Income Taxes:

3 Months Ended

Mar. 31, 2019

INCOME TAXES

Income tax benefit (expense), net for the three months ended March 31, 2019 was $(17) million compared to $26 million reported for the same period in 2018. The increase in tax expense was primarily due to:


•	A prior year $49 million tax benefit resulting from legal entity restructuring, partially offset by:


◦	A prior year $2.3 million income tax expense associated with changes in the prior estimated impact of tax reform on deferred income taxes; and


◦	A current year $3.4 million increase in income tax benefit from forecasted federal production tax credits and state investment tax credits as well as $1.8 million of income tax benefit for deferred tax amortization related to tax reform (which is offset by reduced revenue at our utilities).

Prior year tax benefit related to legal restructuring

As part of the Company’s ongoing efforts to continue to integrate the legal entities that the Company acquired in recent years, certain legal entity restructuring transactions occurred on March 31, 2018. As a result of these transactions, $49 million of deferred income tax assets, related to goodwill that is amortizable for tax purposes, were recorded and deferred tax benefits of $49 million were recorded to Income tax benefit (expense) on the Condensed Consolidated Statements of Income. Due to this being a common control transaction, it had no effect on the other assets and liabilities of these entities.

Prior year TCJA expense

On December 22, 2017, the TCJA was signed into law reducing the federal corporate rate from 35% to 21% effective January 1, 2018. During the three months ended March 31, 2018, we recorded approximately $2.3 million of additional tax expense associated with changes in the prior estimated impacts of TCJA related items.