Income Taxes

12 Months Ended

Dec. 31, 2012

Income Taxes

NOTE 3. INCOME TAXES (Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

     Income taxes from continuing operations for 2012, 2011, and 2010 for Entergy Corporation and Subsidiaries consist of the following:

	2012	2011	2010
	(In Thousands)
Current:
Federal	($47,851)	$452,713	$145,161
Foreign	143	130	131
State	(41,516)	152,711	19,313
Total	(89,224)	605,554	164,605
Deferred and non-current -- net	131,130	(311,708)	468,698
Investment tax credit
adjustments -- net	(11,051)	(7,583)	(16,064)
Income tax expense from
continuing operations	$30,855	$286,263	$617,239

 

     Income taxes for 2012, 2011, and 2010 for Entergy's Registrant Subsidiaries consist of the following:

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2012	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Current:
Federal	$64,069	($66,081)	($132,999)	$3,188	($9,484)	($114,677)	($50,491)
State	6,712	9,535	(1,269)	(4,425)	(1,617)	4,933	(8,544)
Total	70,781	(56,546)	(134,268)	(1,237)	(11,101)	(109,744)	(59,035)
Deferred and non-current -- net	26,042	112,390	8,463	59,045	18,586	144,471	137,832
Investment tax credit
adjustments -- net	(2,017)	(3,228)	(3,117)	871	(245)	(1,609)	(1,682)
Income taxes	$94,806	$52,616	($128,922)	$58,679	$7,240	$33,118	$77,115

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2011	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Current:
Federal	($12,448)	($30,106)	($136,800)	($9,466)	$14,641	($33,045)	$139,529
State	(1,751)	15,950	34,832	6,069	1,724	3,153	16,825
Total	(14,199)	(14,156)	(101,968)	(3,397)	16,365	(29,892)	156,354
Deferred and non-current -- net	148,978	107,250	(265,046)	32,380	(201)	80,993	(84,505)
Investment tax credit
adjustments -- net	(2,014)	(3,358)	(3,197)	(182)	(302)	(1,609)	3,104
Income taxes	$132,765	$89,736	($370,211)	$28,801	$15,862	$49,492	$74,953

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2010	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Current:
Federal	$114,821	$196,230	$73,174	$13,722	($114,382)	($10,607)	($4,102)
State	(9,200)	481	(4,324)	5,959	1,427	1,060	3,328
Total	105,621	196,711	68,850	19,681	(112,955)	(9,547)	(774)
Deferred and non-current -- net	10,328	(101,007)	918	31,415	129,880	53,539	60,305
Investment tax credit
adjustments -- net	(3,005)	(3,407)	(3,222)	(985)	(324)	(1,609)	(3,482)
Income taxes	$112,944	$92,297	$66,546	$50,111	$16,601	$42,383	$56,049

     Total income taxes for Entergy Corporation and 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 2012, 2011, and 2010 are:

	2012	2011	2010
	(In Thousands)
Net income attributable to Entergy Corporation	$846,673	$1,346,439	$1,250,242
Preferred dividend requirements of subsidiaries	21,690	20,933	20,063
Consolidated net income	868,363	1,367,372	1,270,305
Income taxes	30,855	286,263	617,239
Income before income taxes	$899,218	$1,653,635	$1,887,544
Computed at statutory rate (35%)	$314,726	$578,772	$660,640
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	40,699	93,940	40,530
Regulatory differences - utility plant items	35,527	39,970	31,473
Equity component of AFUDC	(30,838)	(30,184)	(16,542)
Amortization of investment tax credits	(14,000)	(14,962)	(15,980)
Net-of-tax regulatory liability (a)	(4,356)	65,357	-
Deferred tax reversal on PPA settlement (a)	-	(421,819)	-
IRS decommissioning settlement (b)	(155,300)
Write-off of reorganization costs	-	-	(19,974)
Tax law change-Medicare Part D	-	-	13,616
Write-off of regulatory asset for income taxes	42,159	-	-
Capital gains / (losses)	(20,188)	-	-
Flow-through / permanent differences	(14,801)	(17,848)	(26,370)
Provision for uncertain tax positions	(159,957)	2,698	(43,115)
Change in regulatory recovery	-	-	-
Other - net	(2,816)	(9,661)	(7,039)
Total income taxes as reported	$30,855	$286,263	$617,239
Effective Income Tax Rate	3.4%	17.3%	32.7%
(a)  See "Income Tax Audits - 2006-2007 IRS Audit" below for discussion of these items.
(b)  See "Income Tax Audits - 2004-2005 IRS Audit" below for discussion of this item.

(c)  See "Income Tax Audits - 2008-2009 IRS Audit" below for discussion of the most significant item in 2012.

            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 2012, 2011, and 2010 are:

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2012	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Net income	$152,365	$158,977	$281,081	$46,768	$17,065	$41,971	$111,866
Income taxes (benefit)	94,806	52,616	(128,922)	58,679	7,240	33,118	77,115
Pretax income	$247,171	$211,593	$152,159	$105,447	$24,305	$75,089	$188,981
Computed at statutory rate (35%)	$86,510	$74,058	$53,256	$36,906	$8,507	$26,281	$66,143
Increases (reductions) in tax
resulting from:
State income taxes net of
federal income tax effect	11,282	5,087	1,976	3,944	505	3,115	6,652
Regulatory differences -
utility plant items	6,778	8,472	312	2,619	2,289	3,668	11,389
Equity component of AFUDC	(2,495)	(3,042)	(12,919)	(1,383)	(276)	(1,587)	(9,136)
Amortization of investment
tax credits	(1,992)	(3,204)	(3,089)	(264)	(240)	(1,596)	(3,480)
Net-of-tax regulatory liability (a)	-	-	(4,356)	-	-	-	-
Flow-through / permanent
differences	3,427	(7,646)	1,397	1,961	(4,385)	1,585	(357)
Non-taxable
dividend income	-	(9,836)	(27,336)	-	-	-	-
Benefit of Entergy Corporation
expenses	(19,403)	(17,703)	-	14,449	2,758	-	(10,241)
Provision for uncertain
tax positions	11,227	8,745	(143,583)	870	(2,095)	1,651	17,966
Change in regulatory recovery	-	(553)	7,854	-	-	-
Other -- net	(528)	(1,762)	(2,434)	(423)	177	1	(1,821)
Total income taxes	$94,806	$52,616	($128,922)	$58,679	$7,240	$33,118	$77,115
Effective Income Tax Rate	38.4%	24.9%	-84.7%	55.6%	29.8%	44.1%	40.8%

(a) See "Income Tax Audits - 2006-2007 IRS Audit" below for discussion of these items.

(b) See "Incomr Tax Audits - 2008-2009 IRS Audit" below for discussion of the most significant item in 2012.

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2011	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Net income	$164,891	$201,604	$473,923	$108,729	$35,976	$80,845	$64,197
Income taxes (benefit)	132,765	89,736	(370,211)	28,801	15,862	49,492	74,953
Pretax income	$297,656	$291,340	$103,712	$137,530	$51,838	$130,337	$139,150
Computed at statutory rate (35%)	$104,180	$101,969	$36,299	$48,136	$18,143	$45,618	$48,703
Increases (reductions) in tax
resulting from:
State income taxes net of
federal income tax effect	13,727	9,618	943	3,211	3,350	2,033	4,436
Regulatory differences -
utility plant items	10,079	8,379	1,404	2,038	3,860	4,003	10,207
Equity component of AFUDC	(3,363)	(3,181)	(11,315)	(2,963)	(215)	(1,322)	(7,825)
Amortization of investment
tax credits	(1,992)	(3,336)	(3,168)	(960)	(295)	(1,596)	(3,480)
Net-of-tax regulatory liability (a)	-	-	65,357	-	-	-	-
Deferred tax reversal on PPA
settlement (a)	-	-	(421,819)	-	-	-	-
Flow-through / permanent
differences	(1,365)	587	(1,285)	304	(4,983)	88	529
Non-taxable
dividend income	-	(11,364)	(27,336)	-	-	-	-
Benefit of Entergy Corporation
expenses	-	(5,694)	-	(21,248)	(6,235)	(16)	16,559
Provision for uncertain
tax positions	12,016	(7,144)	(4,880)	(2)	2,241	717	5,878
Other -- net	(517)	(98)	(4,411)	285	(4)	(33)	(54)
Total income taxes	$132,765	$89,736	($370,211)	$28,801	$15,862	$49,492	$74,953
Effective Income Tax Rate	44.6%	30.8%	-357.0%	20.9%	30.6%	38.0%	53.9%

(a) See "Income Tax Audits - 2006-2007 IRS Audit" below for discussion of these items.

