INCOME TAXES (Notes)

12 Months Ended

Dec. 31, 2014

Income tax [Line Items]

INCOME TAXES

13. INCOME TAXES

The following table sets forth our provision for income taxes for the periods indicated:

	Years Ended December 31,
	2014		2013		2012
	(Thousands of dollars)
Current income tax provision
Federal	$	17,006	$	—	$	—
State	1,397		67		360
Total current income tax provision	18,403		67		360
Deferred income tax provision
Federal	42,024		53,562		51,481
State	7,911		8,643		8,010
Total deferred income tax provision	49,935		62,205		59,491
Total provision for income taxes	$	68,338	$	62,272	$	59,851

The following table is a reconciliation of our income tax provision for the periods indicated:

	Years Ended December 31,
	2014			2013			2012
	(Thousands of dollars)
Income before income taxes	$	178,128		$	161,467		$	156,360
Federal statutory income tax rate	35		%	35		%	35		%
Provision for federal income taxes	62,345			56,513			54,726
State income taxes, net of federal tax benefit	6,051			5,661			5,423
Other, net	(58		)	98			(298		)
Total provision for income taxes	$	68,338		$	62,272		$	59,851

Prior to separation, our operations were included in the consolidated federal and state income tax returns of ONEOK. Our income tax provision was calculated on a separate return basis. Accordingly, we recognized deferred tax assets and liabilities for the difference between the financial statement and income tax basis of assets and liabilities and carry-forward items, based on income tax laws and rates existing at the time the temporary differences are expected to reverse as if we had been a corporation for federal and state income tax purposes. In addition, ONEOK managed its tax position based upon the tax attributes of the consolidated group. Certain attributes may not be available to use if we had been operating as an independent company.

The following table sets forth the tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and liabilities for the periods indicated:

	December 31,
	2014		2013
	(Thousands of dollars)
Deferred tax assets
Employee benefits and other accrued liabilities	$	128,715	$	—
Net operating loss	8,144		40,125
Other	5,655		8,249
Total deferred tax assets	142,514		48,374
Deferred tax liabilities
Excess of tax over book depreciation	820,853		750,305
Purchased-gas cost adjustment	16,177		4,695
Other regulatory assets and liabilities, net	193,159		2,563
Total deferred tax liabilities	1,030,189		757,563
Net deferred tax liabilities	$	887,675	$	709,189

At December 31, 2014, we had income taxes receivable of $43.8 million. We had no income taxes payable or receivable at December 31, 2013.

In accordance with the Tax Matters Agreement, a cash settlement of $3.8 million is expected from ONEOK related to both the filing of ONEOK’s income tax return for the calendar year ended December 31, 2013 and for the January 1, 2014, through January 31, 2014 period. Our net deferred tax liabilities were adjusted to reflect this settlement.

The net operating loss of $8.1 million expires in 2035. We expect to utilize all of the net operating loss prior to its expiration date.