XML 26 R15.htm IDEA: XBRL DOCUMENT v3.10.0.1
Income Taxes
 6 Months Ended
Jun. 30, 2018
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes
Effective Tax Rate
The table below provides a reconciliation of income tax expense computed at the federal statutory income tax rate to the income tax provision:
 
Three months ended June 30,
 
Six months ended June 30,
(in millions)
2018
 
2017
 
2018
 
2017
Edison International:
 
 
 
 
 
 
 
Income from continuing operations before income taxes
$
289

 
$
335

 
$
500

 
$
687

Provision for income tax at federal statutory rate of 21% and 35%, respectively 1
61

 
117

 
105

 
241

Increase in income tax from:
 

 
 
 
 

 
 
State tax, net of federal benefit
—

 
6

 
(5
)
 
16

Property-related2
(69
)
 
(83
)
 
(138
)
 
(196
)
Change related to uncertain tax positions
—

 
(6
)
 
—

 
(18
)
Shared-based compensation3
—

 
(3
)
 
—

 
(46
)
Other
(1
)
 
(5
)
 
(2
)
 
(11
)
Total income tax (benefit) expense from continuing operations
$
(9
)
 
$
26

 
$
(40
)
 
$
(14
)
Effective tax rate
(3.1
)%
 
7.8
%
 
(8.0
)%
 
(2.0
)%
SCE:
 
 
 
 
 
 
 
Income from continuing operations before income taxes
$
325

 
$
395

 
$
635

 
$
787

Provision for income tax at federal statutory rate of 21% and 35%, respectively1
68

 
138

 
133

 
275

Increase in income tax from:
 
 
 
 
 
 
 
State tax, net of federal benefit
3

 
9

 
4

 
22

Property-related2
(69
)
 
(83
)
 
(138
)
 
(196
)
Change related to uncertain tax positions
—

 
—

 
(1
)
 
(11
)
Shared-based compensation3
—

 
(1
)
 
—

 
(9
)
Other
(4
)
 
(6
)
 
(6
)
 
(12
)
Total income tax (benefit) expense from continuing operations
$
(2
)
 
$
57

 
$
(8
)
 
$
69

Effective tax rate
(0.6
)%
 
14.4
%
 
(1.3
)%
 
8.8
 %

1 
Tax Reform reduced the federal corporate income tax rate from 35% to 21%, effective January 1, 2018.
2 In March 2017, SCE received the final decision on claims against, and counterclaims of, Mitsubishi Heavy Industries, Inc. and related companies (together, "MHI") from the arbitration tribunal, the International Chamber of Commerce. With the resolution of the insurance claim against Nuclear Electric Insurance Limited ("NEIL") in October 2015 and the conclusion of the arbitration proceeding against MHI, a tax abandonment loss of $691 million and $1.13 billion for federal and state income tax purposes, respectively, was claimed in the first six months of 2017, resulting in a flow-through tax benefit of approximately $39 million, impacting the 2017 effective tax rate.
3 Includes state taxes for Edison International and SCE of $4 million and $1 million, respectively, for the three months ended June 30, 2017 and $10 million and $2 million, respectively, for the six months ended June 30, 2017.
The CPUC requires flow-through ratemaking treatment for the current tax benefit arising from certain property-related and other temporary differences which reverse over time. Flow-through items reduce current authorized revenue requirements in SCE's rate cases and result in a regulatory asset for recovery of deferred income taxes in future periods. The difference between the authorized amounts as determined in SCE's rate cases, adjusted for balancing and memorandum account activities, and the recorded flow-through items also result in increases or decreases in regulatory assets with a corresponding impact on the effective tax rate to the extent that recorded deferred amounts are expected to be recovered in future rates.
Unrecognized Tax Benefits
 The following table provides a reconciliation of unrecognized tax benefits:

Edison International
 
SCE
(in millions)
2018
 
2017
 
2018
 
2017
Balance at January 1,
$
432

 
$
471

 
$
331

 
$
371

Tax positions taken during the current year:
 
 
 
 
 
 
 
   Increases
21

 
20

 
21

 
20

Tax positions taken during a prior year:
 
 
 
 
 
 
 
   Increases
—

 
3

 
—

 
3

   Decreases
(7
)
 
—

 
(7
)
 
—

   Decreases for settlements during the period1
—

 
(83
)
 
—

 
(78
)
Balance at June 30,
$
446

 
$
411

 
$
345

 
$
316


1 In the first quarter of 2017, Edison International settled all open tax positions with the IRS for taxable years 2007 through 2012.
Tax Disputes
In the first quarter of 2017, Edison International settled all open tax positions with the IRS for taxable years 2007 through 2012. Edison International has previously made cash deposits to cover the estimated tax and interest liability from this audit cycle and expects a $7 million refund of this deposited amount.
Tax years that remain open for examination by the IRS and the California Franchise Tax Board are 2014 – 2016 and 2010 – 2016, respectively. Edison International has settled all open tax positions with the IRS for taxable years prior to 2013. 
Edison International expects to receive a final settlement for tax years 1994 – 2006 from the California Franchise Tax Board by year end 2018. Upon receipt of this settlement, SCE expects to update its assessment of uncertain tax positions. Tax years 2007 – 2009 are currently under protest with the California Franchise Tax Board.