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2010	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Net income	$172,618	$174,319	$231,435	$85,377	$31,114	$66,200	$82,624
Income taxes	112,944	92,297	66,546	50,111	16,601	42,383	56,049
Pretax income	$285,562	$266,616	$297,981	$135,488	$47,715	$108,583	$138,673
Computed at statutory rate (35%)	$99,947	$93,316	$104,293	$47,421	$16,700	$38,004	$48,536
Increases (reductions) in tax
resulting from:
State income taxes net of
federal income tax effect	13,156	1,142	(10,618)	1,245	1,387	424	2,206
Regulatory differences -
utility plant items	6,126	(4,004)	7,374	3,455	3,999	4,089	10,435
Equity component of AFUDC	(144)	(1,547)	(8,361)	(1,643)	(184)	(1,525)	(3,138)
Amortization of investment
tax credits	(2,983)	(3,309)	(3,192)	(972)	(313)	(1,596)	(3,480)
Flow-through / permanent
differences	(1,235)	8,423	(754)	153	(4,883)	236	(497)
Non-taxable
dividend income	-	(9,189)	(23,603)	-	-	-	-
Provision for uncertain
tax positions	(2,100)	7,200	2,200	700	(300)	2,800	2,090
Other -- net	177	265	(793)	(248)	195	(49)	(103)
Total income taxes	$112,944	$92,297	$66,546	$50,111	$16,601	$42,383	$56,049
Effective Income Tax Rate	39.6%	34.6%	22.3%	37.0%	34.8%	39.0%	40.4%

     Significant components of accumulated deferred income taxes and taxes accrued for Entergy Corporation and Subsidiaries as of December 31, 2012 and 2011 are as follows:

	2012	2011
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net	($8,240,342)	($7,043,758)
Regulatory assets	(898,143)	(930,370)
Nuclear decommissioning trusts	(848,918)	(553,558)
Combined unitary state taxes	(233,210)	(227,427)
Power purchase agreements	-	(17,138)
Other	(485,550)	(402,097)
Total	(10,706,163)	(9,174,348)
Deferred tax assets:
Nuclear decommissioning liabilities	733,103	612,945
Regulatory liabilities	404,852	197,554
Pension and other post-employment benefits	358,893	315,134
Sale and leaseback	195,074	217,430
Accumulated deferred investment tax credit	110,690	108,338
Provision for contingencies	61,576	28,504
Power purchase agreements	43,717	-
Other	141,592	160,620
Net operating loss carryforwards	960,235	253,518
Capital losses	13,631	12,995
Valuation allowance	(86,881)	(85,615)
Total	2,936,482	1,821,423
Noncurrent accrued taxes (including unrecognized
tax benefits)	(210,534)	(814,597)
Accumulated deferred income taxes and taxes accrued	($7,980,215)	($8,167,522)

Entergy's estimated tax attributes carryovers and their expiration dates as of December 31, 2012 are as follows:

Carryover Description	Carryover Amount	Year(s) of expiration
Federal net operating losses	$12.6 billion	2028-2032
State net operating losses	$11.2 billion	2013-2032
State capital losses	$177 million	2013-2015
Miscellaneous federal and state credits	$81.9 million	2013-2032

     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 and capital loss carryovers will not be utilized, a valuation allowance $69.6 million and $13.6 million of has been provided on the deferred tax assets relating to these state net operating and capital loss carryovers, respectively.

     Significant components of accumulated deferred income taxes and taxes accrued for the Registrant Subsidiaries as of December 31, 2012 and 2011 are as follows:

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2012	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net	($1,565,988)	($1,268,164)	($1,544,256)	($727,442)	($202,496)	($770,084)	($759,896)
Regulatory assets	(172,915)	(100,578)	(249,051)	(27,077)	(4,790)	(220,417)	(119,209)
Nuclear decommissioning trusts	(67,025)	(25,472)	(29,493)	-	-	-	(27,809)
Deferred fuel	(50,068)	(1,618)	(11,815)	(11,332)	(976)	3,932	(445)
Other	(55,000)	(27,501)	(92,433)	(12,641)	(10,576)	(23,681)	(6,592)
Total	($1,910,996)	($1,423,333)	($1,927,048)	($778,492)	($218,838)	($1,010,250)	($913,951)
Deferred tax assets:
Nuclear decommissioning liabilities	(63,189)	51,593	92,930	-	-	-	(65,564)
Regulatory liabilities	79,805	47,474	173,046	8,515	47,257	3,429	45,327
Pension and other post-
employment benefits	(75,278)	47,469	34,283	(22,140)	(10,815)	(40,389)	(19,160)
Sale and Leaseback	-	-	57,423	-	-	-	137,651
Accumulated deferred investment tax credit	16,062	36,642	27,008	2,776	500	6,210	21,492
Provision for contingencies	4,723	33,074	48,241	9,564	(2,865)	(35,505)	-
Power purchase agreements	94	37,771	-	84	21	2,752	-
Unbilled/deferred revenues	27,651	(23,150)	(7,101)	9,242	3,352	12,986	-
Compensation	3,587	580	18	(664)	13	4,547	180
Net operating loss carryforwards	102,034	-	460,367	45,475	-	20,307	86,228
Other	5,565	6,106	5,513	8,758	4,472	6,707	2,000
Total	101,054	237,559	891,728	61,610	41,935	(18,956)	208,154
Noncurrent accrued taxes (including
unrecognized tax benefits)	46,930	(239,670)	218,033	(1,121)	13,630	55,113	(4,130)
Accumulated deferred income
taxes and taxes accrued	($1,763,012)	($1,425,444)	($817,287)	($718,003)	($163,273)	($974,093)	($709,927)

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2011	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net	($1,334,016)	($1,124,284)	($1,077,835)	($608,596)	($148,296)	($735,310)	($505,369)
Regulatory assets	(222,429)	(103,585)	(249,459)	(32,611)	-	(227,224)	(120,886)
Nuclear decommissioning trusts	(53,789)	(21,096)	(22,441)	-	-	-	(19,138)
Deferred fuel	(82,452)	(1,225)	(4,285)	718	(331)	3,932	(8)
Other	(54,277)	(1,394)	(26,237)	(7,263)	(18,319)	(14,098)	(9,333)
Total	($1,746,963)	($1,251,584)	($1,380,257)	($647,752)	($166,946)	($972,700)	($654,734)
Deferred tax assets:
Nuclear decommissioning liabilities	(104,862)	(38,683)	56,399	-	-	-	(47,360)
Regulatory liabilities	29,473	(39,265)	111,705	1,497	53,191	35,072	18,301
Pension and other post-				-	-	-
employment benefits	(75,399)	123,085	19,866	(30,390)	(11,713)	(41,964)	(19,593)
Sale and Leaseback	-	-	66,801	-	-	-	150,629
Accumulated deferred
investment tax credit	16,843	31,367	28,197	2,437	592	6,769	22,133
Provision for contingencies	4,167	(1,406)	3,940	2,465	10,121	2,299	-
Power purchase agreements	94	3,938	(1)	2,383	22	2,547	-
Unbilled/deferred revenues	15,222	(21,918)	(7,108)	8,990	2,707	14,324	-
Net operating loss carryforwards	-	-	39,153	-	-	58,547	-
Other	56,116	27,548	33,675	6,206	1,899	8,753	40,759
Total	(58,346)	84,666	352,627	(6,412)	56,819	86,347	164,869
Noncurrent accrued taxes (including
unrecognized tax benefits)	(27,718)	(206,752)	(75,750)	(6,271)	(27,859)	39,799	(165,981)
Accumulated deferred income
taxes and taxes accrued	($1,833,027)	($1,373,670)	($1,103,380)	($660,435)	($137,986)	($846,554)	($655,846)

     The Registrant Subsidiaries' estimated tax attributes carryovers and their expiration dates as of December 31, 2012 are as follows:

