Income Taxes

12 Months Ended

Dec. 31, 2016

Income Taxes

INCOME TAXES (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

Income taxes for 2016, 2015, and 2014 for Entergy Corporation and Subsidiaries consist of the following:

	2016			2015			2014
	(In Thousands)
Current:
Federal		$45,249			$77,166			$90,061
Foreign	68			97			90
State	(14,960		)	157,829			(12,637		)
Total	30,357			235,092			77,514
Deferred and non-current - net	(840,465		)	(864,799		)	528,326
Investment tax credit adjustments - net	(7,151		)	(13,220		)	(16,243		)
Income taxes		($817,259	)		($642,927	)		$589,597

Income taxes for 2016, 2015, and 2014 for Entergy’s Registrant Subsidiaries consist of the following:

2016	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi		Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Current:
Federal		($14,748	)		($124,113	)		$10,603		($91,067	)		$19,656			$29,628
State	2,805			10,757			2,257		566			1,374			(25,825		)
Total	(11,943		)	(113,356		)	12,860		(90,501		)	21,030			3,803
Deferred and non-current - net	120,942			208,157			46,984		119,345			42,982			71,051
Investment tax credit adjustments - net	(1,226		)	(5,067		)	4,010		(139		)	(915		)	(3,793		)
Income taxes		$107,773			$89,734			$63,854		$28,705			$63,097			$71,061

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Current:
Federal		$66,966			$101,382			$25,628			($9,346	)		$53,313			($63,302	)
State	6,265			35,406			6,832			1,784			2,450			26,755
Total	73,231			136,788			32,460			(7,562		)	55,763			(36,547		)
Deferred and non-current - net	(31,463		)	47,220			31,149			32,890			(17,599		)	93,491
Investment tax credit adjustments - net	(1,227		)	(5,337		)	(1,737		)	(138		)	(914		)	(3,867		)
Income taxes		$40,541			$178,671			$61,872			$25,190			$37,250			$53,077

2014	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Current:
Federal		($34,258	)		($44,909	)		$8,103			($1,428	)		$48,610			$19,908
State	(678		)	(1,191		)	7,474			510			4,877			15,379
Total	(34,936		)	(46,100		)	15,577			(918		)	53,487			35,287
Deferred and non-current - net	119,841			236,794			42,305			14,592			(2,418		)	53,501
Investment tax credit adjustments - net	(1,276		)	(5,642		)	(2,172		)	(224		)	(1,425		)	(5,478		)
Income taxes		$83,629			$185,052			$55,710			$13,450			$49,644			$83,310

Total income taxes for Entergy Corporation and Subsidiaries differ from the amounts computed by applying the statutory income tax rate to income before income taxes.  The reasons for the differences for the years 2016, 2015, and 2014 are:

	2016			2015			2014
	(In Thousands)
Net income (loss) attributable to Entergy Corporation		($583,618	)		($176,562	)		$940,721
Preferred dividend requirements of subsidiaries	19,115			19,828			19,536
Consolidated net income (loss)	(564,503		)	(156,734		)	960,257
Income taxes	(817,259		)	(642,927		)	589,597
Income (loss) before income taxes		($1,381,762	)		($799,661	)		$1,549,854
Computed at statutory rate (35%)		($483,617	)		($279,881	)		$542,449
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	40,581			29,944			44,708
Regulatory differences - utility plant items	33,581			32,089			39,321
Equity component of AFUDC	(23,647		)	(18,191		)	(21,108		)
Amortization of investment tax credits	(10,889		)	(11,136		)	(12,211		)
Flow-through / permanent differences	(19,307		)	(7,872		)	(18,003		)
New York tax law change (a)	—			—			(21,500		)
Louisiana business combination	—			(333,655		)	—
Entergy Wholesale Commodities restructuring (b)	(237,760		)	—			—
Act 55 financing settlement (d)	(63,477		)	—			—
Provision for uncertain tax positions (c) (d)	(67,119		)	(56,683		)	32,573
Valuation allowance	11,411			—			—
Other - net	2,984			2,458			3,368
Total income taxes as reported		($817,259	)		($642,927	)		$589,597
Effective Income Tax Rate	59.1		%	80.4		%	38.0		%

(a) In March 2014, New York enacted legislation that substantially modified various aspects of New York tax law. The most significant effect of the legislation for Entergy was the adoption of full water’s-edge unitary combined reporting, meaning that all of Entergy’s domestic entities will be included in New York’s combined filing group. The effect of the tax law change resulted in a deferred state income tax reduction of approximately $21.5 million as shown in the table above.

(b) See “Other Tax Matters” below for discussion of the Entergy Wholesale Commodities restructuring.

(c) See “Income Tax Audits- 2008-2009 IRS Audit” below for discussion of the most significant items for 2015.

(d) See “Income Tax Audits- 2010-2011 IRS Audit” below for discussion of the most significant items for 2016.

Total income taxes for the Registrant Subsidiaries differ from the amounts computed by applying the statutory income tax rate to income before taxes.  The reasons for the differences for the years 2016, 2015, and 2014 are:

2016	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Net income		$167,212			$622,047			$109,184			$48,849			$107,538			$96,744
Income taxes	107,773			89,734			63,854			28,705			63,097			71,061
Pretax income		$274,985			$711,781			$173,038			$77,554			$170,635			$167,805
Computed at statutory rate (35%)		$96,245			$249,123			$60,563			$27,144			$59,722			$58,732
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	11,652			29,014			5,592			3,543			449			7,001
Regulatory differences - utility plant items	10,971			8,094			(1,154		)	2,329			4,140			9,201
Equity component of AFUDC	(5,985		)	(9,774		)	(2,030		)	(412		)	(2,666		)	(2,780		)
Amortization of investment tax credits	(1,201		)	(5,019		)	(160		)	(132		)	(900		)	(3,476		)
Flow-through / permanent differences	(3,848		)	(980		)	764			(3,609		)	634			(883		)
Act 55 financing settlement (a)	—			(61,620		)	—			—			(454		)	—
Non-taxable dividend income	—			(44,658		)	—			—			—			—
Provision for uncertain tax positions (a)	(717		)	(75,871		)	50			(300		)	1,926			3,151
Other - net	656			1,425			229			142			246			115
Total income taxes as reported		$107,773			$89,734			$63,854			$28,705			$63,097			$71,061
Effective Income Tax Rate	39.2		%	12.6		%	36.9		%	37.0		%	37.0		%	42.3		%

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Net income		$74,272			$446,639			$92,708			$44,925			$69,625			$111,318
Income taxes	40,541			178,671			61,872			25,190			37,250			53,077
Pretax income		$114,813			$625,310			$154,580			$70,115			$106,875			$164,395
Computed at statutory rate (35%)		$40,185			$218,859			$54,103			$24,540			$37,406			$57,538
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	6,643			23,650			5,219			2,887			1,621			6,403
Regulatory differences - utility plant items	7,299			3,013			2,383			2,201			3,703			12,167
Equity component of AFUDC	(4,979		)	(5,420		)	(1,083		)	(451		)	(1,987		)	(2,973		)
Amortization of investment tax credits	(1,201		)	(5,252		)	(160		)	(111		)	(900		)	(3,476		)
Flow-through / permanent differences	(4,062		)	2,460			431			(4,539		)	530			618
Non-taxable dividend income	—			(44,658		)	—			—			—			—
Provision for uncertain tax positions (b)	(3,978		)	(15,377		)	756			525			(3,365		)	(17,313		)
Other - net	634			1,396			223			138			242			113
Total income taxes as reported		$40,541			$178,671			$61,872			$25,190			$37,250			$53,077
Effective Income Tax Rate	35.3		%	28.6		%	40.0		%	35.9		%	34.9		%	32.3		%

2014	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Net income		$121,392			$446,022			$74,821			$31,030			$74,804			$96,334
Income taxes	83,629			185,052			55,710			13,450			49,644			83,310
Pretax income		$205,021			$631,074			$130,531			$44,480			$124,448			$179,644
Computed at statutory rate (35%)		$71,757			$220,876			$45,686			$15,568			$43,557			$62,875
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	9,591			11,666			5,180			1,562			3,221			6,877
Regulatory differences - utility plant items	8,653			7,487			4,448			777			4,165			13,791
Equity component of AFUDC	(2,533		)	(14,612		)	(833		)	(320		)	(1,035		)	(1,774		)
Amortization of investment tax credits	(1,251		)	(5,594		)	(260		)	(218		)	(1,412		)	(3,476		)
Flow-through / permanent differences	(5,082		)	(225		)	555			(4,458		)	393			(327		)
Non-taxable dividend income	—			(41,255		)	—			—			—			—
Provision for uncertain tax positions	1,881			5,336			718			405			522			5,235
Other - net	613			1,373			216			134			233			109
Total income taxes as reported		$83,629			$185,052			$55,710			$13,450			$49,644			$83,310
Effective Income Tax Rate	40.8		%	29.3		%	42.7		%	30.2		%	39.9		%	46.4		%

(a) See “Income Tax Audits- 2010-2011 IRS Audit” below for discussion of the most significant items for Entergy Louisiana.

(b) See “Income Tax Audits- 2008-2009 IRS Audit” below for discussion of the most significant items for Entergy Louisiana and System Energy.

Significant components of accumulated deferred income taxes and taxes accrued for Entergy Corporation and Subsidiaries as of December 31, 2016 and 2015 are as follows:

	2016			2015
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($6,362,905	)		($6,804,225	)
Regulatory assets	(584,572		)	(646,392		)
Nuclear decommissioning trusts/receivables	(1,739,977		)	(1,254,463		)
Pension, net funding	(429,896		)	(365,111		)
Combined unitary state taxes	(33,063		)	(45,078		)
Power purchase agreements	(993		)	—
Other	(251,719		)	(315,844		)
Total	(9,403,125		)	(9,431,113		)
Deferred tax assets:
Nuclear decommissioning liabilities	1,399,468			828,983
Regulatory liabilities	255,272			284,432
Pension and other post-employment benefits	539,456			525,524
Sale and leaseback	135,866			139,720
Compensation	99,300			69,432
Accumulated deferred investment tax credit	92,375			95,248
Provision for allowances and contingencies	188,390			188,282
Power purchase agreements	—			38,401
Net operating loss carryforwards	334,025			360,188
Capital losses and miscellaneous tax credits	18,470			11,075
Valuation allowance	(104,277		)	(91,532		)
Other	59,079			68,204
Total	3,017,424			2,517,957
Non-current accrued taxes (including unrecognized tax benefits)	(991,704		)	(1,338,806		)
Accumulated deferred income taxes and taxes accrued		($7,377,405	)		($8,251,962	)

Entergy’s estimated tax attributes carryovers and their expiration dates as of December 31, 2016 are as follows:

Carryover Description	Carryover Amount	Year(s) of expiration
Federal net operating losses	$6.7 billion	2023-2036
State net operating losses	$7.8 billion	2017-2036
Miscellaneous federal and state credits	$89.9 million	2017-2036

As a result of the accounting for uncertain tax positions, the amount of the deferred tax assets reflected in the financial statements is less than the amount of the tax effect of the federal and state net operating loss carryovers, tax credit carryovers, and other tax attributes reflected on income tax returns. Because it is more likely than not that the benefit from certain state net operating loss carryovers will not be utilized, valuation allowances of $62 million as of December 31, 2016 and $46 million as of December 31, 2015 have been provided on the deferred tax assets relating to these state net operating loss carryovers. Additionally, valuation allowances totaling $42.3 million as of December 31, 2016 and $45.5 million as of December 31, 2015 have been provided on deferred tax assets related to federal and state jurisdictions in which Entergy does not currently expect to be able to utilize separate company tax return losses, preventing realization of such deferred tax assets.

Significant components of accumulated deferred income taxes and taxes accrued for the Registrant Subsidiaries as of December 31, 2016 and 2015 are as follows:

2016	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($1,857,554	)		($2,357,599	)		($820,971	)		($177,242	)		($835,671	)		($651,394	)
Regulatory assets	(109,241		)	(219,750		)	(25,309		)	(36,301		)	(153,914		)	(39,879		)
Nuclear decommissioning trusts/receivables	(144,250		)	(119,544		)	—			—			—			(83,891		)
Pension, net funding	(123,889		)	(122,465		)	(34,284		)	(16,307		)	(28,371		)	(29,357		)
Deferred fuel	(14,774		)	(1,778		)	(12,770		)	(5,229		)	(2,808		)	(1,137		)
Other	(47,785		)	(22,136		)	(12,474		)	(18,536		)	(8,812		)	(2,051		)
Total	(2,297,493		)	(2,843,272		)	(905,808		)	(253,615		)	(1,029,576		)	(807,709		)
Deferred tax assets:
Regulatory liabilities	5,768			175,973			18,833			25,240			15,814			13,644
Nuclear decommissioning liabilities	124,206			55,408			—			—			—			53,113
Pension and other post-employment benefits	(24,467		)	145,401			(8,042		)	(12,070		)	(19,096		)	(1,182		)
Sale and leaseback	—			33,383			—			—			—			102,483
Accumulated deferred investment tax credit	13,848			54,509			3,315			239			4,527			15,936
Provision for allowances and contingencies	(1,497		)	124,309			21,817			36,466			5,904			—
Power purchase agreements	(3,094		)	29,827			1,905			—			140			—
Unbilled/deferred revenues	6,799			(35,006		)	5,085			3,751			11,902			—
Compensation	2,787			5,309			1,492			685			1,587			360
Net operating loss carryforwards	69,524			17,125			—			—			—			—
Capital losses and miscellaneous tax credits	2,074			—			4,487			—			—			—
Other	174			17,110			1,152			496			2,955			—
Total	196,122			623,348			50,044			54,807			23,733			184,354
Non-current accrued taxes (including unrecognized tax benefits)	(85,252		)	(471,194		)	(5,567		)	(136,145		)	(21,804		)	(489,510		)
Accumulated deferred income taxes and taxes accrued		($2,186,623	)		($2,691,118	)		($861,331	)		($334,953	)		($1,027,647	)		($1,112,865	)

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($1,710,444	)		($2,041,968	)		($781,427	)		($167,294	)		($778,270	)		($611,745	)
Regulatory assets	(108,422		)	(254,316		)	(24,918		)	(39,451		)	(172,117		)	(46,990		)
Nuclear decommissioning trusts	(121,326		)	(99,980		)	—			—			—			(68,370		)
Pension, net funding	(107,073		)	(109,709		)	(30,901		)	(14,459		)	(28,001		)	(25,791		)
Deferred fuel	(7,647		)	(2,513		)	(684		)	(175		)	2,050			(18		)
Power purchase agreements	—			—			—			—			—			—
Other	(38,683		)	(86,275		)	(5,625		)	(12,253		)	(10,109		)	(22,478		)
Total	(2,093,595		)	(2,594,761		)	(843,555		)	(233,632		)	(986,447		)	(775,392		)
Deferred tax assets:
Regulatory liabilities	18,369			215,154			7,787			20,888			7,307			14,927
Nuclear decommissioning liabilities	109,962			49,333			—			—			—			39,420
Pension and other post-employment benefits	(20,420		)	149,680			(6,628		)	(8,939		)	(16,703		)	(1,037		)
Sale and leaseback	—			37,236			—			—			—			102,484
Accumulated deferred investment tax credit	14,320			56,635			1,777			290			4,842			17,385
Provision for allowances and contingencies	1,024			123,007			18,735			33,843			7,266			134
Power purchase agreements	(1,279		)	13,840			1,901			13			575			—
Unbilled/deferred revenues	9,815			(32,365		)	7,154			2,126			10,851			—
Compensation	1,842			4,182			601			880			4,496			—
Net operating loss carryforwards	—			90,241			—			—			—			—
Other	128			21,982			1,995			316			1,672			—
Total	133,761			728,925			33,322			49,417			20,306			173,313
Non-current accrued taxes (including unrecognized tax benefits)	(22,978		)	(641,120		)	(402		)	(29,846		)	(40,693		)	(416,996		)
Accumulated deferred income taxes and taxes accrued		($1,982,812	)		($2,506,956	)		($810,635	)		($214,061	)		($1,006,834	)		($1,019,075	)

The Registrant Subsidiaries’ estimated tax attributes carryovers and their expiration dates as of December 31, 2016 are as follows:

	Entergy Arkansas	Entergy Louisiana	Entergy Mississippi	Entergy New Orleans	Entergy Texas	System Energy
Federal net operating losses	$184 million	$4.4 billion	—	$34 million	—	$201 million
Year(s) of expiration	2028-2036	2036	N/A	2028-2036	N/A	2028-2036
State net operating losses	$80 million	$4.8 billion	—	$285 million	—	$175 million
Year(s) of expiration	2021	2029-2036	N/A	2032-2035	N/A	2035
Misc. federal credits	$2 million	—	$3 million	—	—	$2 million
Year(s) of expiration	2029-2036	N/A	2029-2036	N/A	N/A	2029-2036
State credits	—	—	$4.5 million	—	$3.4 million	$8.4 million
Year(s) of expiration	N/A	N/A	2018-2020	N/A	2026	2017-2020

As a result of the accounting for uncertain tax positions, the amount of the deferred tax assets reflected in the financial statements is less than the amount of the tax effect of the federal and state net operating loss carryovers and tax credit carryovers.

Unrecognized tax benefits

Accounting standards establish a “more-likely-than-not” recognition threshold that must be met before a tax benefit can be recognized in the financial statements.  If a tax deduction is taken on a tax return, but does not meet the more-likely-than-not recognition threshold, an increase in income tax liability, above what is payable on the tax return, is required to be recorded.  A reconciliation of Entergy’s beginning and ending amount of unrecognized tax benefits is as follows:

	2016			2015			2014
	(In Thousands)
Gross balance at January 1		$2,611,585			$4,736,785			$4,593,224
Additions based on tax positions related to the current year	1,532,782			1,850,705			348,543
Additions for tax positions of prior years	368,404			59,815			11,637
Reductions for tax positions of prior years (a)	(265,653		)	(3,966,535		)	(213,401		)
Settlements	(337,263		)	(68,227		)	—
Lapse of statute of limitations	—			(958		)	(3,218		)
Gross balance at December 31	3,909,855			2,611,585			4,736,785
Offsets to gross unrecognized tax benefits:
Carryovers and refund claims	(2,922,085		)	(1,264,483		)	(4,295,643		)
Cash paid to taxing authorities	(10,000		)	—			—
Unrecognized tax benefits net of unused tax attributes, refund claims and payments (b)		$977,770			$1,347,102			$441,142

(a) The primary reduction for 2015 is related to the nuclear decommissioning costs treatment discussed in “Income Tax Audits - 2008-2009 IRS Audit” below.

(b) Potential tax liability above what is payable on tax returns

The balances of unrecognized tax benefits include $1,240 million, $955 million, and $516 million as of December 31, 2016, 2015, and 2014, respectively, which, if recognized, would lower the effective income tax rates.  Because of the effect of deferred tax accounting, the remaining balances of unrecognized tax benefits of $2,670 million, $1,657 million, and $4,221 million as of December 31, 2016, 2015, and 2014, respectively, if disallowed, would not affect the annual effective income tax rate but would accelerate the payment of cash to the taxing authority to an earlier period.

Entergy accrues interest expense, if any, related to unrecognized tax benefits in income tax expense.  Entergy’s December 31, 2016, 2015, and 2014 accrued balance for the possible payment of interest is approximately $30 million, $27 million, and $127 million, respectively.

A reconciliation of the Registrant Subsidiaries’ beginning and ending amount of unrecognized tax benefits for 2016, 2015, and 2014 is as follows:

2016	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Gross balance at January 1, 2016		$25,445			$1,690,661			$19,482			$53,897			$13,462			$478,318
Additions based on tax positions related to the current year (a)	16,868			931,720			2,662			33,912			2,002			5,318
Additions for tax positions of prior years	2,463			157,586			336			129,784			2,888			601
Reductions for tax positions of prior years	(41,957		)	(144,068		)	(10,219		)	(29,821		)	(1,849		)	(10,266		)
Settlements	(316		)	(195,560		)	(55		)	(21,542		)	(557		)	(1,599		)
Gross balance at December 31, 2016	2,503			2,440,339			12,206			166,230			15,946			472,372
Offsets to gross unrecognized tax benefits:
Loss carryovers	—			(1,783,093		)	(2,373		)	(27,320		)	(376		)	(90,028		)
Unrecognized tax benefits net of unused tax attributes and payments		$2,503			$657,246			$9,833			$138,910			$15,570			$382,344

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Gross balance at January 1, 2015		$362,912			$1,205,929			$20,144			$53,763			$17,264			$258,242
Additions based on tax positions related to the current year (b)	2,196			1,367,058			566			472			657			472,304
Additions for tax positions of prior years	1,057			7,992			8,140			48			2,914			913
Reductions for tax positions of prior years	(340,720		)	(859,430		)	—			(386		)	(3,981		)	(253,141		)
Settlements	—			(30,888		)	(9,368		)	—			(3,392		)	—
Gross balance at December 31, 2015	25,445			1,690,661			19,482			53,897			13,462			478,318
Offsets to gross unrecognized tax benefits:
Loss carryovers	(3,613		)	(893,764		)	(1,016		)	(506		)	(276		)	(133,611		)
Unrecognized tax benefits net of unused tax attributes and payments		$21,832			$796,897			$18,466			$53,391			$13,186			$344,707

2014	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Gross balance at January 1, 2014		$347,713			$1,076,680			$16,186			$51,679			$13,017			$265,185
Additions based on tax positions related to the current year	14,511			151,249			3,928			2,235			4,225			2,744
Additions for tax positions of prior years	1,767			6,924			319			37			303			566
Reductions for tax positions of prior years	(1,079		)	(28,924		)	(289		)	(188		)	(267		)	(10,253		)
Settlements	—			—			—			—			(14		)	—
Gross balance at December 31, 2014	362,912			1,205,929			20,144			53,763			17,264			258,242
Offsets to gross unrecognized tax benefits:
Loss carryovers	(361,043		)	(739,988		)	(6,992		)	(20,735		)	(241		)	(163,124		)
Unrecognized tax benefits net of unused tax attributes and payments		$1,869			$465,941			$13,152			$33,028			$17,023			$95,118

(a) The primary addition for Entergy Louisiana is related to the mark-to market treatment discussed in “Other Tax Matters” below.

(b) The primary addition for Entergy Louisiana and System Energy is related to the nuclear decommissioning costs treatment discussed in “Other Tax Matters” below.

The Registrant Subsidiaries’ balances of unrecognized tax benefits included amounts which, if recognized, would have reduced income tax expense as follows:

	December 31,
	2016		2015		2014
	(In Millions)
Entergy Arkansas		$3.6		$4.5		$2.6
Entergy Louisiana		$473.3		$692.7		$267.3
Entergy Mississippi		$—		$8.1		$3.9
Entergy New Orleans		$33.6		$50.7		$50.7
Entergy Texas		$7.0		$5.2		$10.5
System Energy		$—		$0.7		$3.7

The Registrant Subsidiaries accrue interest and penalties related to unrecognized tax benefits in income tax expense.  Penalties have not been accrued.  Accrued balances for the possible payment of interest are as follows:

	December 31,
	2016		2015		2014
	(In Millions)
Entergy Arkansas		$1.4		$1.3		$17.0
Entergy Louisiana		$8.4		$9.3		$22.2
Entergy Mississippi		$0.8		$0.4		$2.8
Entergy New Orleans		$1.5		$1.8		$1.3
Entergy Texas		$1.2		$1.2		$1.0
System Energy		$3.7		$0.7		$23.8

Income Tax Audits

Entergy and its subsidiaries file U.S. federal and various state and foreign income tax returns.  IRS examinations are complete for years before 2012. All state taxing authorities’ examinations are completed for years before 2009.

2006-2007 IRS Audit

In the first quarter 2015, the IRS finalized tax and interest computations from the 2006-2007 audit that resulted in a reversal of Entergy’s provision for uncertain tax positions related to accrued interest of approximately $20 million, including decreases of approximately $4 million for Entergy Arkansas, $11 million for Entergy Louisiana, and $1 million for System Energy.

2008-2009 IRS Audit

In the fourth quarter 2009, Entergy filed Applications for Change in Accounting Method (the “2009 CAM”) for tax purposes with the IRS for certain costs under Section 263A of the Internal Revenue Code.  In the Applications, Entergy proposed to treat the nuclear decommissioning liability associated with the operation of its nuclear power plants as a production cost properly includable in cost of goods sold.  The effect of the 2009 CAM was a $5.7 billion reduction in 2009 taxable income.  The 2009 CAM was adjusted to $9.3 billion in 2012.

In the fourth quarter 2012 the IRS disallowed the reduction to 2009 taxable income related to the 2009 CAM.  In the third quarter 2013, the Internal Revenue Service issued its RAR for the tax years 2008-2009. As a result of the issuance of this RAR, Entergy and the IRS resolved all of the 2008-2009 issues described above except for the 2009 CAM. Entergy disagreed with the IRS’s disallowance of the 2009 CAM and filed a protest with the IRS Appeals Division in October 2013.

In August 2015, Entergy and the IRS agreed on the treatment of the 2009 position regarding nuclear decommissioning liabilities from the 2008-2009 audit. The agreement provides that Entergy is entitled to deduct approximately $118 million of the $9.3 billion claimed in 2009. The agreement effectively settled all matters pertaining to the 2009 tax year and increased Entergy’s 2009 federal income tax liability by $2.4 million.

2010-2011 IRS Audit

The IRS completed its examination of the 2010 and 2011 tax years and issued its 2010-2011 Revenue Agent Report (RAR) in June 2016. Entergy agreed to all proposed adjustments contained in the RAR. As a result of the issuance of the RAR, Entergy Louisiana was able to recognize previously unrecognized tax benefits as follows:

• Entergy and the IRS agreed that $148.6 million of the proceeds received by Entergy Louisiana in 2010 from the Louisiana Utilities Restoration Corporation (LURC), an instrumentality of the State of Louisiana, for the financing of Hurricane Gustav and Hurricane Ike storm costs pursuant to Act 55 of the Louisiana Regular Session of 2007 (Louisiana Act 55) were not taxable. Because the treatment of the financing is settled, Entergy recognized previously unrecognized tax benefits totaling $63.5 million, of which Entergy Louisiana recorded $61.6 million. Entergy Louisiana also accrued a regulatory liability of $16.1 million ($9.9 million net-of-tax) in accordance with the terms of Entergy Louisiana’s previous settlement agreement approved by the LPSC regarding Entergy Louisiana’s obligation to pay to customers savings associated with the Act 55 financing.

