Provision (Benefit) for Income Taxes

9 Months Ended

Sep. 30, 2014

Income Tax Disclosure [Abstract]

Provision (Benefit) for Income Taxes

Note 5 – Provision (Benefit) for Income Taxes

The Provision (benefit) for income taxes includes:

	Three months ended   September 30,					Nine months ended    September 30,
	2014			2013		2014		2013
	(Millions)
Current:
Federal	$	(15	)	$	25	$	98	$	(47	)
State	(2		)	—		2		3
Foreign	2			2		7		3
	(15		)	27		107		(41		)
Deferred:
Federal	911			21		910		233
State	98			9		103		41
Foreign	4			5		13		27
	1,013			35		1,026		301
Total provision (benefit)	$	998		$	62	$	1,133	$	260

The effective income tax rate for the total provision for the three months ended September 30, 2014, is greater than the federal statutory rate primarily due to the effect of state income taxes, partially offset by taxes on foreign operations and the impact of nontaxable noncontrolling interests.

The effective income tax rate for the total provision for the nine months ended September 30, 2014, is greater than the federal statutory rate primarily due to the effect of state income taxes and taxes on foreign operations, partially offset by a tax benefit related to the completion of the Canada Dropdown in the first quarter of 2014 and the impact of nontaxable noncontrolling interests.

The federal and state income tax provisions for the three and nine months ended September 30, 2014 include the tax effect of a $2.5 billion gain associated with remeasuring our equity-method investment to fair value as a result of the ACMP Acquisition. (See Note 3 – Acquisition).

The effective income tax rates for the total provision for the three and nine months ended September 30, 2013, are less than the federal statutory rate primarily due to the impact of nontaxable noncontrolling interests and taxes on foreign operations, partially offset by the effect of state income taxes. The 2013 state deferred provision includes $10 million, net of federal benefit, related to the impact of a second-quarter Texas franchise tax law change.

As a result of closing the Canada Dropdown, approximately $64 million of previously deferred tax liability has been reclassified as a current income tax liability through the third quarter of 2014.

During the next 12 months, we do not expect ultimate resolution of any unrecognized tax benefit associated with domestic or international matters to have a material impact on our unrecognized tax benefit position.