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
	Arkansas	Louisiana	Louisiana	Mississippi New Orleans		Texas	Energy
Federal net operating
losses	$1.3 billion	$321 million	$2.3 billion	$155 million	$81 million	$60 million	$875 million
Year(s) of expiration	2029 -2031	2029 -2030	2028 -2032	2029 -2032	2030 -2032	2029 -2032	2029 -2032
State net operating losses	$48 million	$852 million	$3.2 billion	-	$94 million	-	$220 million
Year(s) of expiration	2023-2026	2024 -2025	2023 -2027	N/A	2025-2027	N/A	2029-2030
Federal minimum tax
credits	$2 million	$1 million	$4 million	$1 million	$1 million	$- million	$2 million
Year(s) of expiration	2024-2031	2024-2031	2026 -2031	2024 -2031	2024 -2031	N/A	2024-2031
Other federal credits	$0 million	$0 million	$0 million	$0 million	$0 million	-	$0 million
Year(s) of expiration	2024 -2030	2024 -2030	2024 -2030	2024 -2030	2024 -2030	N/A	2024 -2030
State credits	-	-	-	$10.1 million	-	$4.2 million	$15.6 million
Year(s) of expiration	N/A	N/A	N/A	2013 -2016	N/A	2013 -2027	2015 -2016

     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:

	2012	2011	2010
	(In Thousands)
Gross balance at January 1	$4,387,780	$4,949,788	$4,050,491
Additions based on tax positions related to the current year	163,612	211,966	480,843
Additions for tax positions of prior years	1,517,797	332,744	871,682
Reductions for tax positions of prior years	(476,873)	(259,895)	(438,460)
Settlements	(1,421,913)	(841,528)	(10,462)
Lapse of statute of limitations	-	(5,295)	(4,306)
Gross balance at December 31	4,170,403	4,387,780	4,949,788
Offsets to gross unrecognized tax benefits:
Credit and loss carryovers	(4,022,535)	(3,212,397)	(3,771,301)
Cash paid to taxing authorities	-	(363,266)	(373,000)
Unrecognized tax benefits net of unused tax attributes and payments (1)	$147,868	$812,117	$805,487

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

     The balances of unrecognized tax benefits include $203 million, $521 million, and $605 million as of December 31, 2012, 2011, and 2010, 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 $3.968 billion, $3.867 billion, and $4.345 billion as of December 31, 2012, 2011, and 2010, 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 has made deposits with the IRS against its potential liabilities arising from audit adjustments and settlements related to its uncertain tax positions.Deposits are expected to be made to the IRS as the cash tax benefits of uncertain tax positions are realized.The total amount of cash deposits shown for 2011 has been fully offset against settled liabilities which arose in 2012.

     Entergy accrues interest expense, if any, related to unrecognized tax benefits in income tax expense. Entergy's December 31, 2012, 2011, and 2010 accrued balance for the possible payment of interest is approximately $146.3 million, $99 million, and $45 million, respectively.

A reconciliation of the Registrant Subsidiaries' beginning and ending amount of unrecognized tax benefits for 2012, 2011, and 2010 is as follows:

2012	Entergy Arkansas	Entergy Gulf States Louisiana	Entergy Louisiana	Entergy Mississippi	Entergy New Orleans	Entergy Texas	System Energy
	(In Thousands)
Gross balance at January 1, 2012	$335,493	$390,493	$446,187	$11,052	$56,052	$19,225	$281,183
Additions based on tax
positions related to the
current year	10,409	8,974	67,721	8,401	497	1,656	8,715
Additions for tax positions
of prior years	429,232	392,548	331,432	4,057	445	4,834	271,172
Reductions for tax
positions of prior years	(39,534)	(50,518)	(169,465)	(5,703)	(2,506)	(11,649)	(20,934)
Settlements	(390,931)	(275,776)	(139,202)	(966)	(2,470)	(112)	(279,790)
Gross balance at December 31, 2012	344,669	465,721	536,673	16,841	52,018	13,954	260,346
Offsets to gross unrecognized
tax benefits:
Loss carryovers	(342,127)	(160,955)	(536,673)	(16,841)	(35,511)	(1,593)	(249,424)
Cash paid to taxing authorities	-	-	-	-	-	-	-
Unrecognized tax benefits net of
unused tax attributes and payments	$2,542	$304,766	$-	$-	$16,507	$12,361	$10,922

2011	Entergy Arkansas	Entergy Gulf States Louisiana	Entergy Louisiana	Entergy Mississippi	Entergy New Orleans	Entergy Texas	System Energy
	(In Thousands)
Gross balance at January 1, 2011	$240,239	$353,886	$505,188	$24,163	$18,176	$14,229	$224,518
Additions based on tax
positions related to the
current year	11,216	9,398	8,748	457	50,212	1,760	44,419
Additions for tax positions
of prior years	44,202	50,944	21,052	21,902	7,343	7,533	14,200
Reductions for tax
positions of prior years	(3,255)	(21,719)	(27,991)	(5,022)	(12,289)	(3,432)	(4,942)
Settlements	43,091	(2,016)	(60,810)	(30,448)	(7,390)	(865)	2,988
Gross balance at December 31, 2011	335,493	390,493	446,187	11,052	56,052	19,225	281,183
Offsets to gross unrecognized
tax benefits:
Loss carryovers	(146,429)	(26,394)	(216,720)	(5,930)	(1,211)	(10,645)	(10,752)
Cash paid to taxing authorities	(75,977)	(45,493)	0	(7,556)	(1,174)	(1,376)	(41,878)
Unrecognized tax benefits net of
unused tax attributes and payments	$113,087	$318,606	$229,467	($2,434)	$53,667	$7,204	$228,553

2010	Entergy Arkansas	Entergy Gulf States Louisiana	Entergy Louisiana	Entergy Mississippi	Entergy New Orleans	Entergy Texas	System Energy
	(In Thousands)
Gross balance at January 1, 2010	$293,920	$311,311	$352,577	$17,137	($53,295)	$32,299	$211,247
Additions based on tax
positions related to the
current year	38,205	87,755	183,188	4,679	173	5,169	16,829
Additions for tax positions
of prior years	1,838	25,960	34,236	6,857	72,169	5,868	10,402
Reductions for tax
positions of prior years	(92,699)	(71,033)	(64,868)	(4,469)	(863)	(29,100)	(13,116)
Settlements	(1,025)	(107)	55	(41)	(8)	(7)	(844)
Gross balance at December 31, 2010	240,239	353,886	505,188	24,163	18,176	14,229	224,518
Offsets to gross unrecognized
tax benefits:
Loss carryovers	(123,968)	(29,257)	(131,805)	(6,477)	(3,751)	(6,269)	(10,487)
Cash paid to taxing authorities	(75,977)	(45,493)	-	(7,556)	(1,174)	(1,376)	(41,878)
Unrecognized tax benefits net of
unused tax attributes and payments	$40,294	$279,136	$373,383	$10,130	$13,251	$6,584	$172,153

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

	December 31, 2012	December 31, 2011	December 31, 2010
	(In  Millions)
Entergy Arkansas	$0.6	$-	$0.2
Entergy Gulf States Louisiana	$44.0	$107.9	$129.6
Entergy Louisiana	$92.4	$281.3	$286.7
Entergy Mississippi	$3.9	$3.8	$5.3
Entergy New Orleans	$-	$-	$-
Entergy Texas	$8.6	$7.3	$6.0
System Energy	$3.5	$-	$12.1

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, 2012	December 31, 2011	December 31, 2010
	(In Millions)
Entergy Arkansas	$21.8	$11.4	$-
Entergy Gulf States Louisiana	$33.1	$14.4	$9.7
Entergy Louisiana	$0.9	$0.8	$3.3
Entergy Mississippi	$2.4	$1.7	$1.6
Entergy New Orleans	$0.1	$2.4	$-
Entergy Texas	$0.7	$0.1	$0.1
System Energy	$33.2	$18.5	$8.2

Income Tax Litigation

In October 2010 the U.S. Tax Court entered a decision in favor of Entergy for tax years 1997 and 1998. The issues decided by the Tax Court are as follows:

• The ability to credit the U.K. Windfall Tax against U.S. tax as a foreign tax credit.  The U.K. Windfall Tax relates to Entergy's former investment in London Electricity.
• The validity of Entergy's change in method of tax accounting for street lighting assets and the related increase in depreciation deductions.

