Note 12 - Income Taxes

12 Months Ended

Dec. 31, 2014

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

Note 12 - Income Taxes

Income Tax Expense

The relative split between current and deferred taxes is due to a variety of factors, including true ups of prior year tax returns, and most importantly, the timing of our property-related deductions. Components of income tax expense in the Consolidated Statements of Income are shown in the following table.

In millions	2014			2013			2012
Current income taxes
Federal	$	113		$	164		$	8
State		38			35			4
Deferred income taxes
Federal		184			(8	)		128
State		17			(11	)		20
Amortization of investment tax credits		(2	)		(3	)		(3	)
Total	$	350		$	177		$	157

The reconciliations between the statutory federal income tax rate of 35%, the effective rate and the related amount of income tax expense for the years ended December 31, in our Consolidated Statements of Income are presented in the following table.

In millions	2014			2013			2012
Computed tax expense at statutory rate	$	325		$	165		$	151
State income tax, net of federal income tax benefit		36			20			19
Tax effect of net income attributable to the noncontrolling interest		(7	)		(7	)		(6	)
Amortization of investment tax credits		(2	)		(3	)		(3	)
Affordable housing credits		(2	)		(2	)		(2	)
Flexible dividend deduction		(2	)		(2	)		(2	)
Sale of Compass Energy		-			6			-
Other		2			-			-
Total income tax expense on Consolidated Statements of Income	$	350		$	177		$	157

Accumulated Deferred Income Tax Assets and Liabilities

We report some of our assets and liabilities differently for financial accounting purposes than we do for income tax purposes. We report the tax effects of the differences in those items as deferred income tax assets or liabilities in our Consolidated Statements of Financial Position. We measure the assets and liabilities using income tax rates that are currently in effect. The current portion of our deferred income taxes is recognized within current assets in our Consolidated Statements of Financial Position. We have provided a valuation allowance for some of these items that reduce our net deferred tax assets to amounts we believe are more likely than not to be realized in future periods. With respect to our continuing operations, we have net operating losses in various jurisdictions. Components that give rise to the net current and long-term accumulated deferred income tax liability are as follows.

	As of December 31,
In millions	2014			2013
Current accumulated deferred income tax liabilities
Mark-to-market	$	33		$	-
Inventory		26			18
Total current accumulated deferred income tax liabilities		59			18
Current accumulated deferred income tax assets
Compensation accruals		30			19
Lower of cost or market		26			-
Allowance for doubtful accounts		12			10
Mark-to-market		-			24
Other		21			16
Total current accumulated deferred income tax assets		89			69
Valuation allowances (1)		(6	)		(8	)
Total current accumulated deferred income tax assets, net of valuation allowance		83			61
Net current accumulated deferred income tax asset	$	24		$	43
Long-term accumulated deferred income tax liabilities
Property - accelerated depreciation and other property-related items	$	1,801		$	1,608
Investments in partnerships		16			18
Acquisition intangibles		14			11
Mark-to-market		12			-
Undistributed earnings of foreign subsidiaries		-			26
Other		85			97
Total long-term accumulated deferred income tax liabilities		1,928			1,760
Long-term accumulated deferred income tax assets
Unfunded pension and retiree welfare benefit obligation		117			92
Deferred investment tax credits		6			7
Mark-to-market		-			3
Other		95			44
Total long-term accumulated deferred income tax assets		218			146
Valuation allowances (1)		(14	)		(14	)
Total long-term accumulated deferred income tax assets, net of valuation allowance		204			132
Net long-term accumulated deferred income tax liability	$	1,724		$	1,628

(1) The total valuation allowance in 2014 and 2013 is $20 million and $22 million respectively. For 2014 the total is comprised of $1 million due to net operating losses of a former non-operating facility that are not allowed in New Jersey and $19 million related to our investment in Triton. For 2013 the total is comprised of $3 million due to net operating losses in New Jersey of a former non-operating facility that are not allowed in New Jersey and $19 million related to our investment in Triton. New Jersey net operating losses expired in 2014, resulting in the reduction of the valuation allowance.

Tax Benefits

As of December 31, 2014, and December 31, 2013, we did not have a liability for unrecognized tax benefits. Based on current information, we do not anticipate that this will change materially in 2015. As of December 31, 2014, we did not have a liability recorded for payment of interest or penalties associated with uncertain tax positions nor did we have any such interest or penalties during 2014 or 2013.

We file a U.S. federal consolidated income tax return and various state income tax returns. We are no longer subject to income tax examinations by the Internal Revenue Service or in any state for years before 2011.