Income Taxes

9 Months Ended

Sep. 30, 2021

Income Tax Disclosure [Abstract]

Income Taxes

6. INCOME TAXES

DESC’s effective tax rate for the nine months ended September 30, 2021 is 7.2% compared to 18.2% for the nine months ended September 30, 2020. DESC’s effective tax rate for the nine months ended September 30, 2021 is primarily attributable to the nominal year-to-date pre-tax income resulting from charges in connection with the comprehensive settlement agreement discussed in Note 2.

DESC has recorded an estimate of excess deferred income tax amortization in 2021. The reversal of these excess deferred income taxes will impact the effective tax rate and rates charged to customers. See Note 3 to the Consolidated Financial Statements in DESC’s Annual Report on Form 10-K for the year ended December 31, 2020 for more information.

As of September 30, 2021, there have been no material changes in DESC’s unrecognized tax benefits. See Note 7 to the Consolidated Financial Statements in DESC's Annual Report on Form 10-K for the year ended December 31, 2020 for a discussion of these unrecognized tax benefits.