The IRS did not appeal street lighting depreciation, and that matter is final. The IRS filed an appeal of the U.K. Windfall Tax decision, however, with the U.S. Court of Appeals for the Fifth Circuit in December 2010. Oral arguments were heard in November 2011. In June 2012 the U.S. Court of Appeals for the Fifth Circuit unanimously affirmed the U.S. Tax Court decision. As a result of this decision, Entergy reversed its liability for uncertain tax positions associated with this issue. On September 4, 2012, the U.S. Solicitor General, on behalf of the Commissioner of Internal Revenue, petitioned the U.S. Supreme Court for a writ of certiorari to review the Fifth Circuit judgment.

Concurrent with the Tax Court's issuance of a favorable decision regarding the above issues, the Tax Court issued a favorable decision in a separate proceeding, PPL Corp. v. Commissioner, regarding the creditability of the U.K. Windfall Tax.  The IRS appealed the PPL decision to the United States Court of Appeals for the Third Circuit.  In December 2011 the Third Circuit reversed the Tax Court's holding in PPL Corp. v. Commissioner, stating that the U.K. tax was not eligible for the foreign tax credit.  PPL Corp. petitioned the U.S. Supreme Court for a writ of certiorari to review the U.S. Court of Appeals for the Third Circuit decision.  On October 29, 2012, the U.S. Supreme Court granted PPL Corp.'s petition for certiorari.    The Solicitor General's petition for writ of certiorari in Entergy's case is currently on hold pending the disposition of the PPL case.  Entergy's case will be determined consistent with the U.S. Supreme Court's decision in the PPL proceeding.  Oral argument in PPL's case was heard on February 20, 2013.

The total tax at issue on the U.K. Windfall Tax credit matter is $152 million, and interest on the underpayment of such tax is estimated to be $102 million resulting in total exposure of $254 million.

            In February 2008 the IRS issued a Statutory Notice of Deficiency for the year 2000.  The deficiency resulted from a disallowance of foreign tax credits (the same issue discussed above) as well as the disallowance of depreciation deductions on non-utility nuclear plants.  Entergy filed a Tax Court petition in May 2008 challenging the IRS treatment of these issues.  In June 2010 a trial on the depreciation issue was held in Washington, D.C.  In February 2011 a joint stipulation of settled issues was filed under which the IRS conceded its position with respect to the depreciation issue.  The outcome of the foreign tax credit matter for the year 2000 will also be determined consistent with the U.S. Supreme Court's decision in the PPL proceeding.

Income Tax Audits

Entergy and its subsidiaries file U.S. federal and various state and foreign income tax returns.Other than the matters discussed in the Income Tax Litigation section above, the IRS's and substantially all state taxing authorities' examinations are completed for years before 2005.

2002-2003 IRS Audit

In September 2009, Entergy entered into a partial agreement with the IRS for the years 2002 and 2003. In the partial agreement, Entergy did not agree to the IRS's disallowance of foreign tax credits for the U.K. Windfall Tax and the street lighting depreciation issues. As discussed above, the IRS did not appeal the Tax Court ruling on the street lighting depreciation. The U.K. Windfall tax credit issue will be governed by the U.S. Supreme Court's decision in the PPL Corp. proceeding as explained in "Income Tax Litigation", above.

2004-2005 IRS Audit

            The IRS issued its 2004-2005 Revenue Agent's Report (RAR) in May 2009.

            In June 2009, Entergy filed a formal protest with the IRS Appeals Division indicating disagreement with certain issues contained in the 2004-2005 RAR.  The major issues in dispute are:

• Depreciation of street lighting assets (because the IRS did not appeal the Tax Court's 2010 decision on this issue, it will be fully allowed in the final Appeals Division calculations for this audit).
• Inclusion of nuclear decommissioning liabilities in cost of goods sold for the nuclear power plants owned by the Utility resulting from an Application for Change in Accounting Method for tax purposes (the "2004 CAM").

During the fourth quarter 2012, Entergy settled the position relating to the 2004 CAM.   Under the settlement Entergy conceded its tax position, resulting in an increase in taxable income of approximately $2.97 billion for the tax years 2004 - 2007.  The settlement provides that Entergy Louisiana is entitled to additional tax depreciation of approximately $547 million for years 2006 and beyond.  The deferred tax asset net of interest charges associated with the settlement is $155 million for Entergy.  There was a related increase to Entergy Louisiana's member's equity account.

2006-2007 IRS Audit

            The IRS issued its 2006-2007 RAR in October 2011.  In connection with the 2006-2007 IRS audit and resulting RAR, Entergy resolved the significant issues discussed below. 

In August 2011, Entergy entered into a settlement agreement with the IRS relating to the mark-to-market income tax treatment of various wholesale electric power purchase and sale agreements, including Entergy Louisiana's contract to purchase electricity from the Vidalia hydroelectric facility.  See Note 8 to the financial statements for further details regarding this contract and a previous LPSC-approved settlement regarding the tax treatment of the contract.

With respect to income tax accounting for wholesale electric power purchase agreements, Entergy recognized income for tax purposes of approximately $1.5 billion, which represents a reversal of previously deducted temporary differences on which deferred taxes had been provided.  Also in connection with this settlement, Entergy recognized a gain for income tax purposes of approximately $1.03 billion on the formation of a wholly-owned subsidiary in 2005 with a corresponding step-up in the tax basis of depreciable assets resulting in additional tax depreciation at Entergy Louisiana.  Because Entergy Louisiana is entitled to deduct additional tax depreciation of $1.03 billion in the future, Entergy Louisiana recorded a deferred tax asset for this additional tax basis. The tax expense associated with the gain is offset by recording the deferred tax asset and by utilization of net operating losses. With the recording of the deferred tax asset, there was a corresponding increase to Entergy Louisiana's member's equity account. The agreement with the IRS effectively settled the tax treatment of various wholesale electric power purchase and sale agreements, resulting in the reversal in third quarter 2011 of approximately $422 million of deferred tax liabilities and liabilities for uncertain tax positions at Entergy Louisiana, with a corresponding reduction in income tax expense. Under the terms of an LPSC-approved final settlement, Entergy Louisiana recorded a $199 million regulatory charge and a corresponding net-of-tax regulatory liability.

After consideration of the taxable income recognition and the additional depreciation deductions provided for in the settlement, Entergy's net operating loss carryover was reduced by approximately $2.5 billion.

2008-2009 IRS Audit

In the third quarter 2008, Entergy Louisiana and Entergy Gulf States Louisiana received $679 million and $274.7 million, respectively, from the Louisiana Utilities Restoration Corporation ("LURC"). These receipts from LURC were from the proceeds of a Louisiana Act 55 financing of the costs incurred to restore service following Hurricane Katrina and Hurricane Rita. See Note 2 to the financial statements for further details regarding the financings.

In June 2012, Entergy effectively settled the tax treatment of the receipt of these funds, which resulted in an increase to 2008 taxable income of $129 million and $104 million for Entergy Louisiana and Entergy Gulf States Louisiana, respectively. As a result of the settlement, Entergy recorded an income tax benefit of $172 million, including $143 million for Entergy Louisiana and $20 million for Entergy Gulf States Louisiana, resulting from the reversal of liabilities for uncertain tax positions. Under the terms of an LPSC-approved settlement related to the Louisiana Act 55 financings, Entergy Louisiana and Entergy Gulf States Louisiana recorded, respectively, a $137 million ($84 million net-of-tax) and a $28 million ($17 million net-of-tax) regulatory charge and a corresponding regulatory liability to reflect their obligations to customers with respect to the settlement. See Note 8 to the financial statements for further discussion of the LPSC settlement.

              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. Entergy has disagreed with this disallowance and will file a protest with IRS Appeals at the conclusion of the 2008-09 examination.

Other Tax Matters

            Entergy regularly negotiates with the IRS to achieve settlements.  The results of all pending litigations and audit issues could result in significant changes to the amounts of unrecognized tax benefits, as discussed above.

In March 2010, Entergy filed an Application for Change in Accounting Method with the IRS. In the application, Entergy proposed to change the definition of unit of property for its generation assets to determine the appropriate characterization of costs associated with such units as capital or repair under the Internal Revenue Code and related Treasury Regulations. The effect of this change was an approximate $1.3 billion reduction in 2010 taxable income for Entergy, including reductions of $292 million for Entergy Arkansas, $132 million for Entergy Gulf States Louisiana, $185 million for Entergy Louisiana, $48 million for Entergy Mississippi, $45 million for Entergy Texas, $13 million for Entergy New Orleans, and $180 million for System Energy.