• Entergy and the IRS agreed upon the tax treatment of Entergy Louisiana’s regulatory liability related to the Vidalia purchased power agreement. As a result, Entergy Louisiana recognized a previously unrecognized tax benefit of $74.5 million.

Other Tax Matters

Entergy regularly negotiates with the IRS to achieve settlements.  The resolution of audit issues could result in significant changes to the amounts of unrecognized tax benefits in the next twelve months.

In October 2015 two of Entergy’s Louisiana utilities, Entergy Gulf States Louisiana and Entergy Louisiana, combined their businesses into a legal entity which is identified as Entergy Louisiana herein. The structure of the business combination generated both a permanent difference and a temporary difference under FASB ASC Topic 740. The permanent difference resulted from recognition of the Waterford 3 and River Bend decommissioning liabilities as part of the business combination. Recognition of such decommissioning liabilities required Entergy to also recognize a taxable gain. The taxable gain resulted in a temporary difference because the gain provided for an increase in tax basis. Entergy Louisiana maintained a carryover tax basis in the assets received; and, to the extent that the increase in tax basis will provide additional tax depreciation, Entergy recorded a deferred tax asset. Entergy Louisiana obtained the corresponding deferred tax asset in the business combination. The permanent tax benefit net of ancillary tax charges was approximately $334 million. Consistent with the terms of the stipulated settlement in the business combination proceeding, electric customers of Entergy Louisiana will realize customer credits associated with the business combination. Accordingly, in October 2015, Entergy recorded a regulatory liability of $107 million ($66 million net-of-tax) which partially offsets the effect of the aforementioned deferred tax asset. The deferred tax asset and the regulatory liability, net-of-tax, increased Entergy Louisiana’s member’s equity by $268 million. See Note 2 to the financial statements for further discussion of the business combination.

In the fourth quarter 2015, System Energy and Entergy Louisiana adopted a new method of accounting for income tax return purposes in which the companies’ nuclear decommissioning costs will be treated as production costs of electricity includable in cost of goods sold. The new method results in a reduction of taxable income of $1.2 billion for System Energy and $2.2 billion for Entergy Louisiana.

The Protecting Americans from Tax Hikes Act of 2015 was enacted in December 2015. The most significant provisions affecting Entergy and the Registrant Subsidiaries were a five-year extension of bonus depreciation and permanent extension of the research and experimentation tax credit. The effect of the bonus depreciation extension on 2015 increased Entergy’s tax net operating loss.

Entergy made a tax election to treat its subsidiary that owns one of the Entergy Wholesale Commodities nuclear power plants as a corporation for federal income tax purposes in the second quarter 2016. This resulted in a constructive contribution of all the assets and liabilities associated with the plant to a new subsidiary corporation for federal income tax purposes, and generated both permanent and temporary differences under the income tax accounting standards. The constructive contribution required Entergy to recognize the plant’s nuclear decommissioning liability for income tax purposes resulting in permanent differences. The accrual of the nuclear decommissioning liability required Entergy to recognize a gain for income tax purposes, a significant portion of which resulted in an increase in tax basis of the assets constructively contributed to the subsidiary. Recognition of the gain and the increase in tax basis of the assets represents a temporary difference. The permanent difference reduced income tax expense, net of unrecognized tax benefits, by $238 million.

In 2016, Entergy Louisiana elected mark-to-market income tax treatment for various wholesale electric power purchase and sale agreements, including Entergy Louisiana’s contract to purchase electricity from the Vidalia hydroelectric facility and from System Energy under the Unit Power Sales Agreement. The election resulted in a $2.2 billion deductible temporary difference.

Entergy Arkansas [Member]

Income Taxes

INCOME TAXES (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

Income taxes for 2016, 2015, and 2014 for Entergy Corporation and Subsidiaries consist of the following:

	2016			2015			2014
	(In Thousands)
Current:
Federal		$45,249			$77,166			$90,061
Foreign	68			97			90
State	(14,960		)	157,829			(12,637		)
Total	30,357			235,092			77,514
Deferred and non-current - net	(840,465		)	(864,799		)	528,326
Investment tax credit adjustments - net	(7,151		)	(13,220		)	(16,243		)
Income taxes		($817,259	)		($642,927	)		$589,597

Income taxes for 2016, 2015, and 2014 for Entergy’s Registrant Subsidiaries consist of the following:

2016	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi		Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Current:
Federal		($14,748	)		($124,113	)		$10,603		($91,067	)		$19,656			$29,628
State	2,805			10,757			2,257		566			1,374			(25,825		)
Total	(11,943		)	(113,356		)	12,860		(90,501		)	21,030			3,803
Deferred and non-current - net	120,942			208,157			46,984		119,345			42,982			71,051
Investment tax credit adjustments - net	(1,226		)	(5,067		)	4,010		(139		)	(915		)	(3,793		)
Income taxes		$107,773			$89,734			$63,854		$28,705			$63,097			$71,061

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Current:
Federal		$66,966			$101,382			$25,628			($9,346	)		$53,313			($63,302	)
State	6,265			35,406			6,832			1,784			2,450			26,755
Total	73,231			136,788			32,460			(7,562		)	55,763			(36,547		)
Deferred and non-current - net	(31,463		)	47,220			31,149			32,890			(17,599		)	93,491
Investment tax credit adjustments - net	(1,227		)	(5,337		)	(1,737		)	(138		)	(914		)	(3,867		)
Income taxes		$40,541			$178,671			$61,872			$25,190			$37,250			$53,077

2014	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Current:
Federal		($34,258	)		($44,909	)		$8,103			($1,428	)		$48,610			$19,908
State	(678		)	(1,191		)	7,474			510			4,877			15,379
Total	(34,936		)	(46,100		)	15,577			(918		)	53,487			35,287
Deferred and non-current - net	119,841			236,794			42,305			14,592			(2,418		)	53,501
Investment tax credit adjustments - net	(1,276		)	(5,642		)	(2,172		)	(224		)	(1,425		)	(5,478		)
Income taxes		$83,629			$185,052			$55,710			$13,450			$49,644			$83,310

Total income taxes for Entergy Corporation and Subsidiaries differ from the amounts computed by applying the statutory income tax rate to income before income taxes.  The reasons for the differences for the years 2016, 2015, and 2014 are:

	2016			2015			2014
	(In Thousands)
Net income (loss) attributable to Entergy Corporation		($583,618	)		($176,562	)		$940,721
Preferred dividend requirements of subsidiaries	19,115			19,828			19,536
Consolidated net income (loss)	(564,503		)	(156,734		)	960,257
Income taxes	(817,259		)	(642,927		)	589,597
Income (loss) before income taxes		($1,381,762	)		($799,661	)		$1,549,854
Computed at statutory rate (35%)		($483,617	)		($279,881	)		$542,449
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	40,581			29,944			44,708
Regulatory differences - utility plant items	33,581			32,089			39,321
Equity component of AFUDC	(23,647		)	(18,191		)	(21,108		)
Amortization of investment tax credits	(10,889		)	(11,136		)	(12,211		)
Flow-through / permanent differences	(19,307		)	(7,872		)	(18,003		)
New York tax law change (a)	—			—			(21,500		)
Louisiana business combination	—			(333,655		)	—
Entergy Wholesale Commodities restructuring (b)	(237,760		)	—			—
Act 55 financing settlement (d)	(63,477		)	—			—
Provision for uncertain tax positions (c) (d)	(67,119		)	(56,683		)	32,573
Valuation allowance	11,411			—			—
Other - net	2,984			2,458			3,368
Total income taxes as reported		($817,259	)		($642,927	)		$589,597
Effective Income Tax Rate	59.1		%	80.4		%	38.0		%

(a) In March 2014, New York enacted legislation that substantially modified various aspects of New York tax law. The most significant effect of the legislation for Entergy was the adoption of full water’s-edge unitary combined reporting, meaning that all of Entergy’s domestic entities will be included in New York’s combined filing group. The effect of the tax law change resulted in a deferred state income tax reduction of approximately $21.5 million as shown in the table above.

(b) See “Other Tax Matters” below for discussion of the Entergy Wholesale Commodities restructuring.

(c) See “Income Tax Audits- 2008-2009 IRS Audit” below for discussion of the most significant items for 2015.

(d) See “Income Tax Audits- 2010-2011 IRS Audit” below for discussion of the most significant items for 2016.

Total income taxes for the Registrant Subsidiaries differ from the amounts computed by applying the statutory income tax rate to income before taxes.  The reasons for the differences for the years 2016, 2015, and 2014 are:

2016	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Net income		$167,212			$622,047			$109,184			$48,849			$107,538			$96,744
Income taxes	107,773			89,734			63,854			28,705			63,097			71,061
Pretax income		$274,985			$711,781			$173,038			$77,554			$170,635			$167,805
Computed at statutory rate (35%)		$96,245			$249,123			$60,563			$27,144			$59,722			$58,732
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	11,652			29,014			5,592			3,543			449			7,001
Regulatory differences - utility plant items	10,971			8,094			(1,154		)	2,329			4,140			9,201
Equity component of AFUDC	(5,985		)	(9,774		)	(2,030		)	(412		)	(2,666		)	(2,780		)
Amortization of investment tax credits	(1,201		)	(5,019		)	(160		)	(132		)	(900		)	(3,476		)
Flow-through / permanent differences	(3,848		)	(980		)	764			(3,609		)	634			(883		)
Act 55 financing settlement (a)	—			(61,620		)	—			—			(454		)	—
Non-taxable dividend income	—			(44,658		)	—			—			—			—
Provision for uncertain tax positions (a)	(717		)	(75,871		)	50			(300		)	1,926			3,151
Other - net	656			1,425			229			142			246			115
Total income taxes as reported		$107,773			$89,734			$63,854			$28,705			$63,097			$71,061
Effective Income Tax Rate	39.2		%	12.6		%	36.9		%	37.0		%	37.0		%	42.3		%

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Net income		$74,272			$446,639			$92,708			$44,925			$69,625			$111,318
Income taxes	40,541			178,671			61,872			25,190			37,250			53,077
Pretax income		$114,813			$625,310			$154,580			$70,115			$106,875			$164,395
Computed at statutory rate (35%)		$40,185			$218,859			$54,103			$24,540			$37,406			$57,538
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	6,643			23,650			5,219			2,887			1,621			6,403
Regulatory differences - utility plant items	7,299			3,013			2,383			2,201			3,703			12,167
Equity component of AFUDC	(4,979		)	(5,420		)	(1,083		)	(451		)	(1,987		)	(2,973		)
Amortization of investment tax credits	(1,201		)	(5,252		)	(160		)	(111		)	(900		)	(3,476		)
Flow-through / permanent differences	(4,062		)	2,460			431			(4,539		)	530			618
Non-taxable dividend income	—			(44,658		)	—			—			—			—
Provision for uncertain tax positions (b)	(3,978		)	(15,377		)	756			525			(3,365		)	(17,313		)
Other - net	634			1,396			223			138			242			113
Total income taxes as reported		$40,541			$178,671			$61,872			$25,190			$37,250			$53,077
Effective Income Tax Rate	35.3		%	28.6		%	40.0		%	35.9		%	34.9		%	32.3		%

2014	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Net income		$121,392			$446,022			$74,821			$31,030			$74,804			$96,334
Income taxes	83,629			185,052			55,710			13,450			49,644			83,310
Pretax income		$205,021			$631,074			$130,531			$44,480			$124,448			$179,644
Computed at statutory rate (35%)		$71,757			$220,876			$45,686			$15,568			$43,557			$62,875
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	9,591			11,666			5,180			1,562			3,221			6,877
Regulatory differences - utility plant items	8,653			7,487			4,448			777			4,165			13,791
Equity component of AFUDC	(2,533		)	(14,612		)	(833		)	(320		)	(1,035		)	(1,774		)
Amortization of investment tax credits	(1,251		)	(5,594		)	(260		)	(218		)	(1,412		)	(3,476		)
Flow-through / permanent differences	(5,082		)	(225		)	555			(4,458		)	393			(327		)
Non-taxable dividend income	—			(41,255		)	—			—			—			—
Provision for uncertain tax positions	1,881			5,336			718			405			522			5,235
Other - net	613			1,373			216			134			233			109
Total income taxes as reported		$83,629			$185,052			$55,710			$13,450			$49,644			$83,310
Effective Income Tax Rate	40.8		%	29.3		%	42.7		%	30.2		%	39.9		%	46.4		%

(a) See “Income Tax Audits- 2010-2011 IRS Audit” below for discussion of the most significant items for Entergy Louisiana.

(b) See “Income Tax Audits- 2008-2009 IRS Audit” below for discussion of the most significant items for Entergy Louisiana and System Energy.

Significant components of accumulated deferred income taxes and taxes accrued for Entergy Corporation and Subsidiaries as of December 31, 2016 and 2015 are as follows:

	2016			2015
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($6,362,905	)		($6,804,225	)
Regulatory assets	(584,572		)	(646,392		)
Nuclear decommissioning trusts/receivables	(1,739,977		)	(1,254,463		)
Pension, net funding	(429,896		)	(365,111		)
Combined unitary state taxes	(33,063		)	(45,078		)
Power purchase agreements	(993		)	—
Other	(251,719		)	(315,844		)
Total	(9,403,125		)	(9,431,113		)
Deferred tax assets:
Nuclear decommissioning liabilities	1,399,468			828,983
Regulatory liabilities	255,272			284,432
Pension and other post-employment benefits	539,456			525,524
Sale and leaseback	135,866			139,720
Compensation	99,300			69,432
Accumulated deferred investment tax credit	92,375			95,248
Provision for allowances and contingencies	188,390			188,282
Power purchase agreements	—			38,401
Net operating loss carryforwards	334,025			360,188
Capital losses and miscellaneous tax credits	18,470			11,075
Valuation allowance	(104,277		)	(91,532		)
Other	59,079			68,204
Total	3,017,424			2,517,957
Non-current accrued taxes (including unrecognized tax benefits)	(991,704		)	(1,338,806		)
Accumulated deferred income taxes and taxes accrued		($7,377,405	)		($8,251,962	)

Entergy’s estimated tax attributes carryovers and their expiration dates as of December 31, 2016 are as follows:

Carryover Description	Carryover Amount	Year(s) of expiration
Federal net operating losses	$6.7 billion	2023-2036
State net operating losses	$7.8 billion	2017-2036
Miscellaneous federal and state credits	$89.9 million	2017-2036

As a result of the accounting for uncertain tax positions, the amount of the deferred tax assets reflected in the financial statements is less than the amount of the tax effect of the federal and state net operating loss carryovers, tax credit carryovers, and other tax attributes reflected on income tax returns. Because it is more likely than not that the benefit from certain state net operating loss carryovers will not be utilized, valuation allowances of $62 million as of December 31, 2016 and $46 million as of December 31, 2015 have been provided on the deferred tax assets relating to these state net operating loss carryovers. Additionally, valuation allowances totaling $42.3 million as of December 31, 2016 and $45.5 million as of December 31, 2015 have been provided on deferred tax assets related to federal and state jurisdictions in which Entergy does not currently expect to be able to utilize separate company tax return losses, preventing realization of such deferred tax assets.

Significant components of accumulated deferred income taxes and taxes accrued for the Registrant Subsidiaries as of December 31, 2016 and 2015 are as follows:

2016	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($1,857,554	)		($2,357,599	)		($820,971	)		($177,242	)		($835,671	)		($651,394	)
Regulatory assets	(109,241		)	(219,750		)	(25,309		)	(36,301		)	(153,914		)	(39,879		)
Nuclear decommissioning trusts/receivables	(144,250		)	(119,544		)	—			—			—			(83,891		)
Pension, net funding	(123,889		)	(122,465		)	(34,284		)	(16,307		)	(28,371		)	(29,357		)
Deferred fuel	(14,774		)	(1,778		)	(12,770		)	(5,229		)	(2,808		)	(1,137		)
Other	(47,785		)	(22,136		)	(12,474		)	(18,536		)	(8,812		)	(2,051		)
Total	(2,297,493		)	(2,843,272		)	(905,808		)	(253,615		)	(1,029,576		)	(807,709		)
Deferred tax assets:
Regulatory liabilities	5,768			175,973			18,833			25,240			15,814			13,644
Nuclear decommissioning liabilities	124,206			55,408			—			—			—			53,113
Pension and other post-employment benefits	(24,467		)	145,401			(8,042		)	(12,070		)	(19,096		)	(1,182		)
Sale and leaseback	—			33,383			—			—			—			102,483
Accumulated deferred investment tax credit	13,848			54,509			3,315			239			4,527			15,936
Provision for allowances and contingencies	(1,497		)	124,309			21,817			36,466			5,904			—
Power purchase agreements	(3,094		)	29,827			1,905			—			140			—
Unbilled/deferred revenues	6,799			(35,006		)	5,085			3,751			11,902			—
Compensation	2,787			5,309			1,492			685			1,587			360
Net operating loss carryforwards	69,524			17,125			—			—			—			—
Capital losses and miscellaneous tax credits	2,074			—			4,487			—			—			—
Other	174			17,110			1,152			496			2,955			—
Total	196,122			623,348			50,044			54,807			23,733			184,354
Non-current accrued taxes (including unrecognized tax benefits)	(85,252		)	(471,194		)	(5,567		)	(136,145		)	(21,804		)	(489,510		)
Accumulated deferred income taxes and taxes accrued		($2,186,623	)		($2,691,118	)		($861,331	)		($334,953	)		($1,027,647	)		($1,112,865	)

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($1,710,444	)		($2,041,968	)		($781,427	)		($167,294	)		($778,270	)		($611,745	)
Regulatory assets	(108,422		)	(254,316		)	(24,918		)	(39,451		)	(172,117		)	(46,990		)
Nuclear decommissioning trusts	(121,326		)	(99,980		)	—			—			—			(68,370		)
Pension, net funding	(107,073		)	(109,709		)	(30,901		)	(14,459		)	(28,001		)	(25,791		)
Deferred fuel	(7,647		)	(2,513		)	(684		)	(175		)	2,050			(18		)
Power purchase agreements	—			—			—			—			—			—
Other	(38,683		)	(86,275		)	(5,625		)	(12,253		)	(10,109		)	(22,478		)
Total	(2,093,595		)	(2,594,761		)	(843,555		)	(233,632		)	(986,447		)	(775,392		)
Deferred tax assets:
Regulatory liabilities	18,369			215,154			7,787			20,888			7,307			14,927
Nuclear decommissioning liabilities	109,962			49,333			—			—			—			39,420
Pension and other post-employment benefits	(20,420		)	149,680			(6,628		)	(8,939		)	(16,703		)	(1,037		)
Sale and leaseback	—			37,236			—			—			—			102,484
Accumulated deferred investment tax credit	14,320			56,635			1,777			290			4,842			17,385
Provision for allowances and contingencies	1,024			123,007			18,735			33,843			7,266			134
Power purchase agreements	(1,279		)	13,840			1,901			13			575			—
Unbilled/deferred revenues	9,815			(32,365		)	7,154			2,126			10,851			—
Compensation	1,842			4,182			601			880			4,496			—
Net operating loss carryforwards	—			90,241			—			—			—			—
Other	128			21,982			1,995			316			1,672			—
Total	133,761			728,925			33,322			49,417			20,306			173,313
Non-current accrued taxes (including unrecognized tax benefits)	(22,978		)	(641,120		)	(402		)	(29,846		)	(40,693		)	(416,996		)
Accumulated deferred income taxes and taxes accrued		($1,982,812	)		($2,506,956	)		($810,635	)		($214,061	)		($1,006,834	)		($1,019,075	)

The Registrant Subsidiaries’ estimated tax attributes carryovers and their expiration dates as of December 31, 2016 are as follows:

	Entergy Arkansas	Entergy Louisiana	Entergy Mississippi	Entergy New Orleans	Entergy Texas	System Energy
Federal net operating losses	$184 million	$4.4 billion	—	$34 million	—	$201 million
Year(s) of expiration	2028-2036	2036	N/A	2028-2036	N/A	2028-2036
State net operating losses	$80 million	$4.8 billion	—	$285 million	—	$175 million
Year(s) of expiration	2021	2029-2036	N/A	2032-2035	N/A	2035
Misc. federal credits	$2 million	—	$3 million	—	—	$2 million
Year(s) of expiration	2029-2036	N/A	2029-2036	N/A	N/A	2029-2036
State credits	—	—	$4.5 million	—	$3.4 million	$8.4 million
Year(s) of expiration	N/A	N/A	2018-2020	N/A	2026	2017-2020

As a result of the accounting for uncertain tax positions, the amount of the deferred tax assets reflected in the financial statements is less than the amount of the tax effect of the federal and state net operating loss carryovers and tax credit carryovers.

Unrecognized tax benefits

Accounting standards establish a “more-likely-than-not” recognition threshold that must be met before a tax benefit can be recognized in the financial statements.  If a tax deduction is taken on a tax return, but does not meet the more-likely-than-not recognition threshold, an increase in income tax liability, above what is payable on the tax return, is required to be recorded.  A reconciliation of Entergy’s beginning and ending amount of unrecognized tax benefits is as follows:

	2016			2015			2014
	(In Thousands)
Gross balance at January 1		$2,611,585			$4,736,785			$4,593,224
Additions based on tax positions related to the current year	1,532,782			1,850,705			348,543
Additions for tax positions of prior years	368,404			59,815			11,637
Reductions for tax positions of prior years (a)	(265,653		)	(3,966,535		)	(213,401		)
Settlements	(337,263		)	(68,227		)	—
Lapse of statute of limitations	—			(958		)	(3,218		)
Gross balance at December 31	3,909,855			2,611,585			4,736,785
Offsets to gross unrecognized tax benefits:
Carryovers and refund claims	(2,922,085		)	(1,264,483		)	(4,295,643		)
Cash paid to taxing authorities	(10,000		)	—			—
Unrecognized tax benefits net of unused tax attributes, refund claims and payments (b)		$977,770			$1,347,102			$441,142

(a) The primary reduction for 2015 is related to the nuclear decommissioning costs treatment discussed in “Income Tax Audits - 2008-2009 IRS Audit” below.

(b) Potential tax liability above what is payable on tax returns

The balances of unrecognized tax benefits include $1,240 million, $955 million, and $516 million as of December 31, 2016, 2015, and 2014, respectively, which, if recognized, would lower the effective income tax rates.  Because of the effect of deferred tax accounting, the remaining balances of unrecognized tax benefits of $2,670 million, $1,657 million, and $4,221 million as of December 31, 2016, 2015, and 2014, respectively, if disallowed, would not affect the annual effective income tax rate but would accelerate the payment of cash to the taxing authority to an earlier period.

Entergy accrues interest expense, if any, related to unrecognized tax benefits in income tax expense.  Entergy’s December 31, 2016, 2015, and 2014 accrued balance for the possible payment of interest is approximately $30 million, $27 million, and $127 million, respectively.

A reconciliation of the Registrant Subsidiaries’ beginning and ending amount of unrecognized tax benefits for 2016, 2015, and 2014 is as follows:

2016	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Gross balance at January 1, 2016		$25,445			$1,690,661			$19,482			$53,897			$13,462			$478,318
Additions based on tax positions related to the current year (a)	16,868			931,720			2,662			33,912			2,002			5,318
Additions for tax positions of prior years	2,463			157,586			336			129,784			2,888			601
Reductions for tax positions of prior years	(41,957		)	(144,068		)	(10,219		)	(29,821		)	(1,849		)	(10,266		)
Settlements	(316		)	(195,560		)	(55		)	(21,542		)	(557		)	(1,599		)
Gross balance at December 31, 2016	2,503			2,440,339			12,206			166,230			15,946			472,372
Offsets to gross unrecognized tax benefits:
Loss carryovers	—			(1,783,093		)	(2,373		)	(27,320		)	(376		)	(90,028		)
Unrecognized tax benefits net of unused tax attributes and payments		$2,503			$657,246			$9,833			$138,910			$15,570			$382,344

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Gross balance at January 1, 2015		$362,912			$1,205,929			$20,144			$53,763			$17,264			$258,242
Additions based on tax positions related to the current year (b)	2,196			1,367,058			566			472			657			472,304
Additions for tax positions of prior years	1,057			7,992			8,140			48			2,914			913
Reductions for tax positions of prior years	(340,720		)	(859,430		)	—			(386		)	(3,981		)	(253,141		)
Settlements	—			(30,888		)	(9,368		)	—			(3,392		)	—
Gross balance at December 31, 2015	25,445			1,690,661			19,482			53,897			13,462			478,318
Offsets to gross unrecognized tax benefits:
Loss carryovers	(3,613		)	(893,764		)	(1,016		)	(506		)	(276		)	(133,611		)
Unrecognized tax benefits net of unused tax attributes and payments		$21,832			$796,897			$18,466			$53,391			$13,186			$344,707

2014	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Gross balance at January 1, 2014		$347,713			$1,076,680			$16,186			$51,679			$13,017			$265,185
Additions based on tax positions related to the current year	14,511			151,249			3,928			2,235			4,225			2,744
Additions for tax positions of prior years	1,767			6,924			319			37			303			566
Reductions for tax positions of prior years	(1,079		)	(28,924		)	(289		)	(188		)	(267		)	(10,253		)
Settlements	—			—			—			—			(14		)	—
Gross balance at December 31, 2014	362,912			1,205,929			20,144			53,763			17,264			258,242
Offsets to gross unrecognized tax benefits:
Loss carryovers	(361,043		)	(739,988		)	(6,992		)	(20,735		)	(241		)	(163,124		)
Unrecognized tax benefits net of unused tax attributes and payments		$1,869			$465,941			$13,152			$33,028			$17,023			$95,118

(a) The primary addition for Entergy Louisiana is related to the mark-to market treatment discussed in “Other Tax Matters” below.

(b) The primary addition for Entergy Louisiana and System Energy is related to the nuclear decommissioning costs treatment discussed in “Other Tax Matters” below.

