Income Taxes (Tables)

12 Months Ended

Dec. 31, 2021

Components of Income Tax (Benefit) Expense

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


	Edison International						SCE

	Years ended December 31,
(in millions)	2021		2020		2019		2021		2020		2019
Current:
Federal	$	—	$	13	$	—	$	—	$	12	$	—
State		(179)		(22)		6		(45)		(26)		14
		(179)		(9)		6		(45)		(14)		14
Deferred:
Federal		83		(230)		(243)		83		(207)		(206)
State		(40)		(66)		(41)		(21)		(56)		(37)
		43		(296)		(284)		62		(263)		(243)
Total	$	(136)	$	(305)	$	(278)	$	17	$	(277)	$	(229)

Components of Net Accumulated Deferred Income Tax Liability


	Edison International						SCE

	Years ended December 31,
(in millions)	2021		2020		2019		2021		2020		2019
Current:
Federal	$	—	$	13	$	—	$	—	$	12	$	—
State		(179)		(22)		6		(45)		(26)		14
		(179)		(9)		6		(45)		(14)		14
Deferred:
Federal		83		(230)		(243)		83		(207)		(206)
State		(40)		(66)		(41)		(21)		(56)		(37)
		43		(296)		(284)		62		(263)		(243)
Total	$	(136)	$	(305)	$	(278)	$	17	$	(277)	$	(229)

Summary of Net Operating Loss and Tax Credit Carryforwards

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


	Edison International				SCE

	December 31, 2021
	Loss		Credit		Loss		Credit
(in millions)	Carryforwards		Carryforwards		Carryforwards		Carryforwards
Expire in 2022	$	7	$	—	$	7	$	—
Expire between 2023 to 2026		30		—		25		—
Expire between 2029 to 2043		1,504		535		702		60
No expiration date¹		1,269		10		1,124		—
Total	$	2,810	$	545	$	1,858	$	60

1	Under the Tax Cut and Jobs Act signed into law on December 22, 2017 ("Tax Reform"), net operating losses generated after December 31, 2017 can carryforward indefinitely.

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)	2021			2020			2019			2021			2020			2019
Income from operations before income taxes	$	789		$	566		$	1,127		$	952		$	665		$	1,301
Provision for income tax at federal statutory rate of 21%		166			119			237			200			140			273
Increase (decrease) in income tax from:
Items presented with related state income tax, net:
State tax, net of federal benefit		(47)			(61)			(22)			(33)			(52)			(13)
Property-related		(233)			(320)			(303)			(233)			(320)			(303)
Change related to uncertain tax position¹		(147)			(15)			—			(37)			(19)			—
Deferred tax re-measurement²		—			—			(88)			—			—			(88)
2018 GRC Final Decision		—			—			(80)			—			—			(80)
Wildfire related charges³		31			—			—			31			—			—
Average rate assumption method ("ARAM") adjustment ⁴		87			—			—			87			—			—
Corporate-owned life insurance cash surrender value		(8)			(8)			(8)			(8)			(8)			(8)
Other		15			(20)			(14)			10			(18)			(10)
Total income tax (benefit) expense	$	(136)		$	(305)		$	(278)		$	17		$	(277)		$	(229)
Effective tax rate		(17.2)	%		(53.9)	%		(24.7)	%		1.8	%		(41.7)	%		(17.6)	%

In 2021, Edison International and SCE recognized tax benefits related to a settlement with the California Franchise Tax Board "FTB" for tax years 2007 – 2012. See further discussion in Tax Disputes below. In 2020, Edison International and SCE recognized tax expense and benefit, respectively, primarily due to the re-measurement of uncertain tax positions related to the 2010 – 2012 California state tax filings currently under audit.

Relates to changes in the allocation of deferred tax re-measurement between customers and shareholders as a result of a CPUC resolution issued in February 2019. The resolution determined that customers are only entitled to excess deferred taxes which were included when setting rates, while other deferred tax re-measurement belongs to the shareholders.

3	Relates to the non-tax deductible portions of the SED Agreement (as defined in Note 12). See Note 12 for further discussion under 2017/2018 Wildfire/Mudslide Events.

In July 2021, SCE received the IRS' response to its private letter ruling request, regarding the scope of the deferred tax normalization requirements and the computations required to comply with the average rate assumption method. As a result, SCE's estimate changed and a cumulative true-up of $87 million reduction in tax benefits was recorded in the third quarter of 2021, for the period of January 1, 2018 to June 30, 2021.

Reconciliation of Unrecognized Tax Benefits

The following table provides a reconciliation of unrecognized tax benefits:


	Edison International						SCE
(in millions)	2021		2020		2019		2021		2020		2019
Balance at January 1,	$	679	$	370	$	338	$	320	$	282	$	249
Tax positions taken during the current year:
Increases		53		55		46		53		56		47
Tax positions taken during a prior year:
Increases¹		3		274		6		1		4		6
Decreases²		(118)		(20)		(20)		(29)		(22)		(20)
Settlements with taxing authorities³		(4)		—		—		(5)		—		—
Balance at December 31,	$	613	$	679	$	370	$	340	$	320	$	282

1	Edison International recorded favorable tax positions in 2020 in connection with the Edison Mission Energy bankruptcy that required a revaluation of the reserve for uncertain tax positions.

2	Decrease in 2021 was related to re-measurement as a result of a settlement with the FTB for tax years 2007 – 2012.

3	In 2021, Edison International reached a settlement with the FTB for tax years 2007 – 2012.

Schedule of Interest and Penalties Related to Income Tax Liabilities

The total amount of accrued interest and penalties related to income tax liabilities are:


	Edison International				SCE

	December 31,
(in millions)	2021		2020		2021		2020
Accrued interest and penalties	$	—	$	52	$	20	$	23

The net after-tax interest and penalties recognized in income tax (benefit) expense are:


	Edison International						SCE

	Years ended December 31,
(in millions)	2021		2020		2019		2021		2020		2019
Net after-tax interest and penalties tax (benefit) expense	$	(41)	$	4	$	4	$	(2)	$	6	$	3