During the second quarter 2011, Entergy filed an Application for Change in Accounting Method with the IRS related to the allocation of overhead costs between production and non-production activities. The accounting method affects the amount of overhead that will be capitalized or deducted for tax purposes. The accounting method is expected to be implemented for the 2014 tax year.

Entergy Arkansas [Member]

Income Taxes

NOTE 3. INCOME TAXES (Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

     Income taxes from continuing operations for 2012, 2011, and 2010 for Entergy Corporation and Subsidiaries consist of the following:

	2012	2011	2010
	(In Thousands)
Current:
Federal	($47,851)	$452,713	$145,161
Foreign	143	130	131
State	(41,516)	152,711	19,313
Total	(89,224)	605,554	164,605
Deferred and non-current -- net	131,130	(311,708)	468,698
Investment tax credit
adjustments -- net	(11,051)	(7,583)	(16,064)
Income tax expense from
continuing operations	$30,855	$286,263	$617,239

 

     Income taxes for 2012, 2011, and 2010 for Entergy's Registrant Subsidiaries consist of the following:

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2012	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Current:
Federal	$64,069	($66,081)	($132,999)	$3,188	($9,484)	($114,677)	($50,491)
State	6,712	9,535	(1,269)	(4,425)	(1,617)	4,933	(8,544)
Total	70,781	(56,546)	(134,268)	(1,237)	(11,101)	(109,744)	(59,035)
Deferred and non-current -- net	26,042	112,390	8,463	59,045	18,586	144,471	137,832
Investment tax credit
adjustments -- net	(2,017)	(3,228)	(3,117)	871	(245)	(1,609)	(1,682)
Income taxes	$94,806	$52,616	($128,922)	$58,679	$7,240	$33,118	$77,115

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2011	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Current:
Federal	($12,448)	($30,106)	($136,800)	($9,466)	$14,641	($33,045)	$139,529
State	(1,751)	15,950	34,832	6,069	1,724	3,153	16,825
Total	(14,199)	(14,156)	(101,968)	(3,397)	16,365	(29,892)	156,354
Deferred and non-current -- net	148,978	107,250	(265,046)	32,380	(201)	80,993	(84,505)
Investment tax credit
adjustments -- net	(2,014)	(3,358)	(3,197)	(182)	(302)	(1,609)	3,104
Income taxes	$132,765	$89,736	($370,211)	$28,801	$15,862	$49,492	$74,953

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2010	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Current:
Federal	$114,821	$196,230	$73,174	$13,722	($114,382)	($10,607)	($4,102)
State	(9,200)	481	(4,324)	5,959	1,427	1,060	3,328
Total	105,621	196,711	68,850	19,681	(112,955)	(9,547)	(774)
Deferred and non-current -- net	10,328	(101,007)	918	31,415	129,880	53,539	60,305
Investment tax credit
adjustments -- net	(3,005)	(3,407)	(3,222)	(985)	(324)	(1,609)	(3,482)
Income taxes	$112,944	$92,297	$66,546	$50,111	$16,601	$42,383	$56,049

     Total income taxes for Entergy Corporation and 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 2012, 2011, and 2010 are:

	2012	2011	2010
	(In Thousands)
Net income attributable to Entergy Corporation	$846,673	$1,346,439	$1,250,242
Preferred dividend requirements of subsidiaries	21,690	20,933	20,063
Consolidated net income	868,363	1,367,372	1,270,305
Income taxes	30,855	286,263	617,239
Income before income taxes	$899,218	$1,653,635	$1,887,544
Computed at statutory rate (35%)	$314,726	$578,772	$660,640
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	40,699	93,940	40,530
Regulatory differences - utility plant items	35,527	39,970	31,473
Equity component of AFUDC	(30,838)	(30,184)	(16,542)
Amortization of investment tax credits	(14,000)	(14,962)	(15,980)
Net-of-tax regulatory liability (a)	(4,356)	65,357	-
Deferred tax reversal on PPA settlement (a)	-	(421,819)	-
IRS decommissioning settlement (b)	(155,300)
Write-off of reorganization costs	-	-	(19,974)
Tax law change-Medicare Part D	-	-	13,616
Write-off of regulatory asset for income taxes	42,159	-	-
Capital gains / (losses)	(20,188)	-	-
Flow-through / permanent differences	(14,801)	(17,848)	(26,370)
Provision for uncertain tax positions	(159,957)	2,698	(43,115)
Change in regulatory recovery	-	-	-
Other - net	(2,816)	(9,661)	(7,039)
Total income taxes as reported	$30,855	$286,263	$617,239
Effective Income Tax Rate	3.4%	17.3%	32.7%
(a)  See "Income Tax Audits - 2006-2007 IRS Audit" below for discussion of these items.
(b)  See "Income Tax Audits - 2004-2005 IRS Audit" below for discussion of this item.

(c)  See "Income Tax Audits - 2008-2009 IRS Audit" below for discussion of the most significant item in 2012.

            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 2012, 2011, and 2010 are:

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2012	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Net income	$152,365	$158,977	$281,081	$46,768	$17,065	$41,971	$111,866
Income taxes (benefit)	94,806	52,616	(128,922)	58,679	7,240	33,118	77,115
Pretax income	$247,171	$211,593	$152,159	$105,447	$24,305	$75,089	$188,981
Computed at statutory rate (35%)	$86,510	$74,058	$53,256	$36,906	$8,507	$26,281	$66,143
Increases (reductions) in tax
resulting from:
State income taxes net of
federal income tax effect	11,282	5,087	1,976	3,944	505	3,115	6,652
Regulatory differences -
utility plant items	6,778	8,472	312	2,619	2,289	3,668	11,389
Equity component of AFUDC	(2,495)	(3,042)	(12,919)	(1,383)	(276)	(1,587)	(9,136)
Amortization of investment
tax credits	(1,992)	(3,204)	(3,089)	(264)	(240)	(1,596)	(3,480)
Net-of-tax regulatory liability (a)	-	-	(4,356)	-	-	-	-
Flow-through / permanent
differences	3,427	(7,646)	1,397	1,961	(4,385)	1,585	(357)
Non-taxable
dividend income	-	(9,836)	(27,336)	-	-	-	-
Benefit of Entergy Corporation
expenses	(19,403)	(17,703)	-	14,449	2,758	-	(10,241)
Provision for uncertain
tax positions	11,227	8,745	(143,583)	870	(2,095)	1,651	17,966
Change in regulatory recovery	-	(553)	7,854	-	-	-
Other -- net	(528)	(1,762)	(2,434)	(423)	177	1	(1,821)
Total income taxes	$94,806	$52,616	($128,922)	$58,679	$7,240	$33,118	$77,115
Effective Income Tax Rate	38.4%	24.9%	-84.7%	55.6%	29.8%	44.1%	40.8%

(a) See "Income Tax Audits - 2006-2007 IRS Audit" below for discussion of these items.

(b) See "Incomr Tax Audits - 2008-2009 IRS Audit" below for discussion of the most significant item in 2012.

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2011	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Net income	$164,891	$201,604	$473,923	$108,729	$35,976	$80,845	$64,197
Income taxes (benefit)	132,765	89,736	(370,211)	28,801	15,862	49,492	74,953
Pretax income	$297,656	$291,340	$103,712	$137,530	$51,838	$130,337	$139,150
Computed at statutory rate (35%)	$104,180	$101,969	$36,299	$48,136	$18,143	$45,618	$48,703
Increases (reductions) in tax
resulting from:
State income taxes net of
federal income tax effect	13,727	9,618	943	3,211	3,350	2,033	4,436
Regulatory differences -
utility plant items	10,079	8,379	1,404	2,038	3,860	4,003	10,207
Equity component of AFUDC	(3,363)	(3,181)	(11,315)	(2,963)	(215)	(1,322)	(7,825)
Amortization of investment
tax credits	(1,992)	(3,336)	(3,168)	(960)	(295)	(1,596)	(3,480)
Net-of-tax regulatory liability (a)	-	-	65,357	-	-	-	-
Deferred tax reversal on PPA
settlement (a)	-	-	(421,819)	-	-	-	-
Flow-through / permanent
differences	(1,365)	587	(1,285)	304	(4,983)	88	529
Non-taxable
dividend income	-	(11,364)	(27,336)	-	-	-	-
Benefit of Entergy Corporation
expenses	-	(5,694)	-	(21,248)	(6,235)	(16)	16,559
Provision for uncertain
tax positions	12,016	(7,144)	(4,880)	(2)	2,241	717	5,878
Other -- net	(517)	(98)	(4,411)	285	(4)	(33)	(54)
Total income taxes	$132,765	$89,736	($370,211)	$28,801	$15,862	$49,492	$74,953
Effective Income Tax Rate	44.6%	30.8%	-357.0%	20.9%	30.6%	38.0%	53.9%

(a) See "Income Tax Audits - 2006-2007 IRS Audit" below for discussion of these items.