The Registrant Subsidiaries’ balances of unrecognized tax benefits included amounts which, if recognized, would have reduced income tax expense as follows:

	December 31,
	2016		2015		2014
	(In Millions)
Entergy Arkansas		$3.6		$4.5		$2.6
Entergy Louisiana		$473.3		$692.7		$267.3
Entergy Mississippi		$—		$8.1		$3.9
Entergy New Orleans		$33.6		$50.7		$50.7
Entergy Texas		$7.0		$5.2		$10.5
System Energy		$—		$0.7		$3.7

The Registrant Subsidiaries accrue interest and penalties related to unrecognized tax benefits in income tax expense.  Penalties have not been accrued.  Accrued balances for the possible payment of interest are as follows:

	December 31,
	2016		2015		2014
	(In Millions)
Entergy Arkansas		$1.4		$1.3		$17.0
Entergy Louisiana		$8.4		$9.3		$22.2
Entergy Mississippi		$0.8		$0.4		$2.8
Entergy New Orleans		$1.5		$1.8		$1.3
Entergy Texas		$1.2		$1.2		$1.0
System Energy		$3.7		$0.7		$23.8

Income Tax Audits

Entergy and its subsidiaries file U.S. federal and various state and foreign income tax returns.  IRS examinations are complete for years before 2012. All state taxing authorities’ examinations are completed for years before 2009.

2006-2007 IRS Audit

In the first quarter 2015, the IRS finalized tax and interest computations from the 2006-2007 audit that resulted in a reversal of Entergy’s provision for uncertain tax positions related to accrued interest of approximately $20 million, including decreases of approximately $4 million for Entergy Arkansas, $11 million for Entergy Louisiana, and $1 million for System Energy.

2008-2009 IRS Audit

In the fourth quarter 2009, Entergy filed Applications for Change in Accounting Method (the “2009 CAM”) for tax purposes with the IRS for certain costs under Section 263A of the Internal Revenue Code.  In the Applications, Entergy proposed to treat the nuclear decommissioning liability associated with the operation of its nuclear power plants as a production cost properly includable in cost of goods sold.  The effect of the 2009 CAM was a $5.7 billion reduction in 2009 taxable income.  The 2009 CAM was adjusted to $9.3 billion in 2012.

In the fourth quarter 2012 the IRS disallowed the reduction to 2009 taxable income related to the 2009 CAM.  In the third quarter 2013, the Internal Revenue Service issued its RAR for the tax years 2008-2009. As a result of the issuance of this RAR, Entergy and the IRS resolved all of the 2008-2009 issues described above except for the 2009 CAM. Entergy disagreed with the IRS’s disallowance of the 2009 CAM and filed a protest with the IRS Appeals Division in October 2013.

In August 2015, Entergy and the IRS agreed on the treatment of the 2009 position regarding nuclear decommissioning liabilities from the 2008-2009 audit. The agreement provides that Entergy is entitled to deduct approximately $118 million of the $9.3 billion claimed in 2009. The agreement effectively settled all matters pertaining to the 2009 tax year and increased Entergy’s 2009 federal income tax liability by $2.4 million.

2010-2011 IRS Audit

The IRS completed its examination of the 2010 and 2011 tax years and issued its 2010-2011 Revenue Agent Report (RAR) in June 2016. Entergy agreed to all proposed adjustments contained in the RAR. As a result of the issuance of the RAR, Entergy Louisiana was able to recognize previously unrecognized tax benefits as follows:

• Entergy and the IRS agreed that $148.6 million of the proceeds received by Entergy Louisiana in 2010 from the Louisiana Utilities Restoration Corporation (LURC), an instrumentality of the State of Louisiana, for the financing of Hurricane Gustav and Hurricane Ike storm costs pursuant to Act 55 of the Louisiana Regular Session of 2007 (Louisiana Act 55) were not taxable. Because the treatment of the financing is settled, Entergy recognized previously unrecognized tax benefits totaling $63.5 million, of which Entergy Louisiana recorded $61.6 million. Entergy Louisiana also accrued a regulatory liability of $16.1 million ($9.9 million net-of-tax) in accordance with the terms of Entergy Louisiana’s previous settlement agreement approved by the LPSC regarding Entergy Louisiana’s obligation to pay to customers savings associated with the Act 55 financing.

• Entergy and the IRS agreed upon the tax treatment of Entergy Louisiana’s regulatory liability related to the Vidalia purchased power agreement. As a result, Entergy Louisiana recognized a previously unrecognized tax benefit of $74.5 million.

Other Tax Matters

Entergy regularly negotiates with the IRS to achieve settlements.  The resolution of audit issues could result in significant changes to the amounts of unrecognized tax benefits in the next twelve months.

In October 2015 two of Entergy’s Louisiana utilities, Entergy Gulf States Louisiana and Entergy Louisiana, combined their businesses into a legal entity which is identified as Entergy Louisiana herein. The structure of the business combination generated both a permanent difference and a temporary difference under FASB ASC Topic 740. The permanent difference resulted from recognition of the Waterford 3 and River Bend decommissioning liabilities as part of the business combination. Recognition of such decommissioning liabilities required Entergy to also recognize a taxable gain. The taxable gain resulted in a temporary difference because the gain provided for an increase in tax basis. Entergy Louisiana maintained a carryover tax basis in the assets received; and, to the extent that the increase in tax basis will provide additional tax depreciation, Entergy recorded a deferred tax asset. Entergy Louisiana obtained the corresponding deferred tax asset in the business combination. The permanent tax benefit net of ancillary tax charges was approximately $334 million. Consistent with the terms of the stipulated settlement in the business combination proceeding, electric customers of Entergy Louisiana will realize customer credits associated with the business combination. Accordingly, in October 2015, Entergy recorded a regulatory liability of $107 million ($66 million net-of-tax) which partially offsets the effect of the aforementioned deferred tax asset. The deferred tax asset and the regulatory liability, net-of-tax, increased Entergy Louisiana’s member’s equity by $268 million. See Note 2 to the financial statements for further discussion of the business combination.

In the fourth quarter 2015, System Energy and Entergy Louisiana adopted a new method of accounting for income tax return purposes in which the companies’ nuclear decommissioning costs will be treated as production costs of electricity includable in cost of goods sold. The new method results in a reduction of taxable income of $1.2 billion for System Energy and $2.2 billion for Entergy Louisiana.

The Protecting Americans from Tax Hikes Act of 2015 was enacted in December 2015. The most significant provisions affecting Entergy and the Registrant Subsidiaries were a five-year extension of bonus depreciation and permanent extension of the research and experimentation tax credit. The effect of the bonus depreciation extension on 2015 increased Entergy’s tax net operating loss.

Entergy made a tax election to treat its subsidiary that owns one of the Entergy Wholesale Commodities nuclear power plants as a corporation for federal income tax purposes in the second quarter 2016. This resulted in a constructive contribution of all the assets and liabilities associated with the plant to a new subsidiary corporation for federal income tax purposes, and generated both permanent and temporary differences under the income tax accounting standards. The constructive contribution required Entergy to recognize the plant’s nuclear decommissioning liability for income tax purposes resulting in permanent differences. The accrual of the nuclear decommissioning liability required Entergy to recognize a gain for income tax purposes, a significant portion of which resulted in an increase in tax basis of the assets constructively contributed to the subsidiary. Recognition of the gain and the increase in tax basis of the assets represents a temporary difference. The permanent difference reduced income tax expense, net of unrecognized tax benefits, by $238 million.

In 2016, Entergy Louisiana elected mark-to-market income tax treatment for various wholesale electric power purchase and sale agreements, including Entergy Louisiana’s contract to purchase electricity from the Vidalia hydroelectric facility and from System Energy under the Unit Power Sales Agreement. The election resulted in a $2.2 billion deductible temporary difference.

Entergy Louisiana [Member]

Income Taxes

INCOME TAXES (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

Income taxes for 2016, 2015, and 2014 for Entergy Corporation and Subsidiaries consist of the following:

	2016			2015			2014
	(In Thousands)
Current:
Federal		$45,249			$77,166			$90,061
Foreign	68			97			90
State	(14,960		)	157,829			(12,637		)
Total	30,357			235,092			77,514
Deferred and non-current - net	(840,465		)	(864,799		)	528,326
Investment tax credit adjustments - net	(7,151		)	(13,220		)	(16,243		)
Income taxes		($817,259	)		($642,927	)		$589,597

Income taxes for 2016, 2015, and 2014 for Entergy’s Registrant Subsidiaries consist of the following:

2016	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi		Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Current:
Federal		($14,748	)		($124,113	)		$10,603		($91,067	)		$19,656			$29,628
State	2,805			10,757			2,257		566			1,374			(25,825		)
Total	(11,943		)	(113,356		)	12,860		(90,501		)	21,030			3,803
Deferred and non-current - net	120,942			208,157			46,984		119,345			42,982			71,051
Investment tax credit adjustments - net	(1,226		)	(5,067		)	4,010		(139		)	(915		)	(3,793		)
Income taxes		$107,773			$89,734			$63,854		$28,705			$63,097			$71,061

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Current:
Federal		$66,966			$101,382			$25,628			($9,346	)		$53,313			($63,302	)
State	6,265			35,406			6,832			1,784			2,450			26,755
Total	73,231			136,788			32,460			(7,562		)	55,763			(36,547		)
Deferred and non-current - net	(31,463		)	47,220			31,149			32,890			(17,599		)	93,491
Investment tax credit adjustments - net	(1,227		)	(5,337		)	(1,737		)	(138		)	(914		)	(3,867		)
Income taxes		$40,541			$178,671			$61,872			$25,190			$37,250			$53,077

2014	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Current:
Federal		($34,258	)		($44,909	)		$8,103			($1,428	)		$48,610			$19,908
State	(678		)	(1,191		)	7,474			510			4,877			15,379
Total	(34,936		)	(46,100		)	15,577			(918		)	53,487			35,287
Deferred and non-current - net	119,841			236,794			42,305			14,592			(2,418		)	53,501
Investment tax credit adjustments - net	(1,276		)	(5,642		)	(2,172		)	(224		)	(1,425		)	(5,478		)
Income taxes		$83,629			$185,052			$55,710			$13,450			$49,644			$83,310

Total income taxes for Entergy Corporation and Subsidiaries differ from the amounts computed by applying the statutory income tax rate to income before income taxes.  The reasons for the differences for the years 2016, 2015, and 2014 are:

	2016			2015			2014
	(In Thousands)
Net income (loss) attributable to Entergy Corporation		($583,618	)		($176,562	)		$940,721
Preferred dividend requirements of subsidiaries	19,115			19,828			19,536
Consolidated net income (loss)	(564,503		)	(156,734		)	960,257
Income taxes	(817,259		)	(642,927		)	589,597
Income (loss) before income taxes		($1,381,762	)		($799,661	)		$1,549,854
Computed at statutory rate (35%)		($483,617	)		($279,881	)		$542,449
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	40,581			29,944			44,708
Regulatory differences - utility plant items	33,581			32,089			39,321
Equity component of AFUDC	(23,647		)	(18,191		)	(21,108		)
Amortization of investment tax credits	(10,889		)	(11,136		)	(12,211		)
Flow-through / permanent differences	(19,307		)	(7,872		)	(18,003		)
New York tax law change (a)	—			—			(21,500		)
Louisiana business combination	—			(333,655		)	—
Entergy Wholesale Commodities restructuring (b)	(237,760		)	—			—
Act 55 financing settlement (d)	(63,477		)	—			—
Provision for uncertain tax positions (c) (d)	(67,119		)	(56,683		)	32,573
Valuation allowance	11,411			—			—
Other - net	2,984			2,458			3,368
Total income taxes as reported		($817,259	)		($642,927	)		$589,597
Effective Income Tax Rate	59.1		%	80.4		%	38.0		%

(a) In March 2014, New York enacted legislation that substantially modified various aspects of New York tax law. The most significant effect of the legislation for Entergy was the adoption of full water’s-edge unitary combined reporting, meaning that all of Entergy’s domestic entities will be included in New York’s combined filing group. The effect of the tax law change resulted in a deferred state income tax reduction of approximately $21.5 million as shown in the table above.

(b) See “Other Tax Matters” below for discussion of the Entergy Wholesale Commodities restructuring.

(c) See “Income Tax Audits- 2008-2009 IRS Audit” below for discussion of the most significant items for 2015.

(d) See “Income Tax Audits- 2010-2011 IRS Audit” below for discussion of the most significant items for 2016.

Total income taxes for the Registrant Subsidiaries differ from the amounts computed by applying the statutory income tax rate to income before taxes.  The reasons for the differences for the years 2016, 2015, and 2014 are:

2016	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Net income		$167,212			$622,047			$109,184			$48,849			$107,538			$96,744
Income taxes	107,773			89,734			63,854			28,705			63,097			71,061
Pretax income		$274,985			$711,781			$173,038			$77,554			$170,635			$167,805
Computed at statutory rate (35%)		$96,245			$249,123			$60,563			$27,144			$59,722			$58,732
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	11,652			29,014			5,592			3,543			449			7,001
Regulatory differences - utility plant items	10,971			8,094			(1,154		)	2,329			4,140			9,201
Equity component of AFUDC	(5,985		)	(9,774		)	(2,030		)	(412		)	(2,666		)	(2,780		)
Amortization of investment tax credits	(1,201		)	(5,019		)	(160		)	(132		)	(900		)	(3,476		)
Flow-through / permanent differences	(3,848		)	(980		)	764			(3,609		)	634			(883		)
Act 55 financing settlement (a)	—			(61,620		)	—			—			(454		)	—
Non-taxable dividend income	—			(44,658		)	—			—			—			—
Provision for uncertain tax positions (a)	(717		)	(75,871		)	50			(300		)	1,926			3,151
Other - net	656			1,425			229			142			246			115
Total income taxes as reported		$107,773			$89,734			$63,854			$28,705			$63,097			$71,061
Effective Income Tax Rate	39.2		%	12.6		%	36.9		%	37.0		%	37.0		%	42.3		%

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Net income		$74,272			$446,639			$92,708			$44,925			$69,625			$111,318
Income taxes	40,541			178,671			61,872			25,190			37,250			53,077
Pretax income		$114,813			$625,310			$154,580			$70,115			$106,875			$164,395
Computed at statutory rate (35%)		$40,185			$218,859			$54,103			$24,540			$37,406			$57,538
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	6,643			23,650			5,219			2,887			1,621			6,403
Regulatory differences - utility plant items	7,299			3,013			2,383			2,201			3,703			12,167
Equity component of AFUDC	(4,979		)	(5,420		)	(1,083		)	(451		)	(1,987		)	(2,973		)
Amortization of investment tax credits	(1,201		)	(5,252		)	(160		)	(111		)	(900		)	(3,476		)
Flow-through / permanent differences	(4,062		)	2,460			431			(4,539		)	530			618
Non-taxable dividend income	—			(44,658		)	—			—			—			—
Provision for uncertain tax positions (b)	(3,978		)	(15,377		)	756			525			(3,365		)	(17,313		)
Other - net	634			1,396			223			138			242			113
Total income taxes as reported		$40,541			$178,671			$61,872			$25,190			$37,250			$53,077
Effective Income Tax Rate	35.3		%	28.6		%	40.0		%	35.9		%	34.9		%	32.3		%

2014	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Net income		$121,392			$446,022			$74,821			$31,030			$74,804			$96,334
Income taxes	83,629			185,052			55,710			13,450			49,644			83,310
Pretax income		$205,021			$631,074			$130,531			$44,480			$124,448			$179,644
Computed at statutory rate (35%)		$71,757			$220,876			$45,686			$15,568			$43,557			$62,875
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	9,591			11,666			5,180			1,562			3,221			6,877
Regulatory differences - utility plant items	8,653			7,487			4,448			777			4,165			13,791
Equity component of AFUDC	(2,533		)	(14,612		)	(833		)	(320		)	(1,035		)	(1,774		)
Amortization of investment tax credits	(1,251		)	(5,594		)	(260		)	(218		)	(1,412		)	(3,476		)
Flow-through / permanent differences	(5,082		)	(225		)	555			(4,458		)	393			(327		)
Non-taxable dividend income	—			(41,255		)	—			—			—			—
Provision for uncertain tax positions	1,881			5,336			718			405			522			5,235
Other - net	613			1,373			216			134			233			109
Total income taxes as reported		$83,629			$185,052			$55,710			$13,450			$49,644			$83,310
Effective Income Tax Rate	40.8		%	29.3		%	42.7		%	30.2		%	39.9		%	46.4		%

(a) See “Income Tax Audits- 2010-2011 IRS Audit” below for discussion of the most significant items for Entergy Louisiana.

(b) See “Income Tax Audits- 2008-2009 IRS Audit” below for discussion of the most significant items for Entergy Louisiana and System Energy.

Significant components of accumulated deferred income taxes and taxes accrued for Entergy Corporation and Subsidiaries as of December 31, 2016 and 2015 are as follows:

	2016			2015
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($6,362,905	)		($6,804,225	)
Regulatory assets	(584,572		)	(646,392		)
Nuclear decommissioning trusts/receivables	(1,739,977		)	(1,254,463		)
Pension, net funding	(429,896		)	(365,111		)
Combined unitary state taxes	(33,063		)	(45,078		)
Power purchase agreements	(993		)	—
Other	(251,719		)	(315,844		)
Total	(9,403,125		)	(9,431,113		)
Deferred tax assets:
Nuclear decommissioning liabilities	1,399,468			828,983
Regulatory liabilities	255,272			284,432
Pension and other post-employment benefits	539,456			525,524
Sale and leaseback	135,866			139,720
Compensation	99,300			69,432
Accumulated deferred investment tax credit	92,375			95,248
Provision for allowances and contingencies	188,390			188,282
Power purchase agreements	—			38,401
Net operating loss carryforwards	334,025			360,188
Capital losses and miscellaneous tax credits	18,470			11,075
Valuation allowance	(104,277		)	(91,532		)
Other	59,079			68,204
Total	3,017,424			2,517,957
Non-current accrued taxes (including unrecognized tax benefits)	(991,704		)	(1,338,806		)
Accumulated deferred income taxes and taxes accrued		($7,377,405	)		($8,251,962	)

Entergy’s estimated tax attributes carryovers and their expiration dates as of December 31, 2016 are as follows:

Carryover Description	Carryover Amount	Year(s) of expiration
Federal net operating losses	$6.7 billion	2023-2036
State net operating losses	$7.8 billion	2017-2036
Miscellaneous federal and state credits	$89.9 million	2017-2036

As a result of the accounting for uncertain tax positions, the amount of the deferred tax assets reflected in the financial statements is less than the amount of the tax effect of the federal and state net operating loss carryovers, tax credit carryovers, and other tax attributes reflected on income tax returns. Because it is more likely than not that the benefit from certain state net operating loss carryovers will not be utilized, valuation allowances of $62 million as of December 31, 2016 and $46 million as of December 31, 2015 have been provided on the deferred tax assets relating to these state net operating loss carryovers. Additionally, valuation allowances totaling $42.3 million as of December 31, 2016 and $45.5 million as of December 31, 2015 have been provided on deferred tax assets related to federal and state jurisdictions in which Entergy does not currently expect to be able to utilize separate company tax return losses, preventing realization of such deferred tax assets.

Significant components of accumulated deferred income taxes and taxes accrued for the Registrant Subsidiaries as of December 31, 2016 and 2015 are as follows:

2016	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($1,857,554	)		($2,357,599	)		($820,971	)		($177,242	)		($835,671	)		($651,394	)
Regulatory assets	(109,241		)	(219,750		)	(25,309		)	(36,301		)	(153,914		)	(39,879		)
Nuclear decommissioning trusts/receivables	(144,250		)	(119,544		)	—			—			—			(83,891		)
Pension, net funding	(123,889		)	(122,465		)	(34,284		)	(16,307		)	(28,371		)	(29,357		)
Deferred fuel	(14,774		)	(1,778		)	(12,770		)	(5,229		)	(2,808		)	(1,137		)
Other	(47,785		)	(22,136		)	(12,474		)	(18,536		)	(8,812		)	(2,051		)
Total	(2,297,493		)	(2,843,272		)	(905,808		)	(253,615		)	(1,029,576		)	(807,709		)
Deferred tax assets:
Regulatory liabilities	5,768			175,973			18,833			25,240			15,814			13,644
Nuclear decommissioning liabilities	124,206			55,408			—			—			—			53,113
Pension and other post-employment benefits	(24,467		)	145,401			(8,042		)	(12,070		)	(19,096		)	(1,182		)
Sale and leaseback	—			33,383			—			—			—			102,483
Accumulated deferred investment tax credit	13,848			54,509			3,315			239			4,527			15,936
Provision for allowances and contingencies	(1,497		)	124,309			21,817			36,466			5,904			—
Power purchase agreements	(3,094		)	29,827			1,905			—			140			—
Unbilled/deferred revenues	6,799			(35,006		)	5,085			3,751			11,902			—
Compensation	2,787			5,309			1,492			685			1,587			360
Net operating loss carryforwards	69,524			17,125			—			—			—			—
Capital losses and miscellaneous tax credits	2,074			—			4,487			—			—			—
Other	174			17,110			1,152			496			2,955			—
Total	196,122			623,348			50,044			54,807			23,733			184,354
Non-current accrued taxes (including unrecognized tax benefits)	(85,252		)	(471,194		)	(5,567		)	(136,145		)	(21,804		)	(489,510		)
Accumulated deferred income taxes and taxes accrued		($2,186,623	)		($2,691,118	)		($861,331	)		($334,953	)		($1,027,647	)		($1,112,865	)

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($1,710,444	)		($2,041,968	)		($781,427	)		($167,294	)		($778,270	)		($611,745	)
Regulatory assets	(108,422		)	(254,316		)	(24,918		)	(39,451		)	(172,117		)	(46,990		)
Nuclear decommissioning trusts	(121,326		)	(99,980		)	—			—			—			(68,370		)
Pension, net funding	(107,073		)	(109,709		)	(30,901		)	(14,459		)	(28,001		)	(25,791		)
Deferred fuel	(7,647		)	(2,513		)	(684		)	(175		)	2,050			(18		)
Power purchase agreements	—			—			—			—			—			—
Other	(38,683		)	(86,275		)	(5,625		)	(12,253		)	(10,109		)	(22,478		)
Total	(2,093,595		)	(2,594,761		)	(843,555		)	(233,632		)	(986,447		)	(775,392		)
Deferred tax assets:
Regulatory liabilities	18,369			215,154			7,787			20,888			7,307			14,927
Nuclear decommissioning liabilities	109,962			49,333			—			—			—			39,420
Pension and other post-employment benefits	(20,420		)	149,680			(6,628		)	(8,939		)	(16,703		)	(1,037		)
Sale and leaseback	—			37,236			—			—			—			102,484
Accumulated deferred investment tax credit	14,320			56,635			1,777			290			4,842			17,385
Provision for allowances and contingencies	1,024			123,007			18,735			33,843			7,266			134
Power purchase agreements	(1,279		)	13,840			1,901			13			575			—
Unbilled/deferred revenues	9,815			(32,365		)	7,154			2,126			10,851			—
Compensation	1,842			4,182			601			880			4,496			—
Net operating loss carryforwards	—			90,241			—			—			—			—
Other	128			21,982			1,995			316			1,672			—
Total	133,761			728,925			33,322			49,417			20,306			173,313
Non-current accrued taxes (including unrecognized tax benefits)	(22,978		)	(641,120		)	(402		)	(29,846		)	(40,693		)	(416,996		)
Accumulated deferred income taxes and taxes accrued		($1,982,812	)		($2,506,956	)		($810,635	)		($214,061	)		($1,006,834	)		($1,019,075	)

The Registrant Subsidiaries’ estimated tax attributes carryovers and their expiration dates as of December 31, 2016 are as follows:

	Entergy Arkansas	Entergy Louisiana	Entergy Mississippi	Entergy New Orleans	Entergy Texas	System Energy
Federal net operating losses	$184 million	$4.4 billion	—	$34 million	—	$201 million
Year(s) of expiration	2028-2036	2036	N/A	2028-2036	N/A	2028-2036
State net operating losses	$80 million	$4.8 billion	—	$285 million	—	$175 million
Year(s) of expiration	2021	2029-2036	N/A	2032-2035	N/A	2035
Misc. federal credits	$2 million	—	$3 million	—	—	$2 million
Year(s) of expiration	2029-2036	N/A	2029-2036	N/A	N/A	2029-2036
State credits	—	—	$4.5 million	—	$3.4 million	$8.4 million
Year(s) of expiration	N/A	N/A	2018-2020	N/A	2026	2017-2020

As a result of the accounting for uncertain tax positions, the amount of the deferred tax assets reflected in the financial statements is less than the amount of the tax effect of the federal and state net operating loss carryovers and tax credit carryovers.

Unrecognized tax benefits

Accounting standards establish a “more-likely-than-not” recognition threshold that must be met before a tax benefit can be recognized in the financial statements.  If a tax deduction is taken on a tax return, but does not meet the more-likely-than-not recognition threshold, an increase in income tax liability, above what is payable on the tax return, is required to be recorded.  A reconciliation of Entergy’s beginning and ending amount of unrecognized tax benefits is as follows:

	2016			2015			2014
	(In Thousands)
Gross balance at January 1		$2,611,585			$4,736,785			$4,593,224
Additions based on tax positions related to the current year	1,532,782			1,850,705			348,543
Additions for tax positions of prior years	368,404			59,815			11,637
Reductions for tax positions of prior years (a)	(265,653		)	(3,966,535		)	(213,401		)
Settlements	(337,263		)	(68,227		)	—
Lapse of statute of limitations	—			(958		)	(3,218		)
Gross balance at December 31	3,909,855			2,611,585			4,736,785
Offsets to gross unrecognized tax benefits:
Carryovers and refund claims	(2,922,085		)	(1,264,483		)	(4,295,643		)
Cash paid to taxing authorities	(10,000		)	—			—
Unrecognized tax benefits net of unused tax attributes, refund claims and payments (b)		$977,770			$1,347,102			$441,142

(a) The primary reduction for 2015 is related to the nuclear decommissioning costs treatment discussed in “Income Tax Audits - 2008-2009 IRS Audit” below.

