		101			(19		)
	37			(79		)	(106		)	199		12			(138		)
Deferred:
Federal	340			454			317			298		476			345
State	109			68			31			10		(14		)	72
	449			522			348			308		462			417
Total continuing operations	486			443			242			507		474			279
Discontinued operations¹	(21		)	(710		)	(36		)	—		—			—
Total	$	465		$	(267	)	$	206		$	507	$	474		$	279


¹	See Note 15 for a discussion of discontinued operations related to EME.

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)	2015		2014		2015		2014
Deferred tax assets:
Property and software related	$	675	$	572	$	675	$	571
Nuclear decommissioning trust assets in excess of nuclear ARO liability	360		441		360		441
Loss and credit carryforwards	1,388		1,657		—		205
Regulatory balancing accounts	21		18		21		18
Pension and PBOPs	337		510		154		321
Other	499		582		411		445
Sub-total	3,280		3,780		1,621		2,001
Less valuation allowance	32		29		—		—
Total	3,248		3,751		1,621		2,001
Deferred tax liabilities:
Property-related	9,606		8,709		9,600		8,699
Capitalized software costs	207		285		207		285
Regulatory balancing accounts	202		577		202		577
Nuclear decommissioning trust assets	360		441		360		441
PBOPs	71		227		71		227
Other	189		274		161		171
Total	10,635		10,513		10,601		10,400
Accumulated deferred income tax liability, net¹	$	7,387	$	6,762	$	8,980	$	8,399

Summary of Tax Credit Carryforwards

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



	Edison International				SCE
	December 31, 2015
(in millions)	Loss Carryforwards		Credit Carryforwards		Loss Carryforwards		Credit Carryforwards
Expire between 2021 to 2034	$	1,136	$	409	$	39	$	22
No expiration date	—		54		—		39
Total¹	$	1,136	$	463	$	39	$	61

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)	2015			2014			2013			2015			2014			2013
Income from continuing operations before income taxes	$	1,568		$	1,979		$	1,221		$	1,618		$	2,039		$	1,279
Provision for income tax at federal statutory rate of 35%	549			693			427			566			714			448
Increase in income tax from:
Items presented with related state income tax, net:
Regulatory asset write-off¹	382			—			—			382			—			—
State tax, net of federal benefit	5			56			18			34			55			34
Property-related²	(341		)	(252		)	(216		)	(341		)	(252		)	(216		)
Change related to uncertain tax positions	(67		)	5			14			(94		)	12			14
San Onofre OII settlement	—			(23		)	24			—			(23		)	24
Other	(42		)	(36		)	(25		)	(40		)	(32		)	(25		)
Total income tax expense from continuing operations	$	486		$	443		$	242		$	507		$	474		$	279
Effective tax rate	31.0		%	22.4		%	19.8		%	31.3		%	23.2		%	21.8		%

¹Includes federal and state.


²	Includes incremental repair benefit recorded in 2013 to 2015. 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)	2015			2014			2013			2015			2014			2013
Balance at January 1,	$	576		$	815		$	812		$	441		$	532		$	571
Tax positions taken during the current year:
Increases	54			65			19			48			57			22
Tax positions taken during a prior year:
Increases	66			1			43			23			—			45
Decreases¹	(165		)	(143		)	(109		)	(159		)	(93		)	(106		)
Increases – deconsolidation of EME²	—			—			50			—			—			—
Decreases for settlements during the period³	(2		)	(162		)	—			—			(55		)	—
Balance at December 31,	$	529		$	576		$	815		$	353		$	441		$	532


¹	Decreases in prior year tax positions relate primarily to re-measurement of uncertain tax positions in connection with receipt of the IRS Revenue Agent Report in June 2015. See discussions in Tax Disputes below.

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.

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)	2015		2014		2015		2014
Accrued interest and penalties	$	122	$	338	$	40	$	64

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)	2015		2014		2013			2015		2014		2013
Net after-tax interest and penalties tax benefit (expense)	$	9	$	41	$	(3	)	$	14	$	16	$	2