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2010	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Net income	$172,618	$174,319	$231,435	$85,377	$31,114	$66,200	$82,624
Income taxes	112,944	92,297	66,546	50,111	16,601	42,383	56,049
Pretax income	$285,562	$266,616	$297,981	$135,488	$47,715	$108,583	$138,673
Computed at statutory rate (35%)	$99,947	$93,316	$104,293	$47,421	$16,700	$38,004	$48,536
Increases (reductions) in tax
resulting from:
State income taxes net of
federal income tax effect	13,156	1,142	(10,618)	1,245	1,387	424	2,206
Regulatory differences -
utility plant items	6,126	(4,004)	7,374	3,455	3,999	4,089	10,435
Equity component of AFUDC	(144)	(1,547)	(8,361)	(1,643)	(184)	(1,525)	(3,138)
Amortization of investment
tax credits	(2,983)	(3,309)	(3,192)	(972)	(313)	(1,596)	(3,480)
Flow-through / permanent
differences	(1,235)	8,423	(754)	153	(4,883)	236	(497)
Non-taxable
dividend income	-	(9,189)	(23,603)	-	-	-	-
Provision for uncertain
tax positions	(2,100)	7,200	2,200	700	(300)	2,800	2,090
Other -- net	177	265	(793)	(248)	195	(49)	(103)
Total income taxes	$112,944	$92,297	$66,546	$50,111	$16,601	$42,383	$56,049
Effective Income Tax Rate	39.6%	34.6%	22.3%	37.0%	34.8%	39.0%	40.4%

     Significant components of accumulated deferred income taxes and taxes accrued for Entergy Corporation and Subsidiaries as of December 31, 2012 and 2011 are as follows:

	2012	2011
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net	($8,240,342)	($7,043,758)
Regulatory assets	(898,143)	(930,370)
Nuclear decommissioning trusts	(848,918)	(553,558)
Combined unitary state taxes	(233,210)	(227,427)
Power purchase agreements	-	(17,138)
Other	(485,550)	(402,097)
Total	(10,706,163)	(9,174,348)
Deferred tax assets:
Nuclear decommissioning liabilities	733,103	612,945
Regulatory liabilities	404,852	197,554
Pension and other post-employment benefits	358,893	315,134
Sale and leaseback	195,074	217,430
Accumulated deferred investment tax credit	110,690	108,338
Provision for contingencies	61,576	28,504
Power purchase agreements	43,717	-
Other	141,592	160,620
Net operating loss carryforwards	960,235	253,518
Capital losses	13,631	12,995
Valuation allowance	(86,881)	(85,615)
Total	2,936,482	1,821,423
Noncurrent accrued taxes (including unrecognized
tax benefits)	(210,534)	(814,597)
Accumulated deferred income taxes and taxes accrued	($7,980,215)	($8,167,522)

Entergy's estimated tax attributes carryovers and their expiration dates as of December 31, 2012 are as follows:

Carryover Description	Carryover Amount	Year(s) of expiration
Federal net operating losses	$12.6 billion	2028-2032
State net operating losses	$11.2 billion	2013-2032
State capital losses	$177 million	2013-2015
Miscellaneous federal and state credits	$81.9 million	2013-2032

     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 and capital loss carryovers will not be utilized, a valuation allowance $69.6 million and $13.6 million of has been provided on the deferred tax assets relating to these state net operating and capital loss carryovers, respectively.

     Significant components of accumulated deferred income taxes and taxes accrued for the Registrant Subsidiaries as of December 31, 2012 and 2011 are as follows:

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2012	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net	($1,565,988)	($1,268,164)	($1,544,256)	($727,442)	($202,496)	($770,084)	($759,896)
Regulatory assets	(172,915)	(100,578)	(249,051)	(27,077)	(4,790)	(220,417)	(119,209)
Nuclear decommissioning trusts	(67,025)	(25,472)	(29,493)	-	-	-	(27,809)
Deferred fuel	(50,068)	(1,618)	(11,815)	(11,332)	(976)	3,932	(445)
Other	(55,000)	(27,501)	(92,433)	(12,641)	(10,576)	(23,681)	(6,592)
Total	($1,910,996)	($1,423,333)	($1,927,048)	($778,492)	($218,838)	($1,010,250)	($913,951)
Deferred tax assets:
Nuclear decommissioning liabilities	(63,189)	51,593	92,930	-	-	-	(65,564)
Regulatory liabilities	79,805	47,474	173,046	8,515	47,257	3,429	45,327
Pension and other post-
employment benefits	(75,278)	47,469	34,283	(22,140)	(10,815)	(40,389)	(19,160)
Sale and Leaseback	-	-	57,423	-	-	-	137,651
Accumulated deferred investment tax credit	16,062	36,642	27,008	2,776	500	6,210	21,492
Provision for contingencies	4,723	33,074	48,241	9,564	(2,865)	(35,505)	-
Power purchase agreements	94	37,771	-	84	21	2,752	-
Unbilled/deferred revenues	27,651	(23,150)	(7,101)	9,242	3,352	12,986	-
Compensation	3,587	580	18	(664)	13	4,547	180
Net operating loss carryforwards	102,034	-	460,367	45,475	-	20,307	86,228
Other	5,565	6,106	5,513	8,758	4,472	6,707	2,000
Total	101,054	237,559	891,728	61,610	41,935	(18,956)	208,154
Noncurrent accrued taxes (including
unrecognized tax benefits)	46,930	(239,670)	218,033	(1,121)	13,630	55,113	(4,130)
Accumulated deferred income
taxes and taxes accrued	($1,763,012)	($1,425,444)	($817,287)	($718,003)	($163,273)	($974,093)	($709,927)

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2011	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net	($1,334,016)	($1,124,284)	($1,077,835)	($608,596)	($148,296)	($735,310)	($505,369)
Regulatory assets	(222,429)	(103,585)	(249,459)	(32,611)	-	(227,224)	(120,886)
Nuclear decommissioning trusts	(53,789)	(21,096)	(22,441)	-	-	-	(19,138)
Deferred fuel	(82,452)	(1,225)	(4,285)	718	(331)	3,932	(8)
Other	(54,277)	(1,394)	(26,237)	(7,263)	(18,319)	(14,098)	(9,333)
Total	($1,746,963)	($1,251,584)	($1,380,257)	($647,752)	($166,946)	($972,700)	($654,734)
Deferred tax assets:
Nuclear decommissioning liabilities	(104,862)	(38,683)	56,399	-	-	-	(47,360)
Regulatory liabilities	29,473	(39,265)	111,705	1,497	53,191	35,072	18,301
Pension and other post-				-	-	-
employment benefits	(75,399)	123,085	19,866	(30,390)	(11,713)	(41,964)	(19,593)
Sale and Leaseback	-	-	66,801	-	-	-	150,629
Accumulated deferred
investment tax credit	16,843	31,367	28,197	2,437	592	6,769	22,133
Provision for contingencies	4,167	(1,406)	3,940	2,465	10,121	2,299	-
Power purchase agreements	94	3,938	(1)	2,383	22	2,547	-
Unbilled/deferred revenues	15,222	(21,918)	(7,108)	8,990	2,707	14,324	-
Net operating loss carryforwards	-	-	39,153	-	-	58,547	-
Other	56,116	27,548	33,675	6,206	1,899	8,753	40,759
Total	(58,346)	84,666	352,627	(6,412)	56,819	86,347	164,869
Noncurrent accrued taxes (including
unrecognized tax benefits)	(27,718)	(206,752)	(75,750)	(6,271)	(27,859)	39,799	(165,981)
Accumulated deferred income
taxes and taxes accrued	($1,833,027)	($1,373,670)	($1,103,380)	($660,435)	($137,986)	($846,554)	($655,846)