(b) Potential tax liability above what is payable on tax returns

The balances of unrecognized tax benefits include $1,240 million, $955 million, and $516 million as of December 31, 2016, 2015, and 2014, respectively, which, if recognized, would lower the effective income tax rates.  Because of the effect of deferred tax accounting, the remaining balances of unrecognized tax benefits of $2,670 million, $1,657 million, and $4,221 million as of December 31, 2016, 2015, and 2014, respectively, if disallowed, would not affect the annual effective income tax rate but would accelerate the payment of cash to the taxing authority to an earlier period.

Entergy accrues interest expense, if any, related to unrecognized tax benefits in income tax expense.  Entergy’s December 31, 2016, 2015, and 2014 accrued balance for the possible payment of interest is approximately $30 million, $27 million, and $127 million, respectively.

A reconciliation of the Registrant Subsidiaries’ beginning and ending amount of unrecognized tax benefits for 2016, 2015, and 2014 is as follows:

2016	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Gross balance at January 1, 2016		$25,445			$1,690,661			$19,482			$53,897			$13,462			$478,318
Additions based on tax positions related to the current year (a)	16,868			931,720			2,662			33,912			2,002			5,318
Additions for tax positions of prior years	2,463			157,586			336			129,784			2,888			601
Reductions for tax positions of prior years	(41,957		)	(144,068		)	(10,219		)	(29,821		)	(1,849		)	(10,266		)
Settlements	(316		)	(195,560		)	(55		)	(21,542		)	(557		)	(1,599		)
Gross balance at December 31, 2016	2,503			2,440,339			12,206			166,230			15,946			472,372
Offsets to gross unrecognized tax benefits:
Loss carryovers	—			(1,783,093		)	(2,373		)	(27,320		)	(376		)	(90,028		)
Unrecognized tax benefits net of unused tax attributes and payments		$2,503			$657,246			$9,833			$138,910			$15,570			$382,344

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Gross balance at January 1, 2015		$362,912			$1,205,929			$20,144			$53,763			$17,264			$258,242
Additions based on tax positions related to the current year (b)	2,196			1,367,058			566			472			657			472,304
Additions for tax positions of prior years	1,057			7,992			8,140			48			2,914			913
Reductions for tax positions of prior years	(340,720		)	(859,430		)	—			(386		)	(3,981		)	(253,141		)
Settlements	—			(30,888		)	(9,368		)	—			(3,392		)	—
Gross balance at December 31, 2015	25,445			1,690,661			19,482			53,897			13,462			478,318
Offsets to gross unrecognized tax benefits:
Loss carryovers	(3,613		)	(893,764		)	(1,016		)	(506		)	(276		)	(133,611		)
Unrecognized tax benefits net of unused tax attributes and payments		$21,832			$796,897			$18,466			$53,391			$13,186			$344,707

2014	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Gross balance at January 1, 2014		$347,713			$1,076,680			$16,186			$51,679			$13,017			$265,185
Additions based on tax positions related to the current year	14,511			151,249			3,928			2,235			4,225			2,744
Additions for tax positions of prior years	1,767			6,924			319			37			303			566
Reductions for tax positions of prior years	(1,079		)	(28,924		)	(289		)	(188		)	(267		)	(10,253		)
Settlements	—			—			—			—			(14		)	—
Gross balance at December 31, 2014	362,912			1,205,929			20,144			53,763			17,264			258,242
Offsets to gross unrecognized tax benefits:
Loss carryovers	(361,043		)	(739,988		)	(6,992		)	(20,735		)	(241		)	(163,124		)
Unrecognized tax benefits net of unused tax attributes and payments		$1,869			$465,941			$13,152			$33,028			$17,023			$95,118

(a) The primary addition for Entergy Louisiana is related to the mark-to market treatment discussed in “Other Tax Matters” below.

(b) The primary addition for Entergy Louisiana and System Energy is related to the nuclear decommissioning costs treatment discussed in “Other Tax Matters” below.

The Registrant Subsidiaries’ balances of unrecognized tax benefits included amounts which, if recognized, would have reduced income tax expense as follows:

	December 31,
	2016		2015		2014
	(In Millions)
Entergy Arkansas		$3.6		$4.5		$2.6
Entergy Louisiana		$473.3		$692.7		$267.3
Entergy Mississippi		$—		$8.1		$3.9
Entergy New Orleans		$33.6		$50.7		$50.7
Entergy Texas		$7.0		$5.2		$10.5
System Energy		$—		$0.7		$3.7

The Registrant Subsidiaries accrue interest and penalties related to unrecognized tax benefits in income tax expense.  Penalties have not been accrued.  Accrued balances for the possible payment of interest are as follows:

	December 31,
	2016		2015		2014
	(In Millions)
Entergy Arkansas		$1.4		$1.3		$17.0
Entergy Louisiana		$8.4		$9.3		$22.2
Entergy Mississippi		$0.8		$0.4		$2.8
Entergy New Orleans		$1.5		$1.8		$1.3
Entergy Texas		$1.2		$1.2		$1.0
System Energy		$3.7		$0.7		$23.8

Income Tax Audits

Entergy and its subsidiaries file U.S. federal and various state and foreign income tax returns.  IRS examinations are complete for years before 2012. All state taxing authorities’ examinations are completed for years before 2009.

2006-2007 IRS Audit

In the first quarter 2015, the IRS finalized tax and interest computations from the 2006-2007 audit that resulted in a reversal of Entergy’s provision for uncertain tax positions related to accrued interest of approximately $20 million, including decreases of approximately $4 million for Entergy Arkansas, $11 million for Entergy Louisiana, and $1 million for System Energy.

2008-2009 IRS Audit

In the fourth quarter 2009, Entergy filed Applications for Change in Accounting Method (the “2009 CAM”) for tax purposes with the IRS for certain costs under Section 263A of the Internal Revenue Code.  In the Applications, Entergy proposed to treat the nuclear decommissioning liability associated with the operation of its nuclear power plants as a production cost properly includable in cost of goods sold.  The effect of the 2009 CAM was a $5.7 billion reduction in 2009 taxable income.  The 2009 CAM was adjusted to $9.3 billion in 2012.

In the fourth quarter 2012 the IRS disallowed the reduction to 2009 taxable income related to the 2009 CAM.  In the third quarter 2013, the Internal Revenue Service issued its RAR for the tax years 2008-2009. As a result of the issuance of this RAR, Entergy and the IRS resolved all of the 2008-2009 issues described above except for the 2009 CAM. Entergy disagreed with the IRS’s disallowance of the 2009 CAM and filed a protest with the IRS Appeals Division in October 2013.

In August 2015, Entergy and the IRS agreed on the treatment of the 2009 position regarding nuclear decommissioning liabilities from the 2008-2009 audit. The agreement provides that Entergy is entitled to deduct approximately $118 million of the $9.3 billion claimed in 2009. The agreement effectively settled all matters pertaining to the 2009 tax year and increased Entergy’s 2009 federal income tax liability by $2.4 million.

2010-2011 IRS Audit

The IRS completed its examination of the 2010 and 2011 tax years and issued its 2010-2011 Revenue Agent Report (RAR) in June 2016. Entergy agreed to all proposed adjustments contained in the RAR. As a result of the issuance of the RAR, Entergy Louisiana was able to recognize previously unrecognized tax benefits as follows:

• Entergy and the IRS agreed that $148.6 million of the proceeds received by Entergy Louisiana in 2010 from the Louisiana Utilities Restoration Corporation (LURC), an instrumentality of the State of Louisiana, for the financing of Hurricane Gustav and Hurricane Ike storm costs pursuant to Act 55 of the Louisiana Regular Session of 2007 (Louisiana Act 55) were not taxable. Because the treatment of the financing is settled, Entergy recognized previously unrecognized tax benefits totaling $63.5 million, of which Entergy Louisiana recorded $61.6 million. Entergy Louisiana also accrued a regulatory liability of $16.1 million ($9.9 million net-of-tax) in accordance with the terms of Entergy Louisiana’s previous settlement agreement approved by the LPSC regarding Entergy Louisiana’s obligation to pay to customers savings associated with the Act 55 financing.

• Entergy and the IRS agreed upon the tax treatment of Entergy Louisiana’s regulatory liability related to the Vidalia purchased power agreement. As a result, Entergy Louisiana recognized a previously unrecognized tax benefit of $74.5 million.

Other Tax Matters

Entergy regularly negotiates with the IRS to achieve settlements.  The resolution of audit issues could result in significant changes to the amounts of unrecognized tax benefits in the next twelve months.

In October 2015 two of Entergy’s Louisiana utilities, Entergy Gulf States Louisiana and Entergy Louisiana, combined their businesses into a legal entity which is identified as Entergy Louisiana herein. The structure of the business combination generated both a permanent difference and a temporary difference under FASB ASC Topic 740. The permanent difference resulted from recognition of the Waterford 3 and River Bend decommissioning liabilities as part of the business combination. Recognition of such decommissioning liabilities required Entergy to also recognize a taxable gain. The taxable gain resulted in a temporary difference because the gain provided for an increase in tax basis. Entergy Louisiana maintained a carryover tax basis in the assets received; and, to the extent that the increase in tax basis will provide additional tax depreciation, Entergy recorded a deferred tax asset. Entergy Louisiana obtained the corresponding deferred tax asset in the business combination. The permanent tax benefit net of ancillary tax charges was approximately $334 million. Consistent with the terms of the stipulated settlement in the business combination proceeding, electric customers of Entergy Louisiana will realize customer credits associated with the business combination. Accordingly, in October 2015, Entergy recorded a regulatory liability of $107 million ($66 million net-of-tax) which partially offsets the effect of the aforementioned deferred tax asset. The deferred tax asset and the regulatory liability, net-of-tax, increased Entergy Louisiana’s member’s equity by $268 million. See Note 2 to the financial statements for further discussion of the business combination.

In the fourth quarter 2015, System Energy and Entergy Louisiana adopted a new method of accounting for income tax return purposes in which the companies’ nuclear decommissioning costs will be treated as production costs of electricity includable in cost of goods sold. The new method results in a reduction of taxable income of $1.2 billion for System Energy and $2.2 billion for Entergy Louisiana.

The Protecting Americans from Tax Hikes Act of 2015 was enacted in December 2015. The most significant provisions affecting Entergy and the Registrant Subsidiaries were a five-year extension of bonus depreciation and permanent extension of the research and experimentation tax credit. The effect of the bonus depreciation extension on 2015 increased Entergy’s tax net operating loss.

Entergy made a tax election to treat its subsidiary that owns one of the Entergy Wholesale Commodities nuclear power plants as a corporation for federal income tax purposes in the second quarter 2016. This resulted in a constructive contribution of all the assets and liabilities associated with the plant to a new subsidiary corporation for federal income tax purposes, and generated both permanent and temporary differences under the income tax accounting standards. The constructive contribution required Entergy to recognize the plant’s nuclear decommissioning liability for income tax purposes resulting in permanent differences. The accrual of the nuclear decommissioning liability required Entergy to recognize a gain for income tax purposes, a significant portion of which resulted in an increase in tax basis of the assets constructively contributed to the subsidiary. Recognition of the gain and the increase in tax basis of the assets represents a temporary difference. The permanent difference reduced income tax expense, net of unrecognized tax benefits, by $238 million.

In 2016, Entergy Louisiana elected mark-to-market income tax treatment for various wholesale electric power purchase and sale agreements, including Entergy Louisiana’s contract to purchase electricity from the Vidalia hydroelectric facility and from System Energy under the Unit Power Sales Agreement. The election resulted in a $2.2 billion deductible temporary difference.

Entergy Mississippi [Member]

Income Taxes

INCOME TAXES (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

Income taxes for 2016, 2015, and 2014 for Entergy Corporation and Subsidiaries consist of the following:

	2016			2015			2014
	(In Thousands)
Current:
Federal		$45,249			$77,166			$90,061
Foreign	68			97			90
State	(14,960		)	157,829			(12,637		)
Total	30,357			235,092			77,514
Deferred and non-current - net	(840,465		)	(864,799		)	528,326
Investment tax credit adjustments - net	(7,151		)	(13,220		)	(16,243		)
Income taxes		($817,259	)		($642,927	)		$589,597

Income taxes for 2016, 2015, and 2014 for Entergy’s Registrant Subsidiaries consist of the following:

2016	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi		Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Current:
Federal		($14,748	)		($124,113	)		$10,603		($91,067	)		$19,656			$29,628
State	2,805			10,757			2,257		566			1,374			(25,825		)
Total	(11,943		)	(113,356		)	12,860		(90,501		)	21,030			3,803
Deferred and non-current - net	120,942			208,157			46,984		119,345			42,982			71,051
Investment tax credit adjustments - net	(1,226		)	(5,067		)	4,010		(139		)	(915		)	(3,793		)
Income taxes		$107,773			$89,734			$63,854		$28,705			$63,097			$71,061

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Current:
Federal		$66,966			$101,382			$25,628			($9,346	)		$53,313			($63,302	)
State	6,265			35,406			6,832			1,784			2,450			26,755
Total	73,231			136,788			32,460			(7,562		)	55,763			(36,547		)
Deferred and non-current - net	(31,463		)	47,220			31,149			32,890			(17,599		)	93,491
Investment tax credit adjustments - net	(1,227		)	(5,337		)	(1,737		)	(138		)	(914		)	(3,867		)
Income taxes		$40,541			$178,671			$61,872			$25,190			$37,250			$53,077

2014	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Current:
Federal		($34,258	)		($44,909	)		$8,103			($1,428	)		$48,610			$19,908
State	(678		)	(1,191		)	7,474			510			4,877			15,379
Total	(34,936		)	(46,100		)	15,577			(918		)	53,487			35,287
Deferred and non-current - net	119,841			236,794			42,305			14,592			(2,418		)	53,501
Investment tax credit adjustments - net	(1,276		)	(5,642		)	(2,172		)	(224		)	(1,425		)	(5,478		)
Income taxes		$83,629			$185,052			$55,710			$13,450			$49,644			$83,310

Total income taxes for Entergy Corporation and Subsidiaries differ from the amounts computed by applying the statutory income tax rate to income before income taxes.  The reasons for the differences for the years 2016, 2015, and 2014 are:

	2016			2015			2014
	(In Thousands)
Net income (loss) attributable to Entergy Corporation		($583,618	)		($176,562	)		$940,721
Preferred dividend requirements of subsidiaries	19,115			19,828			19,536
Consolidated net income (loss)	(564,503		)	(156,734		)	960,257
Income taxes	(817,259		)	(642,927		)	589,597
Income (loss) before income taxes		($1,381,762	)		($799,661	)		$1,549,854
Computed at statutory rate (35%)		($483,617	)		($279,881	)		$542,449
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	40,581			29,944			44,708
Regulatory differences - utility plant items	33,581			32,089			39,321
Equity component of AFUDC	(23,647		)	(18,191		)	(21,108		)
Amortization of investment tax credits	(10,889		)	(11,136		)	(12,211		)
Flow-through / permanent differences	(19,307		)	(7,872		)	(18,003		)
New York tax law change (a)	—			—			(21,500		)
Louisiana business combination	—			(333,655		)	—
Entergy Wholesale Commodities restructuring (b)	(237,760		)	—			—
Act 55 financing settlement (d)	(63,477		)	—			—
Provision for uncertain tax positions (c) (d)	(67,119		)	(56,683		)	32,573
Valuation allowance	11,411			—			—
Other - net	2,984			2,458			3,368
Total income taxes as reported		($817,259	)		($642,927	)		$589,597
Effective Income Tax Rate	59.1		%	80.4		%	38.0		%

(a) In March 2014, New York enacted legislation that substantially modified various aspects of New York tax law. The most significant effect of the legislation for Entergy was the adoption of full water’s-edge unitary combined reporting, meaning that all of Entergy’s domestic entities will be included in New York’s combined filing group. The effect of the tax law change resulted in a deferred state income tax reduction of approximately $21.5 million as shown in the table above.

(b) See “Other Tax Matters” below for discussion of the Entergy Wholesale Commodities restructuring.

(c) See “Income Tax Audits- 2008-2009 IRS Audit” below for discussion of the most significant items for 2015.

(d) See “Income Tax Audits- 2010-2011 IRS Audit” below for discussion of the most significant items for 2016.

Total income taxes for the Registrant Subsidiaries differ from the amounts computed by applying the statutory income tax rate to income before taxes.  The reasons for the differences for the years 2016, 2015, and 2014 are:

2016	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Net income		$167,212			$622,047			$109,184			$48,849			$107,538			$96,744
Income taxes	107,773			89,734			63,854			28,705			63,097			71,061
Pretax income		$274,985			$711,781			$173,038			$77,554			$170,635			$167,805
Computed at statutory rate (35%)		$96,245			$249,123			$60,563			$27,144			$59,722			$58,732
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	11,652			29,014			5,592			3,543			449			7,001
Regulatory differences - utility plant items	10,971			8,094			(1,154		)	2,329			4,140			9,201
Equity component of AFUDC	(5,985		)	(9,774		)	(2,030		)	(412		)	(2,666		)	(2,780		)
Amortization of investment tax credits	(1,201		)	(5,019		)	(160		)	(132		)	(900		)	(3,476		)
Flow-through / permanent differences	(3,848		)	(980		)	764			(3,609		)	634			(883		)
Act 55 financing settlement (a)	—			(61,620		)	—			—			(454		)	—
Non-taxable dividend income	—			(44,658		)	—			—			—			—
Provision for uncertain tax positions (a)	(717		)	(75,871		)	50			(300		)	1,926			3,151
Other - net	656			1,425			229			142			246			115
Total income taxes as reported		$107,773			$89,734			$63,854			$28,705			$63,097			$71,061
Effective Income Tax Rate	39.2		%	12.6		%	36.9		%	37.0		%	37.0		%	42.3		%

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Net income		$74,272			$446,639			$92,708			$44,925			$69,625			$111,318
Income taxes	40,541			178,671			61,872			25,190			37,250			53,077
Pretax income		$114,813			$625,310			$154,580			$70,115			$106,875			$164,395
Computed at statutory rate (35%)		$40,185			$218,859			$54,103			$24,540			$37,406			$57,538
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	6,643			23,650			5,219			2,887			1,621			6,403
Regulatory differences - utility plant items	7,299			3,013			2,383			2,201			3,703			12,167
Equity component of AFUDC	(4,979		)	(5,420		)	(1,083		)	(451		)	(1,987		)	(2,973		)
Amortization of investment tax credits	(1,201		)	(5,252		)	(160		)	(111		)	(900		)	(3,476		)
Flow-through / permanent differences	(4,062		)	2,460			431			(4,539		)	530			618
Non-taxable dividend income	—			(44,658		)	—			—			—			—
Provision for uncertain tax positions (b)	(3,978		)	(15,377		)	756			525			(3,365		)	(17,313		)
Other - net	634			1,396			223			138			242			113
Total income taxes as reported		$40,541			$178,671			$61,872			$25,190			$37,250			$53,077
Effective Income Tax Rate	35.3		%	28.6		%	40.0		%	35.9		%	34.9		%	32.3		%

2014	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Net income		$121,392			$446,022			$74,821			$31,030			$74,804			$96,334
Income taxes	83,629			185,052			55,710			13,450			49,644			83,310
Pretax income		$205,021			$631,074			$130,531			$44,480			$124,448			$179,644
Computed at statutory rate (35%)		$71,757			$220,876			$45,686			$15,568			$43,557			$62,875
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	9,591			11,666			5,180			1,562			3,221			6,877
Regulatory differences - utility plant items	8,653			7,487			4,448			777			4,165			13,791
Equity component of AFUDC	(2,533		)	(14,612		)	(833		)	(320		)	(1,035		)	(1,774		)
Amortization of investment tax credits	(1,251		)	(5,594		)	(260		)	(218		)	(1,412		)	(3,476		)
Flow-through / permanent differences	(5,082		)	(225		)	555			(4,458		)	393			(327		)
Non-taxable dividend income	—			(41,255		)	—			—			—			—
Provision for uncertain tax positions	1,881			5,336			718			405			522			5,235
Other - net	613			1,373			216			134			233			109
Total income taxes as reported		$83,629			$185,052			$55,710			$13,450			$49,644			$83,310
Effective Income Tax Rate	40.8		%	29.3		%	42.7		%	30.2		%	39.9		%	46.4		%

(a) See “Income Tax Audits- 2010-2011 IRS Audit” below for discussion of the most significant items for Entergy Louisiana.

(b) See “Income Tax Audits- 2008-2009 IRS Audit” below for discussion of the most significant items for Entergy Louisiana and System Energy.

Significant components of accumulated deferred income taxes and taxes accrued for Entergy Corporation and Subsidiaries as of December 31, 2016 and 2015 are as follows:

	2016			2015
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($6,362,905	)		($6,804,225	)
Regulatory assets	(584,572		)	(646,392		)
Nuclear decommissioning trusts/receivables	(1,739,977		)	(1,254,463		)
Pension, net funding	(429,896		)	(365,111		)
Combined unitary state taxes	(33,063		)	(45,078		)
Power purchase agreements	(993		)	—
Other	(251,719		)	(315,844		)
Total	(9,403,125		)	(9,431,113		)
Deferred tax assets:
Nuclear decommissioning liabilities	1,399,468			828,983
Regulatory liabilities	255,272			284,432
Pension and other post-employment benefits	539,456			525,524
Sale and leaseback	135,866			139,720
Compensation	99,300			69,432
Accumulated deferred investment tax credit	92,375			95,248
Provision for allowances and contingencies	188,390			188,282
Power purchase agreements	—			38,401
Net operating loss carryforwards	334,025			360,188
Capital losses and miscellaneous tax credits	18,470			11,075
Valuation allowance	(104,277		)	(91,532		)
Other	59,079			68,204
Total	3,017,424			2,517,957
Non-current accrued taxes (including unrecognized tax benefits)	(991,704		)	(1,338,806		)
Accumulated deferred income taxes and taxes accrued		($7,377,405	)		($8,251,962	)

Entergy’s estimated tax attributes carryovers and their expiration dates as of December 31, 2016 are as follows:

Carryover Description	Carryover Amount	Year(s) of expiration
Federal net operating losses	$6.7 billion	2023-2036
State net operating losses	$7.8 billion	2017-2036
Miscellaneous federal and state credits	$89.9 million	2017-2036

As a result of the accounting for uncertain tax positions, the amount of the deferred tax assets reflected in the financial statements is less than the amount of the tax effect of the federal and state net operating loss carryovers, tax credit carryovers, and other tax attributes reflected on income tax returns. Because it is more likely than not that the benefit from certain state net operating loss carryovers will not be utilized, valuation allowances of $62 million as of December 31, 2016 and $46 million as of December 31, 2015 have been provided on the deferred tax assets relating to these state net operating loss carryovers. Additionally, valuation allowances totaling $42.3 million as of December 31, 2016 and $45.5 million as of December 31, 2015 have been provided on deferred tax assets related to federal and state jurisdictions in which Entergy does not currently expect to be able to utilize separate company tax return losses, preventing realization of such deferred tax assets.

Significant components of accumulated deferred income taxes and taxes accrued for the Registrant Subsidiaries as of December 31, 2016 and 2015 are as follows:

2016	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($1,857,554	)		($2,357,599	)		($820,971	)		($177,242	)		($835,671	)		($651,394	)
Regulatory assets	(109,241		)	(219,750		)	(25,309		)	(36,301		)	(153,914		)	(39,879		)
Nuclear decommissioning trusts/receivables	(144,250		)	(119,544		)	—			—			—			(83,891		)
Pension, net funding	(123,889		)	(122,465		)	(34,284		)	(16,307		)	(28,371		)	(29,357		)
Deferred fuel	(14,774		)	(1,778		)	(12,770		)	(5,229		)	(2,808		)	(1,137		)
Other	(47,785		)	(22,136		)	(12,474		)	(18,536		)	(8,812		)	(2,051		)
Total	(2,297,493		)	(2,843,272		)	(905,808		)	(253,615		)	(1,029,576		)	(807,709		)
Deferred tax assets:
Regulatory liabilities	5,768			175,973			18,833			25,240			15,814			13,644
Nuclear decommissioning liabilities	124,206			55,408			—			—			—			53,113
Pension and other post-employment benefits	(24,467		)	145,401			(8,042		)	(12,070		)	(19,096		)	(1,182		)
Sale and leaseback	—			33,383			—			—			—			102,483
Accumulated deferred investment tax credit	13,848			54,509			3,315			239			4,527			15,936
Provision for allowances and contingencies	(1,497		)	124,309			21,817			36,466			5,904			—
Power purchase agreements	(3,094		)	29,827			1,905			—			140			—
Unbilled/deferred revenues	6,799			(35,006		)	5,085			3,751			11,902			—
Compensation	2,787			5,309			1,492			685			1,587			360
Net operating loss carryforwards	69,524			17,125			—			—			—			—
Capital losses and miscellaneous tax credits	2,074			—			4,487			—			—			—
Other	174			17,110			1,152			496			2,955			—
Total	196,122			623,348			50,044			54,807			23,733			184,354
Non-current accrued taxes (including unrecognized tax benefits)	(85,252		)	(471,194		)	(5,567		)	(136,145		)	(21,804		)	(489,510		)
Accumulated deferred income taxes and taxes accrued		($2,186,623	)		($2,691,118	)		($861,331	)		($334,953	)		($1,027,647	)		($1,112,865	)

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($1,710,444	)		($2,041,968	)		($781,427	)		($167,294	)		($778,270	)		($611,745	)
Regulatory assets	(108,422		)	(254,316		)	(24,918		)	(39,451		)	(172,117		)	(46,990		)
Nuclear decommissioning trusts	(121,326		)	(99,980		)	—			—			—			(68,370		)
Pension, net funding	(107,073		)	(109,709		)	(30,901		)	(14,459		)	(28,001		)	(25,791		)
Deferred fuel	(7,647		)	(2,513		)	(684		)	(175		)	2,050			(18		)
Power purchase agreements	—			—			—			—			—			—
Other	(38,683		)	(86,275		)	(5,625		)	(12,253		)	(10,109		)	(22,478		)
Total	(2,093,595		)	(2,594,761		)	(843,555		)	(233,632		)	(986,447		)	(775,392		)
Deferred tax assets:
Regulatory liabilities	18,369			215,154			7,787			20,888			7,307			14,927
Nuclear decommissioning liabilities	109,962			49,333			—			—			—			39,420
Pension and other post-employment benefits	(20,420		)	149,680			(6,628		)	(8,939		)	(16,703		)	(1,037		)
Sale and leaseback	—			37,236			—			—			—			102,484
Accumulated deferred investment tax credit	14,320			56,635			1,777			290			4,842			17,385
Provision for allowances and contingencies	1,024			123,007			18,735			33,843			7,266			134
Power purchase agreements	(1,279		)	13,840			1,901			13			575			—
Unbilled/deferred revenues	9,815			(32,365		)	7,154			2,126			10,851			—
Compensation	1,842			4,182			601			880			4,496			—
Net operating loss carryforwards	—			90,241			—			—			—			—
Other	128			21,982			1,995			316			1,672			—
Total	133,761			728,925			33,322			49,417			20,306			173,313
Non-current accrued taxes (including unrecognized tax benefits)	(22,978		)	(641,120		)	(402		)	(29,846		)	(40,693		)	(416,996		)
Accumulated deferred income taxes and taxes accrued		($1,982,812	)		($2,506,956	)		($810,635	)		($214,061	)		($1,006,834	)		($1,019,075	)

The Registrant Subsidiaries’ estimated tax attributes carryovers and their expiration dates as of December 31, 2016 are as follows:

	Entergy Arkansas	Entergy Louisiana	Entergy Mississippi	Entergy New Orleans	Entergy Texas	System Energy
Federal net operating losses	$184 million	$4.4 billion	—	$34 million	—	$201 million
Year(s) of expiration	2028-2036	2036	N/A	2028-2036	N/A	2028-2036
State net operating losses	$80 million	$4.8 billion	—	$285 million	—	$175 million
Year(s) of expiration	2021	2029-2036	N/A	2032-2035	N/A	2035
Misc. federal credits	$2 million	—	$3 million	—	—	$2 million
Year(s) of expiration	2029-2036	N/A	2029-2036	N/A	N/A	2029-2036
State credits	—	—	$4.5 million	—	$3.4 million	$8.4 million
Year(s) of expiration	N/A	N/A	2018-2020	N/A	2026	2017-2020

As a result of the accounting for uncertain tax positions, the amount of the deferred tax assets reflected in the financial statements is less than the amount of the tax effect of the federal and state net operating loss carryovers and tax credit carryovers.

