Provision (Benefit) for Income Taxes

9 Months Ended

Sep. 30, 2019

Income Tax Disclosure [Abstract]

Provision (Benefit) for Income Taxes [Text Block]

Note 7 – Provision (Benefit) for Income Taxes

The Provision (benefit) for income taxes includes:

	Three Months Ended   September 30,						Nine Months Ended   September 30,
	2019			2018			2019			2018
	(Millions)
Current:
Federal	$	(10	)	$	(19	)	$	(25	)	$	(55	)
State	—			—			—			1
Foreign	1			—			1			—
	(9		)	(19		)	(24		)	(54		)
Deferred:
Federal	73			188			225			312
State	13			21			43			39
	86			209			268			351
Provision (benefit) for income taxes	$	77		$	190		$	244		$	297

The effective income tax rates for the total provision for the three and nine months ended September 30, 2019, are greater than the federal statutory rate, primarily due to the effect of state income taxes.

The effective income tax rates for the total provision for the three and nine months ended September 30, 2018, are higher than the federal statutory rate primarily due to the effect of state income taxes and a $105 million valuation allowance associated with foreign tax credits, that expire between 2024 and 2027. This is partially offset by the impact of the allocation of income to nontaxable noncontrolling interests. The state income tax provisions include a $38 million provision related to an increase in the deferred state income tax rate (net of federal benefit) partially offset by a net decrease in valuation allowances of $31 million on state net operating losses, both primarily driven by the impact that the completion of the WPZ Merger (see Note 1 – General, Description of Business, and Basis of Presentation) had on income allocation for state tax purposes.

A valuation allowance for deferred tax assets, including foreign tax credits, is recognized when it is more likely than not that some, or all, of the benefit from the deferred tax asset will not be realized. To assess that likelihood, we use estimates and judgment regarding our sources of future taxable income, including available tax planning strategies, to determine whether a valuation allowance is required. The completion of the WPZ Merger decreased our deferred income tax liability by $1.829 billion at September 30, 2018. Increased tax depreciation from the additional tax basis will reduce taxable income in future years and may limit our ability to realize the full benefit of certain short-lived deferred tax assets.

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.