     The Registrant Subsidiaries' estimated tax attributes carryovers and their expiration dates as of December 31, 2012 are as follows:

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
	Arkansas	Louisiana	Louisiana	Mississippi New Orleans		Texas	Energy
Federal net operating
losses	$1.3 billion	$321 million	$2.3 billion	$155 million	$81 million	$60 million	$875 million
Year(s) of expiration	2029 -2031	2029 -2030	2028 -2032	2029 -2032	2030 -2032	2029 -2032	2029 -2032
State net operating losses	$48 million	$852 million	$3.2 billion	-	$94 million	-	$220 million
Year(s) of expiration	2023-2026	2024 -2025	2023 -2027	N/A	2025-2027	N/A	2029-2030
Federal minimum tax
credits	$2 million	$1 million	$4 million	$1 million	$1 million	$- million	$2 million
Year(s) of expiration	2024-2031	2024-2031	2026 -2031	2024 -2031	2024 -2031	N/A	2024-2031
Other federal credits	$0 million	$0 million	$0 million	$0 million	$0 million	-	$0 million
Year(s) of expiration	2024 -2030	2024 -2030	2024 -2030	2024 -2030	2024 -2030	N/A	2024 -2030
State credits	-	-	-	$10.1 million	-	$4.2 million	$15.6 million
Year(s) of expiration	N/A	N/A	N/A	2013 -2016	N/A	2013 -2027	2015 -2016

     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:

	2012	2011	2010
	(In Thousands)
Gross balance at January 1	$4,387,780	$4,949,788	$4,050,491
Additions based on tax positions related to the current year	163,612	211,966	480,843
Additions for tax positions of prior years	1,517,797	332,744	871,682
Reductions for tax positions of prior years	(476,873)	(259,895)	(438,460)
Settlements	(1,421,913)	(841,528)	(10,462)
Lapse of statute of limitations	-	(5,295)	(4,306)
Gross balance at December 31	4,170,403	4,387,780	4,949,788
Offsets to gross unrecognized tax benefits:
Credit and loss carryovers	(4,022,535)	(3,212,397)	(3,771,301)
Cash paid to taxing authorities	-	(363,266)	(373,000)
Unrecognized tax benefits net of unused tax attributes and payments (1)	$147,868	$812,117	$805,487

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

     The balances of unrecognized tax benefits include $203 million, $521 million, and $605 million as of December 31, 2012, 2011, and 2010, 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 $3.968 billion, $3.867 billion, and $4.345 billion as of December 31, 2012, 2011, and 2010, 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 has made deposits with the IRS against its potential liabilities arising from audit adjustments and settlements related to its uncertain tax positions.Deposits are expected to be made to the IRS as the cash tax benefits of uncertain tax positions are realized.The total amount of cash deposits shown for 2011 has been fully offset against settled liabilities which arose in 2012.

     Entergy accrues interest expense, if any, related to unrecognized tax benefits in income tax expense. Entergy's December 31, 2012, 2011, and 2010 accrued balance for the possible payment of interest is approximately $146.3 million, $99 million, and $45 million, respectively.

A reconciliation of the Registrant Subsidiaries' beginning and ending amount of unrecognized tax benefits for 2012, 2011, and 2010 is as follows:

2012	Entergy Arkansas	Entergy Gulf States Louisiana	Entergy Louisiana	Entergy Mississippi	Entergy New Orleans	Entergy Texas	System Energy
	(In Thousands)
Gross balance at January 1, 2012	$335,493	$390,493	$446,187	$11,052	$56,052	$19,225	$281,183
Additions based on tax
positions related to the
current year	10,409	8,974	67,721	8,401	497	1,656	8,715
Additions for tax positions
of prior years	429,232	392,548	331,432	4,057	445	4,834	271,172
Reductions for tax
positions of prior years	(39,534)	(50,518)	(169,465)	(5,703)	(2,506)	(11,649)	(20,934)
Settlements	(390,931)	(275,776)	(139,202)	(966)	(2,470)	(112)	(279,790)
Gross balance at December 31, 2012	344,669	465,721	536,673	16,841	52,018	13,954	260,346
Offsets to gross unrecognized
tax benefits:
Loss carryovers	(342,127)	(160,955)	(536,673)	(16,841)	(35,511)	(1,593)	(249,424)
Cash paid to taxing authorities	-	-	-	-	-	-	-
Unrecognized tax benefits net of
unused tax attributes and payments	$2,542	$304,766	$-	$-	$16,507	$12,361	$10,922

2011	Entergy Arkansas	Entergy Gulf States Louisiana	Entergy Louisiana	Entergy Mississippi	Entergy New Orleans	Entergy Texas	System Energy
	(In Thousands)
Gross balance at January 1, 2011	$240,239	$353,886	$505,188	$24,163	$18,176	$14,229	$224,518
Additions based on tax
positions related to the
current year	11,216	9,398	8,748	457	50,212	1,760	44,419
Additions for tax positions
of prior years	44,202	50,944	21,052	21,902	7,343	7,533	14,200
Reductions for tax
positions of prior years	(3,255)	(21,719)	(27,991)	(5,022)	(12,289)	(3,432)	(4,942)
Settlements	43,091	(2,016)	(60,810)	(30,448)	(7,390)	(865)	2,988
Gross balance at December 31, 2011	335,493	390,493	446,187	11,052	56,052	19,225	281,183
Offsets to gross unrecognized
tax benefits:
Loss carryovers	(146,429)	(26,394)	(216,720)	(5,930)	(1,211)	(10,645)	(10,752)
Cash paid to taxing authorities	(75,977)	(45,493)	0	(7,556)	(1,174)	(1,376)	(41,878)
Unrecognized tax benefits net of
unused tax attributes and payments	$113,087	$318,606	$229,467	($2,434)	$53,667	$7,204	$228,553

2010	Entergy Arkansas	Entergy Gulf States Louisiana	Entergy Louisiana	Entergy Mississippi	Entergy New Orleans	Entergy Texas	System Energy
	(In Thousands)
Gross balance at January 1, 2010	$293,920	$311,311	$352,577	$17,137	($53,295)	$32,299	$211,247
Additions based on tax
positions related to the
current year	38,205	87,755	183,188	4,679	173	5,169	16,829
Additions for tax positions
of prior years	1,838	25,960	34,236	6,857	72,169	5,868	10,402
Reductions for tax
positions of prior years	(92,699)	(71,033)	(64,868)	(4,469)	(863)	(29,100)	(13,116)
Settlements	(1,025)	(107)	55	(41)	(8)	(7)	(844)
Gross balance at December 31, 2010	240,239	353,886	505,188	24,163	18,176	14,229	224,518
Offsets to gross unrecognized
tax benefits:
Loss carryovers	(123,968)	(29,257)	(131,805)	(6,477)	(3,751)	(6,269)	(10,487)
Cash paid to taxing authorities	(75,977)	(45,493)	-	(7,556)	(1,174)	(1,376)	(41,878)
Unrecognized tax benefits net of
unused tax attributes and payments	$40,294	$279,136	$373,383	$10,130	$13,251	$6,584	$172,153

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

	December 31, 2012	December 31, 2011	December 31, 2010
	(In  Millions)
Entergy Arkansas	$0.6	$-	$0.2
Entergy Gulf States Louisiana	$44.0	$107.9	$129.6
Entergy Louisiana	$92.4	$281.3	$286.7
Entergy Mississippi	$3.9	$3.8	$5.3
Entergy New Orleans	$-	$-	$-
Entergy Texas	$8.6	$7.3	$6.0
System Energy	$3.5	$-	$12.1

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, 2012	December 31, 2011	December 31, 2010
	(In Millions)
Entergy Arkansas	$21.8	$11.4	$-
Entergy Gulf States Louisiana	$33.1	$14.4	$9.7
Entergy Louisiana	$0.9	$0.8	$3.3
Entergy Mississippi	$2.4	$1.7	$1.6
Entergy New Orleans	$0.1	$2.4	$-
Entergy Texas	$0.7	$0.1	$0.1
System Energy	$33.2	$18.5	$8.2

Income Tax Litigation

In October 2010 the U.S. Tax Court entered a decision in favor of Entergy for tax years 1997 and 1998. The issues decided by the Tax Court are as follows:

• The ability to credit the U.K. Windfall Tax against U.S. tax as a foreign tax credit.  The U.K. Windfall Tax relates to Entergy's former investment in London Electricity.
• The validity of Entergy's change in method of tax accounting for street lighting assets and the related increase in depreciation deductions.