Unrecognized tax benefits

Accounting standards establish a “more-likely-than-not” recognition threshold that must be met before a tax benefit can be recognized in the financial statements.  If a tax deduction is taken on a tax return, but does not meet the more-likely-than-not recognition threshold, an increase in income tax liability, above what is payable on the tax return, is required to be recorded.  A reconciliation of Entergy’s beginning and ending amount of unrecognized tax benefits is as follows:

	2016			2015			2014
	(In Thousands)
Gross balance at January 1		$2,611,585			$4,736,785			$4,593,224
Additions based on tax positions related to the current year	1,532,782			1,850,705			348,543
Additions for tax positions of prior years	368,404			59,815			11,637
Reductions for tax positions of prior years (a)	(265,653		)	(3,966,535		)	(213,401		)
Settlements	(337,263		)	(68,227		)	—
Lapse of statute of limitations	—			(958		)	(3,218		)
Gross balance at December 31	3,909,855			2,611,585			4,736,785
Offsets to gross unrecognized tax benefits:
Carryovers and refund claims	(2,922,085		)	(1,264,483		)	(4,295,643		)
Cash paid to taxing authorities	(10,000		)	—			—
Unrecognized tax benefits net of unused tax attributes, refund claims and payments (b)		$977,770			$1,347,102			$441,142

(a) The primary reduction for 2015 is related to the nuclear decommissioning costs treatment discussed in “Income Tax Audits - 2008-2009 IRS Audit” below.

(b) Potential tax liability above what is payable on tax returns

The balances of unrecognized tax benefits include $1,240 million, $955 million, and $516 million as of December 31, 2016, 2015, and 2014, respectively, which, if recognized, would lower the effective income tax rates.  Because of the effect of deferred tax accounting, the remaining balances of unrecognized tax benefits of $2,670 million, $1,657 million, and $4,221 million as of December 31, 2016, 2015, and 2014, respectively, if disallowed, would not affect the annual effective income tax rate but would accelerate the payment of cash to the taxing authority to an earlier period.

Entergy accrues interest expense, if any, related to unrecognized tax benefits in income tax expense.  Entergy’s December 31, 2016, 2015, and 2014 accrued balance for the possible payment of interest is approximately $30 million, $27 million, and $127 million, respectively.

A reconciliation of the Registrant Subsidiaries’ beginning and ending amount of unrecognized tax benefits for 2016, 2015, and 2014 is as follows:

2016	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Gross balance at January 1, 2016		$25,445			$1,690,661			$19,482			$53,897			$13,462			$478,318
Additions based on tax positions related to the current year (a)	16,868			931,720			2,662			33,912			2,002			5,318
Additions for tax positions of prior years	2,463			157,586			336			129,784			2,888			601
Reductions for tax positions of prior years	(41,957		)	(144,068		)	(10,219		)	(29,821		)	(1,849		)	(10,266		)
Settlements	(316		)	(195,560		)	(55		)	(21,542		)	(557		)	(1,599		)
Gross balance at December 31, 2016	2,503			2,440,339			12,206			166,230			15,946			472,372
Offsets to gross unrecognized tax benefits:
Loss carryovers	—			(1,783,093		)	(2,373		)	(27,320		)	(376		)	(90,028		)
Unrecognized tax benefits net of unused tax attributes and payments		$2,503			$657,246			$9,833			$138,910			$15,570			$382,344

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Gross balance at January 1, 2015		$362,912			$1,205,929			$20,144			$53,763			$17,264			$258,242
Additions based on tax positions related to the current year (b)	2,196			1,367,058			566			472			657			472,304
Additions for tax positions of prior years	1,057			7,992			8,140			48			2,914			913
Reductions for tax positions of prior years	(340,720		)	(859,430		)	—			(386		)	(3,981		)	(253,141		)
Settlements	—			(30,888		)	(9,368		)	—			(3,392		)	—
Gross balance at December 31, 2015	25,445			1,690,661			19,482			53,897			13,462			478,318
Offsets to gross unrecognized tax benefits:
Loss carryovers	(3,613		)	(893,764		)	(1,016		)	(506		)	(276		)	(133,611		)
Unrecognized tax benefits net of unused tax attributes and payments		$21,832			$796,897			$18,466			$53,391			$13,186			$344,707

2014	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Gross balance at January 1, 2014		$347,713			$1,076,680			$16,186			$51,679			$13,017			$265,185
Additions based on tax positions related to the current year	14,511			151,249			3,928			2,235			4,225			2,744
Additions for tax positions of prior years	1,767			6,924			319			37			303			566
Reductions for tax positions of prior years	(1,079		)	(28,924		)	(289		)	(188		)	(267		)	(10,253		)
Settlements	—			—			—			—			(14		)	—
Gross balance at December 31, 2014	362,912			1,205,929			20,144			53,763			17,264			258,242
Offsets to gross unrecognized tax benefits:
Loss carryovers	(361,043		)	(739,988		)	(6,992		)	(20,735		)	(241		)	(163,124		)
Unrecognized tax benefits net of unused tax attributes and payments		$1,869			$465,941			$13,152			$33,028			$17,023			$95,118

(a) The primary addition for Entergy Louisiana is related to the mark-to market treatment discussed in “Other Tax Matters” below.

(b) The primary addition for Entergy Louisiana and System Energy is related to the nuclear decommissioning costs treatment discussed in “Other Tax Matters” below.

The Registrant Subsidiaries’ balances of unrecognized tax benefits included amounts which, if recognized, would have reduced income tax expense as follows:

	December 31,
	2016		2015		2014
	(In Millions)
Entergy Arkansas		$3.6		$4.5		$2.6
Entergy Louisiana		$473.3		$692.7		$267.3
Entergy Mississippi		$—		$8.1		$3.9
Entergy New Orleans		$33.6		$50.7		$50.7
Entergy Texas		$7.0		$5.2		$10.5
System Energy		$—		$0.7		$3.7

The Registrant Subsidiaries accrue interest and penalties related to unrecognized tax benefits in income tax expense.  Penalties have not been accrued.  Accrued balances for the possible payment of interest are as follows:

	December 31,
	2016		2015		2014
	(In Millions)
Entergy Arkansas		$1.4		$1.3		$17.0
Entergy Louisiana		$8.4		$9.3		$22.2
Entergy Mississippi		$0.8		$0.4		$2.8
Entergy New Orleans		$1.5		$1.8		$1.3
Entergy Texas		$1.2		$1.2		$1.0
System Energy		$3.7		$0.7		$23.8

Income Tax Audits

Entergy and its subsidiaries file U.S. federal and various state and foreign income tax returns.  IRS examinations are complete for years before 2012. All state taxing authorities’ examinations are completed for years before 2009.

2006-2007 IRS Audit

In the first quarter 2015, the IRS finalized tax and interest computations from the 2006-2007 audit that resulted in a reversal of Entergy’s provision for uncertain tax positions related to accrued interest of approximately $20 million, including decreases of approximately $4 million for Entergy Arkansas, $11 million for Entergy Louisiana, and $1 million for System Energy.

2008-2009 IRS Audit

In the fourth quarter 2009, Entergy filed Applications for Change in Accounting Method (the “2009 CAM”) for tax purposes with the IRS for certain costs under Section 263A of the Internal Revenue Code.  In the Applications, Entergy proposed to treat the nuclear decommissioning liability associated with the operation of its nuclear power plants as a production cost properly includable in cost of goods sold.  The effect of the 2009 CAM was a $5.7 billion reduction in 2009 taxable income.  The 2009 CAM was adjusted to $9.3 billion in 2012.

In the fourth quarter 2012 the IRS disallowed the reduction to 2009 taxable income related to the 2009 CAM.  In the third quarter 2013, the Internal Revenue Service issued its RAR for the tax years 2008-2009. As a result of the issuance of this RAR, Entergy and the IRS resolved all of the 2008-2009 issues described above except for the 2009 CAM. Entergy disagreed with the IRS’s disallowance of the 2009 CAM and filed a protest with the IRS Appeals Division in October 2013.

In August 2015, Entergy and the IRS agreed on the treatment of the 2009 position regarding nuclear decommissioning liabilities from the 2008-2009 audit. The agreement provides that Entergy is entitled to deduct approximately $118 million of the $9.3 billion claimed in 2009. The agreement effectively settled all matters pertaining to the 2009 tax year and increased Entergy’s 2009 federal income tax liability by $2.4 million.

2010-2011 IRS Audit

The IRS completed its examination of the 2010 and 2011 tax years and issued its 2010-2011 Revenue Agent Report (RAR) in June 2016. Entergy agreed to all proposed adjustments contained in the RAR. As a result of the issuance of the RAR, Entergy Louisiana was able to recognize previously unrecognized tax benefits as follows:

• Entergy and the IRS agreed that $148.6 million of the proceeds received by Entergy Louisiana in 2010 from the Louisiana Utilities Restoration Corporation (LURC), an instrumentality of the State of Louisiana, for the financing of Hurricane Gustav and Hurricane Ike storm costs pursuant to Act 55 of the Louisiana Regular Session of 2007 (Louisiana Act 55) were not taxable. Because the treatment of the financing is settled, Entergy recognized previously unrecognized tax benefits totaling $63.5 million, of which Entergy Louisiana recorded $61.6 million. Entergy Louisiana also accrued a regulatory liability of $16.1 million ($9.9 million net-of-tax) in accordance with the terms of Entergy Louisiana’s previous settlement agreement approved by the LPSC regarding Entergy Louisiana’s obligation to pay to customers savings associated with the Act 55 financing.

• Entergy and the IRS agreed upon the tax treatment of Entergy Louisiana’s regulatory liability related to the Vidalia purchased power agreement. As a result, Entergy Louisiana recognized a previously unrecognized tax benefit of $74.5 million.

Other Tax Matters

Entergy regularly negotiates with the IRS to achieve settlements.  The resolution of audit issues could result in significant changes to the amounts of unrecognized tax benefits in the next twelve months.

In October 2015 two of Entergy’s Louisiana utilities, Entergy Gulf States Louisiana and Entergy Louisiana, combined their businesses into a legal entity which is identified as Entergy Louisiana herein. The structure of the business combination generated both a permanent difference and a temporary difference under FASB ASC Topic 740. The permanent difference resulted from recognition of the Waterford 3 and River Bend decommissioning liabilities as part of the business combination. Recognition of such decommissioning liabilities required Entergy to also recognize a taxable gain. The taxable gain resulted in a temporary difference because the gain provided for an increase in tax basis. Entergy Louisiana maintained a carryover tax basis in the assets received; and, to the extent that the increase in tax basis will provide additional tax depreciation, Entergy recorded a deferred tax asset. Entergy Louisiana obtained the corresponding deferred tax asset in the business combination. The permanent tax benefit net of ancillary tax charges was approximately $334 million. Consistent with the terms of the stipulated settlement in the business combination proceeding, electric customers of Entergy Louisiana will realize customer credits associated with the business combination. Accordingly, in October 2015, Entergy recorded a regulatory liability of $107 million ($66 million net-of-tax) which partially offsets the effect of the aforementioned deferred tax asset. The deferred tax asset and the regulatory liability, net-of-tax, increased Entergy Louisiana’s member’s equity by $268 million. See Note 2 to the financial statements for further discussion of the business combination.

In the fourth quarter 2015, System Energy and Entergy Louisiana adopted a new method of accounting for income tax return purposes in which the companies’ nuclear decommissioning costs will be treated as production costs of electricity includable in cost of goods sold. The new method results in a reduction of taxable income of $1.2 billion for System Energy and $2.2 billion for Entergy Louisiana.

The Protecting Americans from Tax Hikes Act of 2015 was enacted in December 2015. The most significant provisions affecting Entergy and the Registrant Subsidiaries were a five-year extension of bonus depreciation and permanent extension of the research and experimentation tax credit. The effect of the bonus depreciation extension on 2015 increased Entergy’s tax net operating loss.

Entergy made a tax election to treat its subsidiary that owns one of the Entergy Wholesale Commodities nuclear power plants as a corporation for federal income tax purposes in the second quarter 2016. This resulted in a constructive contribution of all the assets and liabilities associated with the plant to a new subsidiary corporation for federal income tax purposes, and generated both permanent and temporary differences under the income tax accounting standards. The constructive contribution required Entergy to recognize the plant’s nuclear decommissioning liability for income tax purposes resulting in permanent differences. The accrual of the nuclear decommissioning liability required Entergy to recognize a gain for income tax purposes, a significant portion of which resulted in an increase in tax basis of the assets constructively contributed to the subsidiary. Recognition of the gain and the increase in tax basis of the assets represents a temporary difference. The permanent difference reduced income tax expense, net of unrecognized tax benefits, by $238 million.

In 2016, Entergy Louisiana elected mark-to-market income tax treatment for various wholesale electric power purchase and sale agreements, including Entergy Louisiana’s contract to purchase electricity from the Vidalia hydroelectric facility and from System Energy under the Unit Power Sales Agreement. The election resulted in a $2.2 billion deductible temporary difference.

Entergy New Orleans [Member]

Income Taxes

INCOME TAXES (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

Income taxes for 2016, 2015, and 2014 for Entergy Corporation and Subsidiaries consist of the following:

	2016			2015			2014
	(In Thousands)
Current:
Federal		$45,249			$77,166			$90,061
Foreign	68			97			90
State	(14,960		)	157,829			(12,637		)
Total	30,357			235,092			77,514
Deferred and non-current - net	(840,465		)	(864,799		)	528,326
Investment tax credit adjustments - net	(7,151		)	(13,220		)	(16,243		)
Income taxes		($817,259	)		($642,927	)		$589,597

Income taxes for 2016, 2015, and 2014 for Entergy’s Registrant Subsidiaries consist of the following:

2016	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi		Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Current:
Federal		($14,748	)		($124,113	)		$10,603		($91,067	)		$19,656			$29,628
State	2,805			10,757			2,257		566			1,374			(25,825		)
Total	(11,943		)	(113,356		)	12,860		(90,501		)	21,030			3,803
Deferred and non-current - net	120,942			208,157			46,984		119,345			42,982			71,051
Investment tax credit adjustments - net	(1,226		)	(5,067		)	4,010		(139		)	(915		)	(3,793		)
Income taxes		$107,773			$89,734			$63,854		$28,705			$63,097			$71,061

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Current:
Federal		$66,966			$101,382			$25,628			($9,346	)		$53,313			($63,302	)
State	6,265			35,406			6,832			1,784			2,450			26,755
Total	73,231			136,788			32,460			(7,562		)	55,763			(36,547		)
Deferred and non-current - net	(31,463		)	47,220			31,149			32,890			(17,599		)	93,491
Investment tax credit adjustments - net	(1,227		)	(5,337		)	(1,737		)	(138		)	(914		)	(3,867		)
Income taxes		$40,541			$178,671			$61,872			$25,190			$37,250			$53,077

2014	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Current:
Federal		($34,258	)		($44,909	)		$8,103			($1,428	)		$48,610			$19,908
State	(678		)	(1,191		)	7,474			510			4,877			15,379
Total	(34,936		)	(46,100		)	15,577			(918		)	53,487			35,287
Deferred and non-current - net	119,841			236,794			42,305			14,592			(2,418		)	53,501
Investment tax credit adjustments - net	(1,276		)	(5,642		)	(2,172		)	(224		)	(1,425		)	(5,478		)
Income taxes		$83,629			$185,052			$55,710			$13,450			$49,644			$83,310

Total income taxes for Entergy Corporation and Subsidiaries differ from the amounts computed by applying the statutory income tax rate to income before income taxes.  The reasons for the differences for the years 2016, 2015, and 2014 are:

	2016			2015			2014
	(In Thousands)
Net income (loss) attributable to Entergy Corporation		($583,618	)		($176,562	)		$940,721
Preferred dividend requirements of subsidiaries	19,115			19,828			19,536
Consolidated net income (loss)	(564,503		)	(156,734		)	960,257
Income taxes	(817,259		)	(642,927		)	589,597
Income (loss) before income taxes		($1,381,762	)		($799,661	)		$1,549,854
Computed at statutory rate (35%)		($483,617	)		($279,881	)		$542,449
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	40,581			29,944			44,708
Regulatory differences - utility plant items	33,581			32,089			39,321
Equity component of AFUDC	(23,647		)	(18,191		)	(21,108		)
Amortization of investment tax credits	(10,889		)	(11,136		)	(12,211		)
Flow-through / permanent differences	(19,307		)	(7,872		)	(18,003		)
New York tax law change (a)	—			—			(21,500		)
Louisiana business combination	—			(333,655		)	—
Entergy Wholesale Commodities restructuring (b)	(237,760		)	—			—
Act 55 financing settlement (d)	(63,477		)	—			—
Provision for uncertain tax positions (c) (d)	(67,119		)	(56,683		)	32,573
Valuation allowance	11,411			—			—
Other - net	2,984			2,458			3,368
Total income taxes as reported		($817,259	)		($642,927	)		$589,597
Effective Income Tax Rate	59.1		%	80.4		%	38.0		%

(a) In March 2014, New York enacted legislation that substantially modified various aspects of New York tax law. The most significant effect of the legislation for Entergy was the adoption of full water’s-edge unitary combined reporting, meaning that all of Entergy’s domestic entities will be included in New York’s combined filing group. The effect of the tax law change resulted in a deferred state income tax reduction of approximately $21.5 million as shown in the table above.

(b) See “Other Tax Matters” below for discussion of the Entergy Wholesale Commodities restructuring.

(c) See “Income Tax Audits- 2008-2009 IRS Audit” below for discussion of the most significant items for 2015.

(d) See “Income Tax Audits- 2010-2011 IRS Audit” below for discussion of the most significant items for 2016.

Total income taxes for the Registrant Subsidiaries differ from the amounts computed by applying the statutory income tax rate to income before taxes.  The reasons for the differences for the years 2016, 2015, and 2014 are:

2016	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Net income		$167,212			$622,047			$109,184			$48,849			$107,538			$96,744
Income taxes	107,773			89,734			63,854			28,705			63,097			71,061
Pretax income		$274,985			$711,781			$173,038			$77,554			$170,635			$167,805
Computed at statutory rate (35%)		$96,245			$249,123			$60,563			$27,144			$59,722			$58,732
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	11,652			29,014			5,592			3,543			449			7,001
Regulatory differences - utility plant items	10,971			8,094			(1,154		)	2,329			4,140			9,201
Equity component of AFUDC	(5,985		)	(9,774		)	(2,030		)	(412		)	(2,666		)	(2,780		)
Amortization of investment tax credits	(1,201		)	(5,019		)	(160		)	(132		)	(900		)	(3,476		)
Flow-through / permanent differences	(3,848		)	(980		)	764			(3,609		)	634			(883		)
Act 55 financing settlement (a)	—			(61,620		)	—			—			(454		)	—
Non-taxable dividend income	—			(44,658		)	—			—			—			—
Provision for uncertain tax positions (a)	(717		)	(75,871		)	50			(300		)	1,926			3,151
Other - net	656			1,425			229			142			246			115
Total income taxes as reported		$107,773			$89,734			$63,854			$28,705			$63,097			$71,061
Effective Income Tax Rate	39.2		%	12.6		%	36.9		%	37.0		%	37.0		%	42.3		%

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Net income		$74,272			$446,639			$92,708			$44,925			$69,625			$111,318
Income taxes	40,541			178,671			61,872			25,190			37,250			53,077
Pretax income		$114,813			$625,310			$154,580			$70,115			$106,875			$164,395
Computed at statutory rate (35%)		$40,185			$218,859			$54,103			$24,540			$37,406			$57,538
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	6,643			23,650			5,219			2,887			1,621			6,403
Regulatory differences - utility plant items	7,299			3,013			2,383			2,201			3,703			12,167
Equity component of AFUDC	(4,979		)	(5,420		)	(1,083		)	(451		)	(1,987		)	(2,973		)
Amortization of investment tax credits	(1,201		)	(5,252		)	(160		)	(111		)	(900		)	(3,476		)
Flow-through / permanent differences	(4,062		)	2,460			431			(4,539		)	530			618
Non-taxable dividend income	—			(44,658		)	—			—			—			—
Provision for uncertain tax positions (b)	(3,978		)	(15,377		)	756			525			(3,365		)	(17,313		)
Other - net	634			1,396			223			138			242			113
Total income taxes as reported		$40,541			$178,671			$61,872			$25,190			$37,250			$53,077
Effective Income Tax Rate	35.3		%	28.6		%	40.0		%	35.9		%	34.9		%	32.3		%

2014	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Net income		$121,392			$446,022			$74,821			$31,030			$74,804			$96,334
Income taxes	83,629			185,052			55,710			13,450			49,644			83,310
Pretax income		$205,021			$631,074			$130,531			$44,480			$124,448			$179,644
Computed at statutory rate (35%)		$71,757			$220,876			$45,686			$15,568			$43,557			$62,875
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	9,591			11,666			5,180			1,562			3,221			6,877
Regulatory differences - utility plant items	8,653			7,487			4,448			777			4,165			13,791
Equity component of AFUDC	(2,533		)	(14,612		)	(833		)	(320		)	(1,035		)	(1,774		)
Amortization of investment tax credits	(1,251		)	(5,594		)	(260		)	(218		)	(1,412		)	(3,476		)
Flow-through / permanent differences	(5,082		)	(225		)	555			(4,458		)	393			(327		)
Non-taxable dividend income	—			(41,255		)	—			—			—			—
Provision for uncertain tax positions	1,881			5,336			718			405			522			5,235
Other - net	613			1,373			216			134			233			109
Total income taxes as reported		$83,629			$185,052			$55,710			$13,450			$49,644			$83,310
Effective Income Tax Rate	40.8		%	29.3		%	42.7		%	30.2		%	39.9		%	46.4		%

(a) See “Income Tax Audits- 2010-2011 IRS Audit” below for discussion of the most significant items for Entergy Louisiana.

(b) See “Income Tax Audits- 2008-2009 IRS Audit” below for discussion of the most significant items for Entergy Louisiana and System Energy.

Significant components of accumulated deferred income taxes and taxes accrued for Entergy Corporation and Subsidiaries as of December 31, 2016 and 2015 are as follows:

	2016			2015
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($6,362,905	)		($6,804,225	)
Regulatory assets	(584,572		)	(646,392		)
Nuclear decommissioning trusts/receivables	(1,739,977		)	(1,254,463		)
Pension, net funding	(429,896		)	(365,111		)
Combined unitary state taxes	(33,063		)	(45,078		)
Power purchase agreements	(993		)	—
Other	(251,719		)	(315,844		)
Total	(9,403,125		)	(9,431,113		)
Deferred tax assets:
Nuclear decommissioning liabilities	1,399,468			828,983
Regulatory liabilities	255,272			284,432
Pension and other post-employment benefits	539,456			525,524
Sale and leaseback	135,866			139,720
Compensation	99,300			69,432
Accumulated deferred investment tax credit	92,375			95,248
Provision for allowances and contingencies	188,390			188,282
Power purchase agreements	—			38,401
Net operating loss carryforwards	334,025			360,188
Capital losses and miscellaneous tax credits	18,470			11,075
Valuation allowance	(104,277		)	(91,532		)
Other	59,079			68,204
Total	3,017,424			2,517,957
Non-current accrued taxes (including unrecognized tax benefits)	(991,704		)	(1,338,806		)
Accumulated deferred income taxes and taxes accrued		($7,377,405	)		($8,251,962	)

Entergy’s estimated tax attributes carryovers and their expiration dates as of December 31, 2016 are as follows:

Carryover Description	Carryover Amount	Year(s) of expiration
Federal net operating losses	$6.7 billion	2023-2036
State net operating losses	$7.8 billion	2017-2036
Miscellaneous federal and state credits	$89.9 million	2017-2036

As a result of the accounting for uncertain tax positions, the amount of the deferred tax assets reflected in the financial statements is less than the amount of the tax effect of the federal and state net operating loss carryovers, tax credit carryovers, and other tax attributes reflected on income tax returns. Because it is more likely than not that the benefit from certain state net operating loss carryovers will not be utilized, valuation allowances of $62 million as of December 31, 2016 and $46 million as of December 31, 2015 have been provided on the deferred tax assets relating to these state net operating loss carryovers. Additionally, valuation allowances totaling $42.3 million as of December 31, 2016 and $45.5 million as of December 31, 2015 have been provided on deferred tax assets related to federal and state jurisdictions in which Entergy does not currently expect to be able to utilize separate company tax return losses, preventing realization of such deferred tax assets.

