Income Taxes

Components of Net Accumulated Deferred Income Tax Liability


	Edison International				SCE

	December 31,
(in millions)	2023		2022		2023		2022
Deferred tax assets:
Property	$	894	$	859	$	877	$	840
Wildfire-related¹		356		458		354		457
Nuclear decommissioning trust assets in excess of nuclear ARO liability		380		321		380		321
Loss and credit carryforwards²		3,486		3,479		2,103		2,157
Regulatory balances		626		641		626		641
Pension and postretirement benefits other than pensions, net		127		130		25		26
Leases		345		406		345		406
Other		159		162		147		135
Sub-total		6,373		6,456		4,857		4,983
Less: valuation allowance³		17		39		—		—
Total		6,356		6,417		4,857		4,983
Deferred tax liabilities:
Property		10,627		10,091		10,611		10,078
Regulatory balances		1,450		1,462		1,450		1,462
Nuclear decommissioning trust assets		380		321		380		321
Leases		345		406		345		406
Other		187		225		158		200
Total		12,989		12,505		12,944		12,467
Accumulated deferred income tax liability, net⁴	$	6,633	$	6,088	$	8,087	$	7,484

1	Relates to estimated losses accrual for wildfire-related claims, net of expected recoveries from insurance and FERC customers, and contributions to the Wildfire Insurance Fund. For further information, see Note 12 and Note 1.

2

As of December 31, 2023, unrecognized tax benefits of $363 million and $299 million for Edison International and SCE, respectively, are presented net against the deferred tax asset for the loss and tax credit carryforwards. As of December 31, 2022, the unrecognized tax benefits netted against deferred tax assets and tax credit carryforwards were $310 million and $254 million for Edison International and SCE, respectively.

3

As of December 31, 2023, Edison International has recorded $17 million valuation allowance on deferred tax assets. The $17 million valuation allowance is related to non-California state net operating loss carryforwards which are expected to expire before being utilized. As of December 31, 2022, the valuation allowance on deferred tax assets which are estimated to expire before being utilized for Edison International includes $35 million for non-California state net operating loss carryforwards, $4 million for California capital losses generated from sale of SoCore Energy in 2018.

4	Included in "Deferred income taxes and credits" on the consolidated balance sheets.

Summary of reconciliation of income tax expense


	Edison International									SCE

	Years ended December 31,
(in millions)	2023			2022			2021			2023			2022			2021
Income from operations before income taxes	$	1,515		$	662		$	789		$	1,781		$	845		$	952
Provision for income tax at federal statutory rate of 21%		318			139			166			374			177			200
(Decrease) increase in income tax from:
State tax, net of federal income tax effect		3			(70)			(47)			23			(57)			(33)
Property-related		(205)			(219)			(233)			(205)			(219)			(233)
Change related to uncertain tax position¹		—			—			(147)			—			—			(37)
Wildfire related charges²		—			—			31			—			—			31
Average rate assumption method ("ARAM") adjustment³		—			—			87			—			—			87
Corporate-owned life insurance cash surrender value		(8)			(9)			(8)			(8)			(9)			(8)
Other		—			(3)			15			—			(1)			10
Total income tax expense (benefit)	$	108		$	(162)		$	(136)		$	184		$	(109)		$	17
Effective tax rate		7.1	%		(24.5)	%		(17.2)	%		10.3	%		(12.9)	%		1.8	%

1	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.

2	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.

3

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.

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)	2023		2022		2023		2022
Accrued interest and penalties	$	—	$	—	$	28	$	23

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


	Edison International						SCE

	Years ended December 31,
(in millions)	2023		2022		2021		2023		2022		2021
Net after-tax interest and penalties tax (benefit) expense	$	—	$	—	$	(41)	$	4	$	2	$	(2)