Significant components of accumulated deferred income taxes and taxes accrued for the Registrant Subsidiaries as of December 31, 2016 and 2015 are as follows:

2016	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($1,857,554	)		($2,357,599	)		($820,971	)		($177,242	)		($835,671	)		($651,394	)
Regulatory assets	(109,241		)	(219,750		)	(25,309		)	(36,301		)	(153,914		)	(39,879		)
Nuclear decommissioning trusts/receivables	(144,250		)	(119,544		)	—			—			—			(83,891		)
Pension, net funding	(123,889		)	(122,465		)	(34,284		)	(16,307		)	(28,371		)	(29,357		)
Deferred fuel	(14,774		)	(1,778		)	(12,770		)	(5,229		)	(2,808		)	(1,137		)
Other	(47,785		)	(22,136		)	(12,474		)	(18,536		)	(8,812		)	(2,051		)
Total	(2,297,493		)	(2,843,272		)	(905,808		)	(253,615		)	(1,029,576		)	(807,709		)
Deferred tax assets:
Regulatory liabilities	5,768			175,973			18,833			25,240			15,814			13,644
Nuclear decommissioning liabilities	124,206			55,408			—			—			—			53,113
Pension and other post-employment benefits	(24,467		)	145,401			(8,042		)	(12,070		)	(19,096		)	(1,182		)
Sale and leaseback	—			33,383			—			—			—			102,483
Accumulated deferred investment tax credit	13,848			54,509			3,315			239			4,527			15,936
Provision for allowances and contingencies	(1,497		)	124,309			21,817			36,466			5,904			—
Power purchase agreements	(3,094		)	29,827			1,905			—			140			—
Unbilled/deferred revenues	6,799			(35,006		)	5,085			3,751			11,902			—
Compensation	2,787			5,309			1,492			685			1,587			360
Net operating loss carryforwards	69,524			17,125			—			—			—			—
Capital losses and miscellaneous tax credits	2,074			—			4,487			—			—			—
Other	174			17,110			1,152			496			2,955			—
Total	196,122			623,348			50,044			54,807			23,733			184,354
Non-current accrued taxes (including unrecognized tax benefits)	(85,252		)	(471,194		)	(5,567		)	(136,145		)	(21,804		)	(489,510		)
Accumulated deferred income taxes and taxes accrued		($2,186,623	)		($2,691,118	)		($861,331	)		($334,953	)		($1,027,647	)		($1,112,865	)

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($1,710,444	)		($2,041,968	)		($781,427	)		($167,294	)		($778,270	)		($611,745	)
Regulatory assets	(108,422		)	(254,316		)	(24,918		)	(39,451		)	(172,117		)	(46,990		)
Nuclear decommissioning trusts	(121,326		)	(99,980		)	—			—			—			(68,370		)
Pension, net funding	(107,073		)	(109,709		)	(30,901		)	(14,459		)	(28,001		)	(25,791		)
Deferred fuel	(7,647		)	(2,513		)	(684		)	(175		)	2,050			(18		)
Power purchase agreements	—			—			—			—			—			—
Other	(38,683		)	(86,275		)	(5,625		)	(12,253		)	(10,109		)	(22,478		)
Total	(2,093,595		)	(2,594,761		)	(843,555		)	(233,632		)	(986,447		)	(775,392		)
Deferred tax assets:
Regulatory liabilities	18,369			215,154			7,787			20,888			7,307			14,927
Nuclear decommissioning liabilities	109,962			49,333			—			—			—			39,420
Pension and other post-employment benefits	(20,420		)	149,680			(6,628		)	(8,939		)	(16,703		)	(1,037		)
Sale and leaseback	—			37,236			—			—			—			102,484
Accumulated deferred investment tax credit	14,320			56,635			1,777			290			4,842			17,385
Provision for allowances and contingencies	1,024			123,007			18,735			33,843			7,266			134
Power purchase agreements	(1,279		)	13,840			1,901			13			575			—
Unbilled/deferred revenues	9,815			(32,365		)	7,154			2,126			10,851			—
Compensation	1,842			4,182			601			880			4,496			—
Net operating loss carryforwards	—			90,241			—			—			—			—
Other	128			21,982			1,995			316			1,672			—
Total	133,761			728,925			33,322			49,417			20,306			173,313
Non-current accrued taxes (including unrecognized tax benefits)	(22,978		)	(641,120		)	(402		)	(29,846		)	(40,693		)	(416,996		)
Accumulated deferred income taxes and taxes accrued		($1,982,812	)		($2,506,956	)		($810,635	)		($214,061	)		($1,006,834	)		($1,019,075	)

The Registrant Subsidiaries’ estimated tax attributes carryovers and their expiration dates as of December 31, 2016 are as follows:

	Entergy Arkansas	Entergy Louisiana	Entergy Mississippi	Entergy New Orleans	Entergy Texas	System Energy
Federal net operating losses	$184 million	$4.4 billion	—	$34 million	—	$201 million
Year(s) of expiration	2028-2036	2036	N/A	2028-2036	N/A	2028-2036
State net operating losses	$80 million	$4.8 billion	—	$285 million	—	$175 million
Year(s) of expiration	2021	2029-2036	N/A	2032-2035	N/A	2035
Misc. federal credits	$2 million	—	$3 million	—	—	$2 million
Year(s) of expiration	2029-2036	N/A	2029-2036	N/A	N/A	2029-2036
State credits	—	—	$4.5 million	—	$3.4 million	$8.4 million
Year(s) of expiration	N/A	N/A	2018-2020	N/A	2026	2017-2020

As a result of the accounting for uncertain tax positions, the amount of the deferred tax assets reflected in the financial statements is less than the amount of the tax effect of the federal and state net operating loss carryovers and tax credit carryovers.

Unrecognized tax benefits

Accounting standards establish a “more-likely-than-not” recognition threshold that must be met before a tax benefit can be recognized in the financial statements.  If a tax deduction is taken on a tax return, but does not meet the more-likely-than-not recognition threshold, an increase in income tax liability, above what is payable on the tax return, is required to be recorded.  A reconciliation of Entergy’s beginning and ending amount of unrecognized tax benefits is as follows:

	2016			2015			2014
	(In Thousands)
Gross balance at January 1		$2,611,585			$4,736,785			$4,593,224
Additions based on tax positions related to the current year	1,532,782			1,850,705			348,543
Additions for tax positions of prior years	368,404			59,815			11,637
Reductions for tax positions of prior years (a)	(265,653		)	(3,966,535		)	(213,401		)
Settlements	(337,263		)	(68,227		)	—
Lapse of statute of limitations	—			(958		)	(3,218		)
Gross balance at December 31	3,909,855			2,611,585			4,736,785
Offsets to gross unrecognized tax benefits:
Carryovers and refund claims	(2,922,085		)	(1,264,483		)	(4,295,643		)
Cash paid to taxing authorities	(10,000		)	—			—
Unrecognized tax benefits net of unused tax attributes, refund claims and payments (b)		$977,770			$1,347,102			$441,142

(a) The primary reduction for 2015 is related to the nuclear decommissioning costs treatment discussed in “Income Tax Audits - 2008-2009 IRS Audit” below.

(b) Potential tax liability above what is payable on tax returns

The balances of unrecognized tax benefits include $1,240 million, $955 million, and $516 million as of December 31, 2016, 2015, and 2014, respectively, which, if recognized, would lower the effective income tax rates.  Because of the effect of deferred tax accounting, the remaining balances of unrecognized tax benefits of $2,670 million, $1,657 million, and $4,221 million as of December 31, 2016, 2015, and 2014, respectively, if disallowed, would not affect the annual effective income tax rate but would accelerate the payment of cash to the taxing authority to an earlier period.

Entergy accrues interest expense, if any, related to unrecognized tax benefits in income tax expense.  Entergy’s December 31, 2016, 2015, and 2014 accrued balance for the possible payment of interest is approximately $30 million, $27 million, and $127 million, respectively.

A reconciliation of the Registrant Subsidiaries’ beginning and ending amount of unrecognized tax benefits for 2016, 2015, and 2014 is as follows:

2016	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Gross balance at January 1, 2016		$25,445			$1,690,661			$19,482			$53,897			$13,462			$478,318
Additions based on tax positions related to the current year (a)	16,868			931,720			2,662			33,912			2,002			5,318
Additions for tax positions of prior years	2,463			157,586			336			129,784			2,888			601
Reductions for tax positions of prior years	(41,957		)	(144,068		)	(10,219		)	(29,821		)	(1,849		)	(10,266		)
Settlements	(316		)	(195,560		)	(55		)	(21,542		)	(557		)	(1,599		)
Gross balance at December 31, 2016	2,503			2,440,339			12,206			166,230			15,946			472,372
Offsets to gross unrecognized tax benefits:
Loss carryovers	—			(1,783,093		)	(2,373		)	(27,320		)	(376		)	(90,028		)
Unrecognized tax benefits net of unused tax attributes and payments		$2,503			$657,246			$9,833			$138,910			$15,570			$382,344

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Gross balance at January 1, 2015		$362,912			$1,205,929			$20,144			$53,763			$17,264			$258,242
Additions based on tax positions related to the current year (b)	2,196			1,367,058			566			472			657			472,304
Additions for tax positions of prior years	1,057			7,992			8,140			48			2,914			913
Reductions for tax positions of prior years	(340,720		)	(859,430		)	—			(386		)	(3,981		)	(253,141		)
Settlements	—			(30,888		)	(9,368		)	—			(3,392		)	—
Gross balance at December 31, 2015	25,445			1,690,661			19,482			53,897			13,462			478,318
Offsets to gross unrecognized tax benefits:
Loss carryovers	(3,613		)	(893,764		)	(1,016		)	(506		)	(276		)	(133,611		)
Unrecognized tax benefits net of unused tax attributes and payments		$21,832			$796,897			$18,466			$53,391			$13,186			$344,707

2014	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Gross balance at January 1, 2014		$347,713			$1,076,680			$16,186			$51,679			$13,017			$265,185
Additions based on tax positions related to the current year	14,511			151,249			3,928			2,235			4,225			2,744
Additions for tax positions of prior years	1,767			6,924			319			37			303			566
Reductions for tax positions of prior years	(1,079		)	(28,924		)	(289		)	(188		)	(267		)	(10,253		)
Settlements	—			—			—			—			(14		)	—
Gross balance at December 31, 2014	362,912			1,205,929			20,144			53,763			17,264			258,242
Offsets to gross unrecognized tax benefits:
Loss carryovers	(361,043		)	(739,988		)	(6,992		)	(20,735		)	(241		)	(163,124		)
Unrecognized tax benefits net of unused tax attributes and payments		$1,869			$465,941			$13,152			$33,028			$17,023			$95,118

(a) The primary addition for Entergy Louisiana is related to the mark-to market treatment discussed in “Other Tax Matters” below.

(b) The primary addition for Entergy Louisiana and System Energy is related to the nuclear decommissioning costs treatment discussed in “Other Tax Matters” below.

The Registrant Subsidiaries’ balances of unrecognized tax benefits included amounts which, if recognized, would have reduced income tax expense as follows:

	December 31,
	2016		2015		2014
	(In Millions)
Entergy Arkansas		$3.6		$4.5		$2.6
Entergy Louisiana		$473.3		$692.7		$267.3
Entergy Mississippi		$—		$8.1		$3.9
Entergy New Orleans		$33.6		$50.7		$50.7
Entergy Texas		$7.0		$5.2		$10.5
System Energy		$—		$0.7		$3.7

The Registrant Subsidiaries accrue interest and penalties related to unrecognized tax benefits in income tax expense.  Penalties have not been accrued.  Accrued balances for the possible payment of interest are as follows:

	December 31,
	2016		2015		2014
	(In Millions)
Entergy Arkansas		$1.4		$1.3		$17.0
Entergy Louisiana		$8.4		$9.3		$22.2
Entergy Mississippi		$0.8		$0.4		$2.8
Entergy New Orleans		$1.5		$1.8		$1.3
Entergy Texas		$1.2		$1.2		$1.0
System Energy		$3.7		$0.7		$23.8

Income Tax Audits

Entergy and its subsidiaries file U.S. federal and various state and foreign income tax returns.  IRS examinations are complete for years before 2012. All state taxing authorities’ examinations are completed for years before 2009.

2006-2007 IRS Audit

In the first quarter 2015, the IRS finalized tax and interest computations from the 2006-2007 audit that resulted in a reversal of Entergy’s provision for uncertain tax positions related to accrued interest of approximately $20 million, including decreases of approximately $4 million for Entergy Arkansas, $11 million for Entergy Louisiana, and $1 million for System Energy.

2008-2009 IRS Audit

In the fourth quarter 2009, Entergy filed Applications for Change in Accounting Method (the “2009 CAM”) for tax purposes with the IRS for certain costs under Section 263A of the Internal Revenue Code.  In the Applications, Entergy proposed to treat the nuclear decommissioning liability associated with the operation of its nuclear power plants as a production cost properly includable in cost of goods sold.  The effect of the 2009 CAM was a $5.7 billion reduction in 2009 taxable income.  The 2009 CAM was adjusted to $9.3 billion in 2012.

In the fourth quarter 2012 the IRS disallowed the reduction to 2009 taxable income related to the 2009 CAM.  In the third quarter 2013, the Internal Revenue Service issued its RAR for the tax years 2008-2009. As a result of the issuance of this RAR, Entergy and the IRS resolved all of the 2008-2009 issues described above except for the 2009 CAM. Entergy disagreed with the IRS’s disallowance of the 2009 CAM and filed a protest with the IRS Appeals Division in October 2013.

In August 2015, Entergy and the IRS agreed on the treatment of the 2009 position regarding nuclear decommissioning liabilities from the 2008-2009 audit. The agreement provides that Entergy is entitled to deduct approximately $118 million of the $9.3 billion claimed in 2009. The agreement effectively settled all matters pertaining to the 2009 tax year and increased Entergy’s 2009 federal income tax liability by $2.4 million.

2010-2011 IRS Audit

The IRS completed its examination of the 2010 and 2011 tax years and issued its 2010-2011 Revenue Agent Report (RAR) in June 2016. Entergy agreed to all proposed adjustments contained in the RAR. As a result of the issuance of the RAR, Entergy Louisiana was able to recognize previously unrecognized tax benefits as follows:

• Entergy and the IRS agreed that $148.6 million of the proceeds received by Entergy Louisiana in 2010 from the Louisiana Utilities Restoration Corporation (LURC), an instrumentality of the State of Louisiana, for the financing of Hurricane Gustav and Hurricane Ike storm costs pursuant to Act 55 of the Louisiana Regular Session of 2007 (Louisiana Act 55) were not taxable. Because the treatment of the financing is settled, Entergy recognized previously unrecognized tax benefits totaling $63.5 million, of which Entergy Louisiana recorded $61.6 million. Entergy Louisiana also accrued a regulatory liability of $16.1 million ($9.9 million net-of-tax) in accordance with the terms of Entergy Louisiana’s previous settlement agreement approved by the LPSC regarding Entergy Louisiana’s obligation to pay to customers savings associated with the Act 55 financing.

• Entergy and the IRS agreed upon the tax treatment of Entergy Louisiana’s regulatory liability related to the Vidalia purchased power agreement. As a result, Entergy Louisiana recognized a previously unrecognized tax benefit of $74.5 million.

Other Tax Matters

Entergy regularly negotiates with the IRS to achieve settlements.  The resolution of audit issues could result in significant changes to the amounts of unrecognized tax benefits in the next twelve months.

In October 2015 two of Entergy’s Louisiana utilities, Entergy Gulf States Louisiana and Entergy Louisiana, combined their businesses into a legal entity which is identified as Entergy Louisiana herein. The structure of the business combination generated both a permanent difference and a temporary difference under FASB ASC Topic 740. The permanent difference resulted from recognition of the Waterford 3 and River Bend decommissioning liabilities as part of the business combination. Recognition of such decommissioning liabilities required Entergy to also recognize a taxable gain. The taxable gain resulted in a temporary difference because the gain provided for an increase in tax basis. Entergy Louisiana maintained a carryover tax basis in the assets received; and, to the extent that the increase in tax basis will provide additional tax depreciation, Entergy recorded a deferred tax asset. Entergy Louisiana obtained the corresponding deferred tax asset in the business combination. The permanent tax benefit net of ancillary tax charges was approximately $334 million. Consistent with the terms of the stipulated settlement in the business combination proceeding, electric customers of Entergy Louisiana will realize customer credits associated with the business combination. Accordingly, in October 2015, Entergy recorded a regulatory liability of $107 million ($66 million net-of-tax) which partially offsets the effect of the aforementioned deferred tax asset. The deferred tax asset and the regulatory liability, net-of-tax, increased Entergy Louisiana’s member’s equity by $268 million. See Note 2 to the financial statements for further discussion of the business combination.

In the fourth quarter 2015, System Energy and Entergy Louisiana adopted a new method of accounting for income tax return purposes in which the companies’ nuclear decommissioning costs will be treated as production costs of electricity includable in cost of goods sold. The new method results in a reduction of taxable income of $1.2 billion for System Energy and $2.2 billion for Entergy Louisiana.

The Protecting Americans from Tax Hikes Act of 2015 was enacted in December 2015. The most significant provisions affecting Entergy and the Registrant Subsidiaries were a five-year extension of bonus depreciation and permanent extension of the research and experimentation tax credit. The effect of the bonus depreciation extension on 2015 increased Entergy’s tax net operating loss.

Entergy made a tax election to treat its subsidiary that owns one of the Entergy Wholesale Commodities nuclear power plants as a corporation for federal income tax purposes in the second quarter 2016. This resulted in a constructive contribution of all the assets and liabilities associated with the plant to a new subsidiary corporation for federal income tax purposes, and generated both permanent and temporary differences under the income tax accounting standards. The constructive contribution required Entergy to recognize the plant’s nuclear decommissioning liability for income tax purposes resulting in permanent differences. The accrual of the nuclear decommissioning liability required Entergy to recognize a gain for income tax purposes, a significant portion of which resulted in an increase in tax basis of the assets constructively contributed to the subsidiary. Recognition of the gain and the increase in tax basis of the assets represents a temporary difference. The permanent difference reduced income tax expense, net of unrecognized tax benefits, by $238 million.

In 2016, Entergy Louisiana elected mark-to-market income tax treatment for various wholesale electric power purchase and sale agreements, including Entergy Louisiana’s contract to purchase electricity from the Vidalia hydroelectric facility and from System Energy under the Unit Power Sales Agreement. The election resulted in a $2.2 billion deductible temporary difference.

Entergy Texas [Member]

Income Taxes

INCOME TAXES (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

Income taxes for 2016, 2015, and 2014 for Entergy Corporation and Subsidiaries consist of the following:

	2016			2015			2014
	(In Thousands)
Current:
Federal		$45,249			$77,166			$90,061
Foreign	68			97			90
State	(14,960		)	157,829			(12,637		)
Total	30,357			235,092			77,514
Deferred and non-current - net	(840,465		)	(864,799		)	528,326
Investment tax credit adjustments - net	(7,151		)	(13,220		)	(16,243		)
Income taxes		($817,259	)		($642,927	)		$589,597

Income taxes for 2016, 2015, and 2014 for Entergy’s Registrant Subsidiaries consist of the following:

2016	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi		Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Current:
Federal		($14,748	)		($124,113	)		$10,603		($91,067	)		$19,656			$29,628
State	2,805			10,757			2,257		566			1,374			(25,825		)
Total	(11,943		)	(113,356		)	12,860		(90,501		)	21,030			3,803
Deferred and non-current - net	120,942			208,157			46,984		119,345			42,982			71,051
Investment tax credit adjustments - net	(1,226		)	(5,067		)	4,010		(139		)	(915		)	(3,793		)
Income taxes		$107,773			$89,734			$63,854		$28,705			$63,097			$71,061

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Current:
Federal		$66,966			$101,382			$25,628			($9,346	)		$53,313			($63,302	)
State	6,265			35,406			6,832			1,784			2,450			26,755
Total	73,231			136,788			32,460			(7,562		)	55,763			(36,547		)
Deferred and non-current - net	(31,463		)	47,220			31,149			32,890			(17,599		)	93,491
Investment tax credit adjustments - net	(1,227		)	(5,337		)	(1,737		)	(138		)	(914		)	(3,867		)
Income taxes		$40,541			$178,671			$61,872			$25,190			$37,250			$53,077

2014	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Current:
Federal		($34,258	)		($44,909	)		$8,103			($1,428	)		$48,610			$19,908
State	(678		)	(1,191		)	7,474			510			4,877			15,379
Total	(34,936		)	(46,100		)	15,577			(918		)	53,487			35,287
Deferred and non-current - net	119,841			236,794			42,305			14,592			(2,418		)	53,501
Investment tax credit adjustments - net	(1,276		)	(5,642		)	(2,172		)	(224		)	(1,425		)	(5,478		)
Income taxes		$83,629			$185,052			$55,710			$13,450			$49,644			$83,310

Total income taxes for Entergy Corporation and Subsidiaries differ from the amounts computed by applying the statutory income tax rate to income before income taxes.  The reasons for the differences for the years 2016, 2015, and 2014 are:

	2016			2015			2014
	(In Thousands)
Net income (loss) attributable to Entergy Corporation		($583,618	)		($176,562	)		$940,721
Preferred dividend requirements of subsidiaries	19,115			19,828			19,536
Consolidated net income (loss)	(564,503		)	(156,734		)	960,257
Income taxes	(817,259		)	(642,927		)	589,597
Income (loss) before income taxes		($1,381,762	)		($799,661	)		$1,549,854
Computed at statutory rate (35%)		($483,617	)		($279,881	)		$542,449
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	40,581			29,944			44,708
Regulatory differences - utility plant items	33,581			32,089			39,321
Equity component of AFUDC	(23,647		)	(18,191		)	(21,108		)
Amortization of investment tax credits	(10,889		)	(11,136		)	(12,211		)
Flow-through / permanent differences	(19,307		)	(7,872		)	(18,003		)
New York tax law change (a)	—			—			(21,500		)
Louisiana business combination	—			(333,655		)	—
Entergy Wholesale Commodities restructuring (b)	(237,760		)	—			—
Act 55 financing settlement (d)	(63,477		)	—			—
Provision for uncertain tax positions (c) (d)	(67,119		)	(56,683		)	32,573
Valuation allowance	11,411			—			—
Other - net	2,984			2,458			3,368
Total income taxes as reported		($817,259	)		($642,927	)		$589,597
Effective Income Tax Rate	59.1		%	80.4		%	38.0		%

(a) In March 2014, New York enacted legislation that substantially modified various aspects of New York tax law. The most significant effect of the legislation for Entergy was the adoption of full water’s-edge unitary combined reporting, meaning that all of Entergy’s domestic entities will be included in New York’s combined filing group. The effect of the tax law change resulted in a deferred state income tax reduction of approximately $21.5 million as shown in the table above.

(b) See “Other Tax Matters” below for discussion of the Entergy Wholesale Commodities restructuring.

(c) See “Income Tax Audits- 2008-2009 IRS Audit” below for discussion of the most significant items for 2015.

(d) See “Income Tax Audits- 2010-2011 IRS Audit” below for discussion of the most significant items for 2016.

Total income taxes for the Registrant Subsidiaries differ from the amounts computed by applying the statutory income tax rate to income before taxes.  The reasons for the differences for the years 2016, 2015, and 2014 are:

2016	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Net income		$167,212			$622,047			$109,184			$48,849			$107,538			$96,744
Income taxes	107,773			89,734			63,854			28,705			63,097			71,061
Pretax income		$274,985			$711,781			$173,038			$77,554			$170,635			$167,805
Computed at statutory rate (35%)		$96,245			$249,123			$60,563			$27,144			$59,722			$58,732
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	11,652			29,014			5,592			3,543			449			7,001
Regulatory differences - utility plant items	10,971			8,094			(1,154		)	2,329			4,140			9,201
Equity component of AFUDC	(5,985		)	(9,774		)	(2,030		)	(412		)	(2,666		)	(2,780		)
Amortization of investment tax credits	(1,201		)	(5,019		)	(160		)	(132		)	(900		)	(3,476		)
Flow-through / permanent differences	(3,848		)	(980		)	764			(3,609		)	634			(883		)
Act 55 financing settlement (a)	—			(61,620		)	—			—			(454		)	—
Non-taxable dividend income	—			(44,658		)	—			—			—			—
Provision for uncertain tax positions (a)	(717		)	(75,871		)	50			(300		)	1,926			3,151
Other - net	656			1,425			229			142			246			115
Total income taxes as reported		$107,773			$89,734			$63,854			$28,705			$63,097			$71,061
Effective Income Tax Rate	39.2		%	12.6		%	36.9		%	37.0		%	37.0		%	42.3		%

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Net income		$74,272			$446,639			$92,708			$44,925			$69,625			$111,318
Income taxes	40,541			178,671			61,872			25,190			37,250			53,077
Pretax income		$114,813			$625,310			$154,580			$70,115			$106,875			$164,395
Computed at statutory rate (35%)		$40,185			$218,859			$54,103			$24,540			$37,406			$57,538
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	6,643			23,650			5,219			2,887			1,621			6,403
Regulatory differences - utility plant items	7,299			3,013			2,383			2,201			3,703			12,167
Equity component of AFUDC	(4,979		)	(5,420		)	(1,083		)	(451		)	(1,987		)	(2,973		)
Amortization of investment tax credits	(1,201		)	(5,252		)	(160		)	(111		)	(900		)	(3,476		)
Flow-through / permanent differences	(4,062		)	2,460			431			(4,539		)	530			618
Non-taxable dividend income	—			(44,658		)	—			—			—			—
Provision for uncertain tax positions (b)	(3,978		)	(15,377		)	756			525			(3,365		)	(17,313		)
Other - net	634			1,396			223			138			242			113
Total income taxes as reported		$40,541			$178,671			$61,872			$25,190			$37,250			$53,077
Effective Income Tax Rate	35.3		%	28.6		%	40.0		%	35.9		%	34.9		%	32.3		%

2014	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Net income		$121,392			$446,022			$74,821			$31,030			$74,804			$96,334
Income taxes	83,629			185,052			55,710			13,450			49,644			83,310
Pretax income		$205,021			$631,074			$130,531			$44,480			$124,448			$179,644
Computed at statutory rate (35%)		$71,757			$220,876			$45,686			$15,568			$43,557			$62,875
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	9,591			11,666			5,180			1,562			3,221			6,877
Regulatory differences - utility plant items	8,653			7,487			4,448			777			4,165			13,791
Equity component of AFUDC	(2,533		)	(14,612		)	(833		)	(320		)	(1,035		)	(1,774		)
Amortization of investment tax credits	(1,251		)	(5,594		)	(260		)	(218		)	(1,412		)	(3,476		)
Flow-through / permanent differences	(5,082		)	(225		)	555			(4,458		)	393			(327		)
Non-taxable dividend income	—			(41,255		)	—			—			—			—
Provision for uncertain tax positions	1,881			5,336			718			405			522			5,235
Other - net	613			1,373			216			134			233			109
Total income taxes as reported		$83,629			$185,052			$55,710			$13,450			$49,644			$83,310
Effective Income Tax Rate	40.8		%	29.3		%	42.7		%	30.2		%	39.9		%	46.4		%

(a) See “Income Tax Audits- 2010-2011 IRS Audit” below for discussion of the most significant items for Entergy Louisiana.

(b) See “Income Tax Audits- 2008-2009 IRS Audit” below for discussion of the most significant items for Entergy Louisiana and System Energy.

Significant components of accumulated deferred income taxes and taxes accrued for Entergy Corporation and Subsidiaries as of December 31, 2016 and 2015 are as follows:

	2016			2015
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($6,362,905	)		($6,804,225	)
Regulatory assets	(584,572		)	(646,392		)
Nuclear decommissioning trusts/receivables	(1,739,977		)	(1,254,463		)
Pension, net funding	(429,896		)	(365,111		)
Combined unitary state taxes	(33,063		)	(45,078		)
Power purchase agreements	(993		)	—
Other	(251,719		)	(315,844		)
Total	(9,403,125		)	(9,431,113		)
Deferred tax assets:
Nuclear decommissioning liabilities	1,399,468			828,983
Regulatory liabilities	255,272			284,432
Pension and other post-employment benefits	539,456			525,524
Sale and leaseback	135,866			139,720
Compensation	99,300			69,432
Accumulated deferred investment tax credit	92,375			95,248
Provision for allowances and contingencies	188,390			188,282
Power purchase agreements	—			38,401
Net operating loss carryforwards	334,025			360,188
Capital losses and miscellaneous tax credits	18,470			11,075
Valuation allowance	(104,277		)	(91,532		)
Other	59,079			68,204
Total	3,017,424			2,517,957
Non-current accrued taxes (including unrecognized tax benefits)	(991,704		)	(1,338,806		)
Accumulated deferred income taxes and taxes accrued		($7,377,405	)		($8,251,962	)

Entergy’s estimated tax attributes carryovers and their expiration dates as of December 31, 2016 are as follows:

Carryover Description	Carryover Amount	Year(s) of expiration
Federal net operating losses	$6.7 billion	2023-2036
State net operating losses	$7.8 billion	2017-2036
Miscellaneous federal and state credits	$89.9 million	2017-2036

As a result of the accounting for uncertain tax positions, the amount of the deferred tax assets reflected in the financial statements is less than the amount of the tax effect of the federal and state net operating loss carryovers, tax credit carryovers, and other tax attributes reflected on income tax returns. Because it is more likely than not that the benefit from certain state net operating loss carryovers will not be utilized, valuation allowances of $62 million as of December 31, 2016 and $46 million as of December 31, 2015 have been provided on the deferred tax assets relating to these state net operating loss carryovers. Additionally, valuation allowances totaling $42.3 million as of December 31, 2016 and $45.5 million as of December 31, 2015 have been provided on deferred tax assets related to federal and state jurisdictions in which Entergy does not currently expect to be able to utilize separate company tax return losses, preventing realization of such deferred tax assets.

Significant components of accumulated deferred income taxes and taxes accrued for the Registrant Subsidiaries as of December 31, 2016 and 2015 are as follows:

2016	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($1,857,554	)		($2,357,599	)		($820,971	)		($177,242	)		($835,671	)		($651,394	)
Regulatory assets	(109,241		)	(219,750		)	(25,309		)	(36,301		)	(153,914		)	(39,879		)
Nuclear decommissioning trusts/receivables	(144,250		)	(119,544		)	—			—			—			(83,891		)
Pension, net funding	(123,889		)	(122,465		)	(34,284		)	(16,307		)	(28,371		)	(29,357		)
Deferred fuel	(14,774		)	(1,778		)	(12,770		)	(5,229		)	(2,808		)	(1,137		)
Other	(47,785		)	(22,136		)	(12,474		)	(18,536		)	(8,812		)	(2,051		)
Total	(2,297,493		)	(2,843,272		)	(905,808		)	(253,615		)	(1,029,576		)	(807,709		)
Deferred tax assets:
Regulatory liabilities	5,768			175,973			18,833			25,240			15,814			13,644
Nuclear decommissioning liabilities	124,206			55,408			—			—			—			53,113
Pension and other post-employment benefits	(24,467		)	145,401			(8,042		)	(12,070		)	(19,096		)	(1,182		)
Sale and leaseback	—			33,383			—			—			—			102,483
Accumulated deferred investment tax credit	13,848			54,509			3,315			239			4,527			15,936
Provision for allowances and contingencies	(1,497		)	124,309			21,817			36,466			5,904			—
Power purchase agreements	(3,094		)	29,827			1,905			—			140			—
Unbilled/deferred revenues	6,799			(35,006		)	5,085			3,751			11,902			—
Compensation	2,787			5,309			1,492			685			1,587			360
Net operating loss carryforwards	69,524			17,125			—			—			—			—
Capital losses and miscellaneous tax credits	2,074			—			4,487			—			—			—
Other	174			17,110			1,152			496			2,955			—
Total	196,122			623,348			50,044			54,807			23,733			184,354
Non-current accrued taxes (including unrecognized tax benefits)	(85,252		)	(471,194		)	(5,567		)	(136,145		)	(21,804		)	(489,510		)
Accumulated deferred income taxes and taxes accrued		($2,186,623	)		($2,691,118	)		($861,331	)		($334,953	)		($1,027,647	)		($1,112,865	)

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($1,710,444	)		($2,041,968	)		($781,427	)		($167,294	)		($778,270	)		($611,745	)
Regulatory assets	(108,422		)	(254,316		)	(24,918		)	(39,451		)	(172,117		)	(46,990		)
Nuclear decommissioning trusts	(121,326		)	(99,980		)	—			—			—			(68,370		)
Pension, net funding	(107,073		)	(109,709		)	(30,901		)	(14,459		)	(28,001		)	(25,791		)
Deferred fuel	(7,647		)	(2,513		)	(684		)	(175		)	2,050			(18		)
Power purchase agreements	—			—			—			—			—			—
Other	(38,683		)	(86,275		)	(5,625		)	(12,253		)	(10,109		)	(22,478		)
Total	(2,093,595		)	(2,594,761		)	(843,555		)	(233,632		)	(986,447		)	(775,392		)
Deferred tax assets:
Regulatory liabilities	18,369			215,154			7,787			20,888			7,307			14,927
Nuclear decommissioning liabilities	109,962			49,333			—			—			—			39,420
Pension and other post-employment benefits	(20,420		)	149,680			(6,628		)	(8,939		)	(16,703		)	(1,037		)
Sale and leaseback	—			37,236			—			—			—			102,484
Accumulated deferred investment tax credit	14,320			56,635			1,777			290			4,842			17,385
Provision for allowances and contingencies	1,024			123,007			18,735			33,843			7,266			134
Power purchase agreements	(1,279		)	13,840			1,901			13			575			—
Unbilled/deferred revenues	9,815			(32,365		)	7,154			2,126			10,851			—
Compensation	1,842			4,182			601			880			4,496			—
Net operating loss carryforwards	—			90,241			—			—			—			—
Other	128			21,982			1,995			316			1,672			—
Total	133,761			728,925			33,322			49,417			20,306			173,313
Non-current accrued taxes (including unrecognized tax benefits)	(22,978		)	(641,120		)	(402		)	(29,846		)	(40,693		)	(416,996		)
Accumulated deferred income taxes and taxes accrued		($1,982,812	)		($2,506,956	)		($810,635	)		($214,061	)		($1,006,834	)		($1,019,075	)

The Registrant Subsidiaries’ estimated tax attributes carryovers and their expiration dates as of December 31, 2016 are as follows:

	Entergy Arkansas	Entergy Louisiana	Entergy Mississippi	Entergy New Orleans	Entergy Texas	System Energy
Federal net operating losses	$184 million	$4.4 billion	—	$34 million	—	$201 million
Year(s) of expiration	2028-2036	2036	N/A	2028-2036	N/A	2028-2036
State net operating losses	$80 million	$4.8 billion	—	$285 million	—	$175 million
Year(s) of expiration	2021	2029-2036	N/A	2032-2035	N/A	2035
Misc. federal credits	$2 million	—	$3 million	—	—	$2 million
Year(s) of expiration	2029-2036	N/A	2029-2036	N/A	N/A	2029-2036
State credits	—	—	$4.5 million	—	$3.4 million	$8.4 million
Year(s) of expiration	N/A	N/A	2018-2020	N/A	2026	2017-2020

As a result of the accounting for uncertain tax positions, the amount of the deferred tax assets reflected in the financial statements is less than the amount of the tax effect of the federal and state net operating loss carryovers and tax credit carryovers.

Unrecognized tax benefits

Accounting standards establish a “more-likely-than-not” recognition threshold that must be met before a tax benefit can be recognized in the financial statements.  If a tax deduction is taken on a tax return, but does not meet the more-likely-than-not recognition threshold, an increase in income tax liability, above what is payable on the tax return, is required to be recorded.  A reconciliation of Entergy’s beginning and ending amount of unrecognized tax benefits is as follows:

	2016			2015			2014
	(In Thousands)
Gross balance at January 1		$2,611,585			$4,736,785			$4,593,224
Additions based on tax positions related to the current year	1,532,782			1,850,705			348,543
Additions for tax positions of prior years	368,404			59,815			11,637
Reductions for tax positions of prior years (a)	(265,653		)	(3,966,535		)	(213,401		)
Settlements	(337,263		)	(68,227		)	—
Lapse of statute of limitations	—			(958		)	(3,218		)
Gross balance at December 31	3,909,855			2,611,585			4,736,785
Offsets to gross unrecognized tax benefits:
Carryovers and refund claims	(2,922,085		)	(1,264,483		)	(4,295,643		)
Cash paid to taxing authorities	(10,000		)	—			—
Unrecognized tax benefits net of unused tax attributes, refund claims and payments (b)		$977,770			$1,347,102			$441,142

(a) The primary reduction for 2015 is related to the nuclear decommissioning costs treatment discussed in “Income Tax Audits - 2008-2009 IRS Audit” below.

(b) Potential tax liability above what is payable on tax returns

The balances of unrecognized tax benefits include $1,240 million, $955 million, and $516 million as of December 31, 2016, 2015, and 2014, respectively, which, if recognized, would lower the effective income tax rates.  Because of the effect of deferred tax accounting, the remaining balances of unrecognized tax benefits of $2,670 million, $1,657 million, and $4,221 million as of December 31, 2016, 2015, and 2014, respectively, if disallowed, would not affect the annual effective income tax rate but would accelerate the payment of cash to the taxing authority to an earlier period.

Entergy accrues interest expense, if any, related to unrecognized tax benefits in income tax expense.  Entergy’s December 31, 2016, 2015, and 2014 accrued balance for the possible payment of interest is approximately $30 million, $27 million, and $127 million, respectively.

A reconciliation of the Registrant Subsidiaries’ beginning and ending amount of unrecognized tax benefits for 2016, 2015, and 2014 is as follows:

2016	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Gross balance at January 1, 2016		$25,445			$1,690,661			$19,482			$53,897			$13,462			$478,318
Additions based on tax positions related to the current year (a)	16,868			931,720			2,662			33,912			2,002			5,318
Additions for tax positions of prior years	2,463			157,586			336			129,784			2,888			601
Reductions for tax positions of prior years	(41,957		)	(144,068		)	(10,219		)	(29,821		)	(1,849		)	(10,266		)
Settlements	(316		)	(195,560		)	(55		)	(21,542		)	(557		)	(1,599		)
Gross balance at December 31, 2016	2,503			2,440,339			12,206			166,230			15,946			472,372
Offsets to gross unrecognized tax benefits:
Loss carryovers	—			(1,783,093		)	(2,373		)	(27,320		)	(376		)	(90,028		)
Unrecognized tax benefits net of unused tax attributes and payments		$2,503			$657,246			$9,833			$138,910			$15,570			$382,344

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Gross balance at January 1, 2015		$362,912			$1,205,929			$20,144			$53,763			$17,264			$258,242
Additions based on tax positions related to the current year (b)	2,196			1,367,058			566			472			657			472,304
Additions for tax positions of prior years	1,057			7,992			8,140			48			2,914			913
Reductions for tax positions of prior years	(340,720		)	(859,430		)	—			(386		)	(3,981		)	(253,141		)
Settlements	—			(30,888		)	(9,368		)	—			(3,392		)	—
Gross balance at December 31, 2015	25,445			1,690,661			19,482			53,897			13,462			478,318
Offsets to gross unrecognized tax benefits:
Loss carryovers	(3,613		)	(893,764		)	(1,016		)	(506		)	(276		)	(133,611		)
Unrecognized tax benefits net of unused tax attributes and payments		$21,832			$796,897			$18,466			$53,391			$13,186			$344,707

2014	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Gross balance at January 1, 2014		$347,713			$1,076,680			$16,186			$51,679			$13,017			$265,185
Additions based on tax positions related to the current year	14,511			151,249			3,928			2,235			4,225			2,744
Additions for tax positions of prior years	1,767			6,924			319			37			303			566
Reductions for tax positions of prior years	(1,079		)	(28,924		)	(289		)	(188		)	(267		)	(10,253		)
Settlements	—			—			—			—			(14		)	—
Gross balance at December 31, 2014	362,912			1,205,929			20,144			53,763			17,264			258,242
Offsets to gross unrecognized tax benefits:
Loss carryovers	(361,043		)	(739,988		)	(6,992		)	(20,735		)	(241		)	(163,124		)
Unrecognized tax benefits net of unused tax attributes and payments		$1,869			$465,941			$13,152			$33,028			$17,023			$95,118

(a) The primary addition for Entergy Louisiana is related to the mark-to market treatment discussed in “Other Tax Matters” below.

(b) The primary addition for Entergy Louisiana and System Energy is related to the nuclear decommissioning costs treatment discussed in “Other Tax Matters” below.

The Registrant Subsidiaries’ balances of unrecognized tax benefits included amounts which, if recognized, would have reduced income tax expense as follows:

	December 31,
	2016		2015		2014
	(In Millions)
Entergy Arkansas		$3.6		$4.5		$2.6
Entergy Louisiana		$473.3		$692.7		$267.3
Entergy Mississippi		$—		$8.1		$3.9
Entergy New Orleans		$33.6		$50.7		$50.7
Entergy Texas		$7.0		$5.2		$10.5
System Energy		$—		$0.7		$3.7

The Registrant Subsidiaries accrue interest and penalties related to unrecognized tax benefits in income tax expense.  Penalties have not been accrued.  Accrued balances for the possible payment of interest are as follows:

	December 31,
	2016		2015		2014
	(In Millions)
Entergy Arkansas		$1.4		$1.3		$17.0
Entergy Louisiana		$8.4		$9.3		$22.2
Entergy Mississippi		$0.8		$0.4		$2.8
Entergy New Orleans		$1.5		$1.8		$1.3
Entergy Texas		$1.2		$1.2		$1.0
System Energy		$3.7		$0.7		$23.8

Income Tax Audits

Entergy and its subsidiaries file U.S. federal and various state and foreign income tax returns.  IRS examinations are complete for years before 2012. All state taxing authorities’ examinations are completed for years before 2009.

2006-2007 IRS Audit

In the first quarter 2015, the IRS finalized tax and interest computations from the 2006-2007 audit that resulted in a reversal of Entergy’s provision for uncertain tax positions related to accrued interest of approximately $20 million, including decreases of approximately $4 million for Entergy Arkansas, $11 million for Entergy Louisiana, and $1 million for System Energy.

2008-2009 IRS Audit

In the fourth quarter 2009, Entergy filed Applications for Change in Accounting Method (the “2009 CAM”) for tax purposes with the IRS for certain costs under Section 263A of the Internal Revenue Code.  In the Applications, Entergy proposed to treat the nuclear decommissioning liability associated with the operation of its nuclear power plants as a production cost properly includable in cost of goods sold.  The effect of the 2009 CAM was a $5.7 billion reduction in 2009 taxable income.  The 2009 CAM was adjusted to $9.3 billion in 2012.

In the fourth quarter 2012 the IRS disallowed the reduction to 2009 taxable income related to the 2009 CAM.  In the third quarter 2013, the Internal Revenue Service issued its RAR for the tax years 2008-2009. As a result of the issuance of this RAR, Entergy and the IRS resolved all of the 2008-2009 issues described above except for the 2009 CAM. Entergy disagreed with the IRS’s disallowance of the 2009 CAM and filed a protest with the IRS Appeals Division in October 2013.

In August 2015, Entergy and the IRS agreed on the treatment of the 2009 position regarding nuclear decommissioning liabilities from the 2008-2009 audit. The agreement provides that Entergy is entitled to deduct approximately $118 million of the $9.3 billion claimed in 2009. The agreement effectively settled all matters pertaining to the 2009 tax year and increased Entergy’s 2009 federal income tax liability by $2.4 million.

2010-2011 IRS Audit

The IRS completed its examination of the 2010 and 2011 tax years and issued its 2010-2011 Revenue Agent Report (RAR) in June 2016. Entergy agreed to all proposed adjustments contained in the RAR. As a result of the issuance of the RAR, Entergy Louisiana was able to recognize previously unrecognized tax benefits as follows:

• Entergy and the IRS agreed that $148.6 million of the proceeds received by Entergy Louisiana in 2010 from the Louisiana Utilities Restoration Corporation (LURC), an instrumentality of the State of Louisiana, for the financing of Hurricane Gustav and Hurricane Ike storm costs pursuant to Act 55 of the Louisiana Regular Session of 2007 (Louisiana Act 55) were not taxable. Because the treatment of the financing is settled, Entergy recognized previously unrecognized tax benefits totaling $63.5 million, of which Entergy Louisiana recorded $61.6 million. Entergy Louisiana also accrued a regulatory liability of $16.1 million ($9.9 million net-of-tax) in accordance with the terms of Entergy Louisiana’s previous settlement agreement approved by the LPSC regarding Entergy Louisiana’s obligation to pay to customers savings associated with the Act 55 financing.

• Entergy and the IRS agreed upon the tax treatment of Entergy Louisiana’s regulatory liability related to the Vidalia purchased power agreement. As a result, Entergy Louisiana recognized a previously unrecognized tax benefit of $74.5 million.

Other Tax Matters

Entergy regularly negotiates with the IRS to achieve settlements.  The resolution of audit issues could result in significant changes to the amounts of unrecognized tax benefits in the next twelve months.

In October 2015 two of Entergy’s Louisiana utilities, Entergy Gulf States Louisiana and Entergy Louisiana, combined their businesses into a legal entity which is identified as Entergy Louisiana herein. The structure of the business combination generated both a permanent difference and a temporary difference under FASB ASC Topic 740. The permanent difference resulted from recognition of the Waterford 3 and River Bend decommissioning liabilities as part of the business combination. Recognition of such decommissioning liabilities required Entergy to also recognize a taxable gain. The taxable gain resulted in a temporary difference because the gain provided for an increase in tax basis. Entergy Louisiana maintained a carryover tax basis in the assets received; and, to the extent that the increase in tax basis will provide additional tax depreciation, Entergy recorded a deferred tax asset. Entergy Louisiana obtained the corresponding deferred tax asset in the business combination. The permanent tax benefit net of ancillary tax charges was approximately $334 million. Consistent with the terms of the stipulated settlement in the business combination proceeding, electric customers of Entergy Louisiana will realize customer credits associated with the business combination. Accordingly, in October 2015, Entergy recorded a regulatory liability of $107 million ($66 million net-of-tax) which partially offsets the effect of the aforementioned deferred tax asset. The deferred tax asset and the regulatory liability, net-of-tax, increased Entergy Louisiana’s member’s equity by $268 million. See Note 2 to the financial statements for further discussion of the business combination.

In the fourth quarter 2015, System Energy and Entergy Louisiana adopted a new method of accounting for income tax return purposes in which the companies’ nuclear decommissioning costs will be treated as production costs of electricity includable in cost of goods sold. The new method results in a reduction of taxable income of $1.2 billion for System Energy and $2.2 billion for Entergy Louisiana.

The Protecting Americans from Tax Hikes Act of 2015 was enacted in December 2015. The most significant provisions affecting Entergy and the Registrant Subsidiaries were a five-year extension of bonus depreciation and permanent extension of the research and experimentation tax credit. The effect of the bonus depreciation extension on 2015 increased Entergy’s tax net operating loss.

Entergy made a tax election to treat its subsidiary that owns one of the Entergy Wholesale Commodities nuclear power plants as a corporation for federal income tax purposes in the second quarter 2016. This resulted in a constructive contribution of all the assets and liabilities associated with the plant to a new subsidiary corporation for federal income tax purposes, and generated both permanent and temporary differences under the income tax accounting standards. The constructive contribution required Entergy to recognize the plant’s nuclear decommissioning liability for income tax purposes resulting in permanent differences. The accrual of the nuclear decommissioning liability required Entergy to recognize a gain for income tax purposes, a significant portion of which resulted in an increase in tax basis of the assets constructively contributed to the subsidiary. Recognition of the gain and the increase in tax basis of the assets represents a temporary difference. The permanent difference reduced income tax expense, net of unrecognized tax benefits, by $238 million.

In 2016, Entergy Louisiana elected mark-to-market income tax treatment for various wholesale electric power purchase and sale agreements, including Entergy Louisiana’s contract to purchase electricity from the Vidalia hydroelectric facility and from System Energy under the Unit Power Sales Agreement. The election resulted in a $2.2 billion deductible temporary difference.

System Energy [Member]

Income Taxes

INCOME TAXES (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

Income taxes for 2016, 2015, and 2014 for Entergy Corporation and Subsidiaries consist of the following:

	2016			2015			2014
	(In Thousands)
Current:
Federal		$45,249			$77,166			$90,061
Foreign	68			97			90
State	(14,960		)	157,829			(12,637		)
Total	30,357			235,092			77,514
Deferred and non-current - net	(840,465		)	(864,799		)	528,326
Investment tax credit adjustments - net	(7,151		)	(13,220		)	(16,243		)
Income taxes		($817,259	)		($642,927	)		$589,597

Income taxes for 2016, 2015, and 2014 for Entergy’s Registrant Subsidiaries consist of the following:

2016	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi		Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Current:
Federal		($14,748	)		($124,113	)		$10,603		($91,067	)		$19,656			$29,628
State	2,805			10,757			2,257		566			1,374			(25,825		)
Total	(11,943		)	(113,356		)	12,860		(90,501		)	21,030			3,803
Deferred and non-current - net	120,942			208,157			46,984		119,345			42,982			71,051
Investment tax credit adjustments - net	(1,226		)	(5,067		)	4,010		(139		)	(915		)	(3,793		)
Income taxes		$107,773			$89,734			$63,854		$28,705			$63,097			$71,061

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Current:
Federal		$66,966			$101,382			$25,628			($9,346	)		$53,313			($63,302	)
State	6,265			35,406			6,832			1,784			2,450			26,755
Total	73,231			136,788			32,460			(7,562		)	55,763			(36,547		)
Deferred and non-current - net	(31,463		)	47,220			31,149			32,890			(17,599		)	93,491
Investment tax credit adjustments - net	(1,227		)	(5,337		)	(1,737		)	(138		)	(914		)	(3,867		)
Income taxes		$40,541			$178,671			$61,872			$25,190			$37,250			$53,077

2014	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Current:
Federal		($34,258	)		($44,909	)		$8,103			($1,428	)		$48,610			$19,908
State	(678		)	(1,191		)	7,474			510			4,877			15,379
Total	(34,936		)	(46,100		)	15,577			(918		)	53,487			35,287
Deferred and non-current - net	119,841			236,794			42,305			14,592			(2,418		)	53,501
Investment tax credit adjustments - net	(1,276		)	(5,642		)	(2,172		)	(224		)	(1,425		)	(5,478		)
Income taxes		$83,629			$185,052			$55,710			$13,450			$49,644			$83,310

Total income taxes for Entergy Corporation and Subsidiaries differ from the amounts computed by applying the statutory income tax rate to income before income taxes.  The reasons for the differences for the years 2016, 2015, and 2014 are:

	2016			2015			2014
	(In Thousands)
Net income (loss) attributable to Entergy Corporation		($583,618	)		($176,562	)		$940,721
Preferred dividend requirements of subsidiaries	19,115			19,828			19,536
Consolidated net income (loss)	(564,503		)	(156,734		)	960,257
Income taxes	(817,259		)	(642,927		)	589,597
Income (loss) before income taxes		($1,381,762	)		($799,661	)		$1,549,854
Computed at statutory rate (35%)		($483,617	)		($279,881	)		$542,449
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	40,581			29,944			44,708
Regulatory differences - utility plant items	33,581			32,089			39,321
Equity component of AFUDC	(23,647		)	(18,191		)	(21,108		)
Amortization of investment tax credits	(10,889		)	(11,136		)	(12,211		)
Flow-through / permanent differences	(19,307		)	(7,872		)	(18,003		)
New York tax law change (a)	—			—			(21,500		)
Louisiana business combination	—			(333,655		)	—
Entergy Wholesale Commodities restructuring (b)	(237,760		)	—			—
Act 55 financing settlement (d)	(63,477		)	—			—
Provision for uncertain tax positions (c) (d)	(67,119		)	(56,683		)	32,573
Valuation allowance	11,411			—			—
Other - net	2,984			2,458			3,368
Total income taxes as reported		($817,259	)		($642,927	)		$589,597
Effective Income Tax Rate	59.1		%	80.4		%	38.0		%

(a) In March 2014, New York enacted legislation that substantially modified various aspects of New York tax law. The most significant effect of the legislation for Entergy was the adoption of full water’s-edge unitary combined reporting, meaning that all of Entergy’s domestic entities will be included in New York’s combined filing group. The effect of the tax law change resulted in a deferred state income tax reduction of approximately $21.5 million as shown in the table above.

(b) See “Other Tax Matters” below for discussion of the Entergy Wholesale Commodities restructuring.

(c) See “Income Tax Audits- 2008-2009 IRS Audit” below for discussion of the most significant items for 2015.

(d) See “Income Tax Audits- 2010-2011 IRS Audit” below for discussion of the most significant items for 2016.

Total income taxes for the Registrant Subsidiaries differ from the amounts computed by applying the statutory income tax rate to income before taxes.  The reasons for the differences for the years 2016, 2015, and 2014 are:

2016	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Net income		$167,212			$622,047			$109,184			$48,849			$107,538			$96,744
Income taxes	107,773			89,734			63,854			28,705			63,097			71,061
Pretax income		$274,985			$711,781			$173,038			$77,554			$170,635			$167,805
Computed at statutory rate (35%)		$96,245			$249,123			$60,563			$27,144			$59,722			$58,732
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	11,652			29,014			5,592			3,543			449			7,001
Regulatory differences - utility plant items	10,971			8,094			(1,154		)	2,329			4,140			9,201
Equity component of AFUDC	(5,985		)	(9,774		)	(2,030		)	(412		)	(2,666		)	(2,780		)
Amortization of investment tax credits	(1,201		)	(5,019		)	(160		)	(132		)	(900		)	(3,476		)
Flow-through / permanent differences	(3,848		)	(980		)	764			(3,609		)	634			(883		)
Act 55 financing settlement (a)	—			(61,620		)	—			—			(454		)	—
Non-taxable dividend income	—			(44,658		)	—			—			—			—
Provision for uncertain tax positions (a)	(717		)	(75,871		)	50			(300		)	1,926			3,151
Other - net	656			1,425			229			142			246			115
Total income taxes as reported		$107,773			$89,734			$63,854			$28,705			$63,097			$71,061
Effective Income Tax Rate	39.2		%	12.6		%	36.9		%	37.0		%	37.0		%	42.3		%

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Net income		$74,272			$446,639			$92,708			$44,925			$69,625			$111,318
Income taxes	40,541			178,671			61,872			25,190			37,250			53,077
Pretax income		$114,813			$625,310			$154,580			$70,115			$106,875			$164,395
Computed at statutory rate (35%)		$40,185			$218,859			$54,103			$24,540			$37,406			$57,538
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	6,643			23,650			5,219			2,887			1,621			6,403
Regulatory differences - utility plant items	7,299			3,013			2,383			2,201			3,703			12,167
Equity component of AFUDC	(4,979		)	(5,420		)	(1,083		)	(451		)	(1,987		)	(2,973		)
Amortization of investment tax credits	(1,201		)	(5,252		)	(160		)	(111		)	(900		)	(3,476		)
Flow-through / permanent differences	(4,062		)	2,460			431			(4,539		)	530			618
Non-taxable dividend income	—			(44,658		)	—			—			—			—
Provision for uncertain tax positions (b)	(3,978		)	(15,377		)	756			525			(3,365		)	(17,313		)
Other - net	634			1,396			223			138			242			113
Total income taxes as reported		$40,541			$178,671			$61,872			$25,190			$37,250			$53,077
Effective Income Tax Rate	35.3		%	28.6		%	40.0		%	35.9		%	34.9		%	32.3		%

2014	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Net income		$121,392			$446,022			$74,821			$31,030			$74,804			$96,334
Income taxes	83,629			185,052			55,710			13,450			49,644			83,310
Pretax income		$205,021			$631,074			$130,531			$44,480			$124,448			$179,644
Computed at statutory rate (35%)		$71,757			$220,876			$45,686			$15,568			$43,557			$62,875
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	9,591			11,666			5,180			1,562			3,221			6,877
Regulatory differences - utility plant items	8,653			7,487			4,448			777			4,165			13,791
Equity component of AFUDC	(2,533		)	(14,612		)	(833		)	(320		)	(1,035		)	(1,774		)
Amortization of investment tax credits	(1,251		)	(5,594		)	(260		)	(218		)	(1,412		)	(3,476		)
Flow-through / permanent differences	(5,082		)	(225		)	555			(4,458		)	393			(327		)
Non-taxable dividend income	—			(41,255		)	—			—			—			—
Provision for uncertain tax positions	1,881			5,336			718			405			522			5,235
Other - net	613			1,373			216			134			233			109
Total income taxes as reported		$83,629			$185,052			$55,710			$13,450			$49,644			$83,310
Effective Income Tax Rate	40.8		%	29.3		%	42.7		%	30.2		%	39.9		%	46.4		%

(a) See “Income Tax Audits- 2010-2011 IRS Audit” below for discussion of the most significant items for Entergy Louisiana.

(b) See “Income Tax Audits- 2008-2009 IRS Audit” below for discussion of the most significant items for Entergy Louisiana and System Energy.

Significant components of accumulated deferred income taxes and taxes accrued for Entergy Corporation and Subsidiaries as of December 31, 2016 and 2015 are as follows:

	2016			2015
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($6,362,905	)		($6,804,225	)
Regulatory assets	(584,572		)	(646,392		)
Nuclear decommissioning trusts/receivables	(1,739,977		)	(1,254,463		)
Pension, net funding	(429,896		)	(365,111		)
Combined unitary state taxes	(33,063		)	(45,078		)
Power purchase agreements	(993		)	—
Other	(251,719		)	(315,844		)
Total	(9,403,125		)	(9,431,113		)
Deferred tax assets:
Nuclear decommissioning liabilities	1,399,468			828,983
Regulatory liabilities	255,272			284,432
Pension and other post-employment benefits	539,456			525,524
Sale and leaseback	135,866			139,720
Compensation	99,300			69,432
Accumulated deferred investment tax credit	92,375			95,248
Provision for allowances and contingencies	188,390			188,282
Power purchase agreements	—			38,401
Net operating loss carryforwards	334,025			360,188
Capital losses and miscellaneous tax credits	18,470			11,075
Valuation allowance	(104,277		)	(91,532		)
Other	59,079			68,204
Total	3,017,424			2,517,957
Non-current accrued taxes (including unrecognized tax benefits)	(991,704		)	(1,338,806		)
Accumulated deferred income taxes and taxes accrued		($7,377,405	)		($8,251,962	)

Entergy’s estimated tax attributes carryovers and their expiration dates as of December 31, 2016 are as follows:

Carryover Description	Carryover Amount	Year(s) of expiration
Federal net operating losses	$6.7 billion	2023-2036
State net operating losses	$7.8 billion	2017-2036
Miscellaneous federal and state credits	$89.9 million	2017-2036

As a result of the accounting for uncertain tax positions, the amount of the deferred tax assets reflected in the financial statements is less than the amount of the tax effect of the federal and state net operating loss carryovers, tax credit carryovers, and other tax attributes reflected on income tax returns. Because it is more likely than not that the benefit from certain state net operating loss carryovers will not be utilized, valuation allowances of $62 million as of December 31, 2016 and $46 million as of December 31, 2015 have been provided on the deferred tax assets relating to these state net operating loss carryovers. Additionally, valuation allowances totaling $42.3 million as of December 31, 2016 and $45.5 million as of December 31, 2015 have been provided on deferred tax assets related to federal and state jurisdictions in which Entergy does not currently expect to be able to utilize separate company tax return losses, preventing realization of such deferred tax assets.

Significant components of accumulated deferred income taxes and taxes accrued for the Registrant Subsidiaries as of December 31, 2016 and 2015 are as follows:

2016	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($1,857,554	)		($2,357,599	)		($820,971	)		($177,242	)		($835,671	)		($651,394	)
Regulatory assets	(109,241		)	(219,750		)	(25,309		)	(36,301		)	(153,914		)	(39,879		)
Nuclear decommissioning trusts/receivables	(144,250		)	(119,544		)	—			—			—			(83,891		)
Pension, net funding	(123,889		)	(122,465		)	(34,284		)	(16,307		)	(28,371		)	(29,357		)
Deferred fuel	(14,774		)	(1,778		)	(12,770		)	(5,229		)	(2,808		)	(1,137		)
Other	(47,785		)	(22,136		)	(12,474		)	(18,536		)	(8,812		)	(2,051		)
Total	(2,297,493		)	(2,843,272		)	(905,808		)	(253,615		)	(1,029,576		)	(807,709		)
Deferred tax assets:
Regulatory liabilities	5,768			175,973			18,833			25,240			15,814			13,644
Nuclear decommissioning liabilities	124,206			55,408			—			—			—			53,113
Pension and other post-employment benefits	(24,467		)	145,401			(8,042		)	(12,070		)	(19,096		)	(1,182		)
Sale and leaseback	—			33,383			—			—			—			102,483
Accumulated deferred investment tax credit	13,848			54,509			3,315			239			4,527			15,936
Provision for allowances and contingencies	(1,497		)	124,309			21,817			36,466			5,904			—
Power purchase agreements	(3,094		)	29,827			1,905			—			140			—
Unbilled/deferred revenues	6,799			(35,006		)	5,085			3,751			11,902			—
Compensation	2,787			5,309			1,492			685			1,587			360
Net operating loss carryforwards	69,524			17,125			—			—			—			—
Capital losses and miscellaneous tax credits	2,074			—			4,487			—			—			—
Other	174			17,110			1,152			496			2,955			—
Total	196,122			623,348			50,044			54,807			23,733			184,354
Non-current accrued taxes (including unrecognized tax benefits)	(85,252		)	(471,194		)	(5,567		)	(136,145		)	(21,804		)	(489,510		)
Accumulated deferred income taxes and taxes accrued		($2,186,623	)		($2,691,118	)		($861,331	)		($334,953	)		($1,027,647	)		($1,112,865	)

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($1,710,444	)		($2,041,968	)		($781,427	)		($167,294	)		($778,270	)		($611,745	)
Regulatory assets	(108,422		)	(254,316		)	(24,918		)	(39,451		)	(172,117		)	(46,990		)
Nuclear decommissioning trusts	(121,326		)	(99,980		)	—			—			—			(68,370		)
Pension, net funding	(107,073		)	(109,709		)	(30,901		)	(14,459		)	(28,001		)	(25,791		)
Deferred fuel	(7,647		)	(2,513		)	(684		)	(175		)	2,050			(18		)
Power purchase agreements	—			—			—			—			—			—
Other	(38,683		)	(86,275		)	(5,625		)	(12,253		)	(10,109		)	(22,478		)
Total	(2,093,595		)	(2,594,761		)	(843,555		)	(233,632		)	(986,447		)	(775,392		)
Deferred tax assets:
Regulatory liabilities	18,369			215,154			7,787			20,888			7,307			14,927
Nuclear decommissioning liabilities	109,962			49,333			—			—			—			39,420
Pension and other post-employment benefits	(20,420		)	149,680			(6,628		)	(8,939		)	(16,703		)	(1,037		)
Sale and leaseback	—			37,236			—			—			—			102,484
Accumulated deferred investment tax credit	14,320			56,635			1,777			290			4,842			17,385
Provision for allowances and contingencies	1,024			123,007			18,735			33,843			7,266			134
Power purchase agreements	(1,279		)	13,840			1,901			13			575			—
Unbilled/deferred revenues	9,815			(32,365		)	7,154			2,126			10,851			—
Compensation	1,842			4,182			601			880			4,496			—
Net operating loss carryforwards	—			90,241			—			—			—			—
Other	128			21,982			1,995			316			1,672			—
Total	133,761			728,925			33,322			49,417			20,306			173,313
Non-current accrued taxes (including unrecognized tax benefits)	(22,978		)	(641,120		)	(402		)	(29,846		)	(40,693		)	(416,996		)
Accumulated deferred income taxes and taxes accrued		($1,982,812	)		($2,506,956	)		($810,635	)		($214,061	)		($1,006,834	)		($1,019,075	)

The Registrant Subsidiaries’ estimated tax attributes carryovers and their expiration dates as of December 31, 2016 are as follows:

	Entergy Arkansas	Entergy Louisiana	Entergy Mississippi	Entergy New Orleans	Entergy Texas	System Energy
Federal net operating losses	$184 million	$4.4 billion	—	$34 million	—	$201 million
Year(s) of expiration	2028-2036	2036	N/A	2028-2036	N/A	2028-2036
State net operating losses	$80 million	$4.8 billion	—	$285 million	—	$175 million
Year(s) of expiration	2021	2029-2036	N/A	2032-2035	N/A	2035
Misc. federal credits	$2 million	—	$3 million	—	—	$2 million
Year(s) of expiration	2029-2036	N/A	2029-2036	N/A	N/A	2029-2036
State credits	—	—	$4.5 million	—	$3.4 million	$8.4 million
Year(s) of expiration	N/A	N/A	2018-2020	N/A	2026	2017-2020

As a result of the accounting for uncertain tax positions, the amount of the deferred tax assets reflected in the financial statements is less than the amount of the tax effect of the federal and state net operating loss carryovers and tax credit carryovers.

Unrecognized tax benefits

Accounting standards establish a “more-likely-than-not” recognition threshold that must be met before a tax benefit can be recognized in the financial statements.  If a tax deduction is taken on a tax return, but does not meet the more-likely-than-not recognition threshold, an increase in income tax liability, above what is payable on the tax return, is required to be recorded.  A reconciliation of Entergy’s beginning and ending amount of unrecognized tax benefits is as follows:

	2016			2015			2014
	(In Thousands)
Gross balance at January 1		$2,611,585			$4,736,785			$4,593,224
Additions based on tax positions related to the current year	1,532,782			1,850,705			348,543
Additions for tax positions of prior years	368,404			59,815			11,637
Reductions for tax positions of prior years (a)	(265,653		)	(3,966,535		)	(213,401		)
Settlements	(337,263		)	(68,227		)	—
Lapse of statute of limitations	—			(958		)	(3,218		)
Gross balance at December 31	3,909,855			2,611,585			4,736,785
Offsets to gross unrecognized tax benefits:
Carryovers and refund claims	(2,922,085		)	(1,264,483		)	(4,295,643		)
Cash paid to taxing authorities	(10,000		)	—			—
Unrecognized tax benefits net of unused tax attributes, refund claims and payments (b)		$977,770			$1,347,102			$441,142

(a) The primary reduction for 2015 is related to the nuclear decommissioning costs treatment discussed in “Income Tax Audits - 2008-2009 IRS Audit” below.

(b) Potential tax liability above what is payable on tax returns

The balances of unrecognized tax benefits include $1,240 million, $955 million, and $516 million as of December 31, 2016, 2015, and 2014, respectively, which, if recognized, would lower the effective income tax rates.  Because of the effect of deferred tax accounting, the remaining balances of unrecognized tax benefits of $2,670 million, $1,657 million, and $4,221 million as of December 31, 2016, 2015, and 2014, respectively, if disallowed, would not affect the annual effective income tax rate but would accelerate the payment of cash to the taxing authority to an earlier period.

Entergy accrues interest expense, if any, related to unrecognized tax benefits in income tax expense.  Entergy’s December 31, 2016, 2015, and 2014 accrued balance for the possible payment of interest is approximately $30 million, $27 million, and $127 million, respectively.

A reconciliation of the Registrant Subsidiaries’ beginning and ending amount of unrecognized tax benefits for 2016, 2015, and 2014 is as follows:

2016	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Gross balance at January 1, 2016		$25,445			$1,690,661			$19,482			$53,897			$13,462			$478,318
Additions based on tax positions related to the current year (a)	16,868			931,720			2,662			33,912			2,002			5,318
Additions for tax positions of prior years	2,463			157,586			336			129,784			2,888			601
Reductions for tax positions of prior years	(41,957		)	(144,068		)	(10,219		)	(29,821		)	(1,849		)	(10,266		)
Settlements	(316		)	(195,560		)	(55		)	(21,542		)	(557		)	(1,599		)
Gross balance at December 31, 2016	2,503			2,440,339			12,206			166,230			15,946			472,372
Offsets to gross unrecognized tax benefits:
Loss carryovers	—			(1,783,093		)	(2,373		)	(27,320		)	(376		)	(90,028		)
Unrecognized tax benefits net of unused tax attributes and payments		$2,503			$657,246			$9,833			$138,910			$15,570			$382,344

2015	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Gross balance at January 1, 2015		$362,912			$1,205,929			$20,144			$53,763			$17,264			$258,242
Additions based on tax positions related to the current year (b)	2,196			1,367,058			566			472			657			472,304
Additions for tax positions of prior years	1,057			7,992			8,140			48			2,914			913
Reductions for tax positions of prior years	(340,720		)	(859,430		)	—			(386		)	(3,981		)	(253,141		)
Settlements	—			(30,888		)	(9,368		)	—			(3,392		)	—
Gross balance at December 31, 2015	25,445			1,690,661			19,482			53,897			13,462			478,318
Offsets to gross unrecognized tax benefits:
Loss carryovers	(3,613		)	(893,764		)	(1,016		)	(506		)	(276		)	(133,611		)
Unrecognized tax benefits net of unused tax attributes and payments		$21,832			$796,897			$18,466			$53,391			$13,186			$344,707

2014	Entergy Arkansas			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Gross balance at January 1, 2014		$347,713			$1,076,680			$16,186			$51,679			$13,017			$265,185
Additions based on tax positions related to the current year	14,511			151,249			3,928			2,235			4,225			2,744
Additions for tax positions of prior years	1,767			6,924			319			37			303			566
Reductions for tax positions of prior years	(1,079		)	(28,924		)	(289		)	(188		)	(267		)	(10,253		)
Settlements	—			—			—			—			(14		)	—
Gross balance at December 31, 2014	362,912			1,205,929			20,144			53,763			17,264			258,242
Offsets to gross unrecognized tax benefits:
Loss carryovers	(361,043		)	(739,988		)	(6,992		)	(20,735		)	(241		)	(163,124		)
Unrecognized tax benefits net of unused tax attributes and payments		$1,869			$465,941			$13,152			$33,028			$17,023			$95,118

(a) The primary addition for Entergy Louisiana is related to the mark-to market treatment discussed in “Other Tax Matters” below.

(b) The primary addition for Entergy Louisiana and System Energy is related to the nuclear decommissioning costs treatment discussed in “Other Tax Matters” below.

The Registrant Subsidiaries’ balances of unrecognized tax benefits included amounts which, if recognized, would have reduced income tax expense as follows:

	December 31,
	2016		2015		2014
	(In Millions)
Entergy Arkansas		$3.6		$4.5		$2.6
Entergy Louisiana		$473.3		$692.7		$267.3
Entergy Mississippi		$—		$8.1		$3.9
Entergy New Orleans		$33.6		$50.7		$50.7
Entergy Texas		$7.0		$5.2		$10.5
System Energy		$—		$0.7		$3.7

The Registrant Subsidiaries accrue interest and penalties related to unrecognized tax benefits in income tax expense.  Penalties have not been accrued.  Accrued balances for the possible payment of interest are as follows:

	December 31,
	2016		2015		2014
	(In Millions)
Entergy Arkansas		$1.4		$1.3		$17.0
Entergy Louisiana		$8.4		$9.3		$22.2
Entergy Mississippi		$0.8		$0.4		$2.8
Entergy New Orleans		$1.5		$1.8		$1.3
Entergy Texas		$1.2		$1.2		$1.0
System Energy		$3.7		$0.7		$23.8

Income Tax Audits

Entergy and its subsidiaries file U.S. federal and various state and foreign income tax returns.  IRS examinations are complete for years before 2012. All state taxing authorities’ examinations are completed for years before 2009.

2006-2007 IRS Audit

In the first quarter 2015, the IRS finalized tax and interest computations from the 2006-2007 audit that resulted in a reversal of Entergy’s provision for uncertain tax positions related to accrued interest of approximately $20 million, including decreases of approximately $4 million for Entergy Arkansas, $11 million for Entergy Louisiana, and $1 million for System Energy.

2008-2009 IRS Audit

In the fourth quarter 2009, Entergy filed Applications for Change in Accounting Method (the “2009 CAM”) for tax purposes with the IRS for certain costs under Section 263A of the Internal Revenue Code.  In the Applications, Entergy proposed to treat the nuclear decommissioning liability associated with the operation of its nuclear power plants as a production cost properly includable in cost of goods sold.  The effect of the 2009 CAM was a $5.7 billion reduction in 2009 taxable income.  The 2009 CAM was adjusted to $9.3 billion in 2012.

In the fourth quarter 2012 the IRS disallowed the reduction to 2009 taxable income related to the 2009 CAM.  In the third quarter 2013, the Internal Revenue Service issued its RAR for the tax years 2008-2009. As a result of the issuance of this RAR, Entergy and the IRS resolved all of the 2008-2009 issues described above except for the 2009 CAM. Entergy disagreed with the IRS’s disallowance of the 2009 CAM and filed a protest with the IRS Appeals Division in October 2013.

In August 2015, Entergy and the IRS agreed on the treatment of the 2009 position regarding nuclear decommissioning liabilities from the 2008-2009 audit. The agreement provides that Entergy is entitled to deduct approximately $118 million of the $9.3 billion claimed in 2009. The agreement effectively settled all matters pertaining to the 2009 tax year and increased Entergy’s 2009 federal income tax liability by $2.4 million.

2010-2011 IRS Audit

The IRS completed its examination of the 2010 and 2011 tax years and issued its 2010-2011 Revenue Agent Report (RAR) in June 2016. Entergy agreed to all proposed adjustments contained in the RAR. As a result of the issuance of the RAR, Entergy Louisiana was able to recognize previously unrecognized tax benefits as follows:

• Entergy and the IRS agreed that $148.6 million of the proceeds received by Entergy Louisiana in 2010 from the Louisiana Utilities Restoration Corporation (LURC), an instrumentality of the State of Louisiana, for the financing of Hurricane Gustav and Hurricane Ike storm costs pursuant to Act 55 of the Louisiana Regular Session of 2007 (Louisiana Act 55) were not taxable. Because the treatment of the financing is settled, Entergy recognized previously unrecognized tax benefits totaling $63.5 million, of which Entergy Louisiana recorded $61.6 million. Entergy Louisiana also accrued a regulatory liability of $16.1 million ($9.9 million net-of-tax) in accordance with the terms of Entergy Louisiana’s previous settlement agreement approved by the LPSC regarding Entergy Louisiana’s obligation to pay to customers savings associated with the Act 55 financing.

• Entergy and the IRS agreed upon the tax treatment of Entergy Louisiana’s regulatory liability related to the Vidalia purchased power agreement. As a result, Entergy Louisiana recognized a previously unrecognized tax benefit of $74.5 million.

Other Tax Matters

Entergy regularly negotiates with the IRS to achieve settlements.  The resolution of audit issues could result in significant changes to the amounts of unrecognized tax benefits in the next twelve months.

In October 2015 two of Entergy’s Louisiana utilities, Entergy Gulf States Louisiana and Entergy Louisiana, combined their businesses into a legal entity which is identified as Entergy Louisiana herein. The structure of the business combination generated both a permanent difference and a temporary difference under FASB ASC Topic 740. The permanent difference resulted from recognition of the Waterford 3 and River Bend decommissioning liabilities as part of the business combination. Recognition of such decommissioning liabilities required Entergy to also recognize a taxable gain. The taxable gain resulted in a temporary difference because the gain provided for an increase in tax basis. Entergy Louisiana maintained a carryover tax basis in the assets received; and, to the extent that the increase in tax basis will provide additional tax depreciation, Entergy recorded a deferred tax asset. Entergy Louisiana obtained the corresponding deferred tax asset in the business combination. The permanent tax benefit net of ancillary tax charges was approximately $334 million. Consistent with the terms of the stipulated settlement in the business combination proceeding, electric customers of Entergy Louisiana will realize customer credits associated with the business combination. Accordingly, in October 2015, Entergy recorded a regulatory liability of $107 million ($66 million net-of-tax) which partially offsets the effect of the aforementioned deferred tax asset. The deferred tax asset and the regulatory liability, net-of-tax, increased Entergy Louisiana’s member’s equity by $268 million. See Note 2 to the financial statements for further discussion of the business combination.

In the fourth quarter 2015, System Energy and Entergy Louisiana adopted a new method of accounting for income tax return purposes in which the companies’ nuclear decommissioning costs will be treated as production costs of electricity includable in cost of goods sold. The new method results in a reduction of taxable income of $1.2 billion for System Energy and $2.2 billion for Entergy Louisiana.

The Protecting Americans from Tax Hikes Act of 2015 was enacted in December 2015. The most significant provisions affecting Entergy and the Registrant Subsidiaries were a five-year extension of bonus depreciation and permanent extension of the research and experimentation tax credit. The effect of the bonus depreciation extension on 2015 increased Entergy’s tax net operating loss.

Entergy made a tax election to treat its subsidiary that owns one of the Entergy Wholesale Commodities nuclear power plants as a corporation for federal income tax purposes in the second quarter 2016. This resulted in a constructive contribution of all the assets and liabilities associated with the plant to a new subsidiary corporation for federal income tax purposes, and generated both permanent and temporary differences under the income tax accounting standards. The constructive contribution required Entergy to recognize the plant’s nuclear decommissioning liability for income tax purposes resulting in permanent differences. The accrual of the nuclear decommissioning liability required Entergy to recognize a gain for income tax purposes, a significant portion of which resulted in an increase in tax basis of the assets constructively contributed to the subsidiary. Recognition of the gain and the increase in tax basis of the assets represents a temporary difference. The permanent difference reduced income tax expense, net of unrecognized tax benefits, by $238 million.

In 2016, Entergy Louisiana elected mark-to-market income tax treatment for various wholesale electric power purchase and sale agreements, including Entergy Louisiana’s contract to purchase electricity from the Vidalia hydroelectric facility and from System Energy under the Unit Power Sales Agreement. The election resulted in a $2.2 billion deductible temporary difference.