The IRS did not appeal street lighting depreciation, and that matter is final. The IRS filed an appeal of the U.K. Windfall Tax decision, however, with the U.S. Court of Appeals for the Fifth Circuit in December 2010. Oral arguments were heard in November 2011. In June 2012 the U.S. Court of Appeals for the Fifth Circuit unanimously affirmed the U.S. Tax Court decision. As a result of this decision, Entergy reversed its liability for uncertain tax positions associated with this issue. On September 4, 2012, the U.S. Solicitor General, on behalf of the Commissioner of Internal Revenue, petitioned the U.S. Supreme Court for a writ of certiorari to review the Fifth Circuit judgment.

Concurrent with the Tax Court's issuance of a favorable decision regarding the above issues, the Tax Court issued a favorable decision in a separate proceeding, PPL Corp. v. Commissioner, regarding the creditability of the U.K. Windfall Tax.  The IRS appealed the PPL decision to the United States Court of Appeals for the Third Circuit.  In December 2011 the Third Circuit reversed the Tax Court's holding in PPL Corp. v. Commissioner, stating that the U.K. tax was not eligible for the foreign tax credit.  PPL Corp. petitioned the U.S. Supreme Court for a writ of certiorari to review the U.S. Court of Appeals for the Third Circuit decision.  On October 29, 2012, the U.S. Supreme Court granted PPL Corp.'s petition for certiorari.    The Solicitor General's petition for writ of certiorari in Entergy's case is currently on hold pending the disposition of the PPL case.  Entergy's case will be determined consistent with the U.S. Supreme Court's decision in the PPL proceeding.  Oral argument in PPL's case was heard on February 20, 2013.

The total tax at issue on the U.K. Windfall Tax credit matter is $152 million, and interest on the underpayment of such tax is estimated to be $102 million resulting in total exposure of $254 million.

            In February 2008 the IRS issued a Statutory Notice of Deficiency for the year 2000.  The deficiency resulted from a disallowance of foreign tax credits (the same issue discussed above) as well as the disallowance of depreciation deductions on non-utility nuclear plants.  Entergy filed a Tax Court petition in May 2008 challenging the IRS treatment of these issues.  In June 2010 a trial on the depreciation issue was held in Washington, D.C.  In February 2011 a joint stipulation of settled issues was filed under which the IRS conceded its position with respect to the depreciation issue.  The outcome of the foreign tax credit matter for the year 2000 will also be determined consistent with the U.S. Supreme Court's decision in the PPL proceeding.

Income Tax Audits

Entergy and its subsidiaries file U.S. federal and various state and foreign income tax returns.Other than the matters discussed in the Income Tax Litigation section above, the IRS's and substantially all state taxing authorities' examinations are completed for years before 2005.

2002-2003 IRS Audit

In September 2009, Entergy entered into a partial agreement with the IRS for the years 2002 and 2003. In the partial agreement, Entergy did not agree to the IRS's disallowance of foreign tax credits for the U.K. Windfall Tax and the street lighting depreciation issues. As discussed above, the IRS did not appeal the Tax Court ruling on the street lighting depreciation. The U.K. Windfall tax credit issue will be governed by the U.S. Supreme Court's decision in the PPL Corp. proceeding as explained in "Income Tax Litigation", above.

2004-2005 IRS Audit

            The IRS issued its 2004-2005 Revenue Agent's Report (RAR) in May 2009.

            In June 2009, Entergy filed a formal protest with the IRS Appeals Division indicating disagreement with certain issues contained in the 2004-2005 RAR.  The major issues in dispute are:

• Depreciation of street lighting assets (because the IRS did not appeal the Tax Court's 2010 decision on this issue, it will be fully allowed in the final Appeals Division calculations for this audit).
• Inclusion of nuclear decommissioning liabilities in cost of goods sold for the nuclear power plants owned by the Utility resulting from an Application for Change in Accounting Method for tax purposes (the "2004 CAM").

During the fourth quarter 2012, Entergy settled the position relating to the 2004 CAM.   Under the settlement Entergy conceded its tax position, resulting in an increase in taxable income of approximately $2.97 billion for the tax years 2004 - 2007.  The settlement provides that Entergy Louisiana is entitled to additional tax depreciation of approximately $547 million for years 2006 and beyond.  The deferred tax asset net of interest charges associated with the settlement is $155 million for Entergy.  There was a related increase to Entergy Louisiana's member's equity account.

2006-2007 IRS Audit

            The IRS issued its 2006-2007 RAR in October 2011.  In connection with the 2006-2007 IRS audit and resulting RAR, Entergy resolved the significant issues discussed below. 

In August 2011, Entergy entered into a settlement agreement with the IRS relating to the mark-to-market income tax treatment of various wholesale electric power purchase and sale agreements, including Entergy Louisiana's contract to purchase electricity from the Vidalia hydroelectric facility.  See Note 8 to the financial statements for further details regarding this contract and a previous LPSC-approved settlement regarding the tax treatment of the contract.

With respect to income tax accounting for wholesale electric power purchase agreements, Entergy recognized income for tax purposes of approximately $1.5 billion, which represents a reversal of previously deducted temporary differences on which deferred taxes had been provided.  Also in connection with this settlement, Entergy recognized a gain for income tax purposes of approximately $1.03 billion on the formation of a wholly-owned subsidiary in 2005 with a corresponding step-up in the tax basis of depreciable assets resulting in additional tax depreciation at Entergy Louisiana.  Because Entergy Louisiana is entitled to deduct additional tax depreciation of $1.03 billion in the future, Entergy Louisiana recorded a deferred tax asset for this additional tax basis. The tax expense associated with the gain is offset by recording the deferred tax asset and by utilization of net operating losses. With the recording of the deferred tax asset, there was a corresponding increase to Entergy Louisiana's member's equity account. The agreement with the IRS effectively settled the tax treatment of various wholesale electric power purchase and sale agreements, resulting in the reversal in third quarter 2011 of approximately $422 million of deferred tax liabilities and liabilities for uncertain tax positions at Entergy Louisiana, with a corresponding reduction in income tax expense. Under the terms of an LPSC-approved final settlement, Entergy Louisiana recorded a $199 million regulatory charge and a corresponding net-of-tax regulatory liability.

After consideration of the taxable income recognition and the additional depreciation deductions provided for in the settlement, Entergy's net operating loss carryover was reduced by approximately $2.5 billion.

2008-2009 IRS Audit

In the third quarter 2008, Entergy Louisiana and Entergy Gulf States Louisiana received $679 million and $274.7 million, respectively, from the Louisiana Utilities Restoration Corporation ("LURC"). These receipts from LURC were from the proceeds of a Louisiana Act 55 financing of the costs incurred to restore service following Hurricane Katrina and Hurricane Rita. See Note 2 to the financial statements for further details regarding the financings.

In June 2012, Entergy effectively settled the tax treatment of the receipt of these funds, which resulted in an increase to 2008 taxable income of $129 million and $104 million for Entergy Louisiana and Entergy Gulf States Louisiana, respectively. As a result of the settlement, Entergy recorded an income tax benefit of $172 million, including $143 million for Entergy Louisiana and $20 million for Entergy Gulf States Louisiana, resulting from the reversal of liabilities for uncertain tax positions. Under the terms of an LPSC-approved settlement related to the Louisiana Act 55 financings, Entergy Louisiana and Entergy Gulf States Louisiana recorded, respectively, a $137 million ($84 million net-of-tax) and a $28 million ($17 million net-of-tax) regulatory charge and a corresponding regulatory liability to reflect their obligations to customers with respect to the settlement. See Note 8 to the financial statements for further discussion of the LPSC settlement.

              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. Entergy has disagreed with this disallowance and will file a protest with IRS Appeals at the conclusion of the 2008-09 examination.

Other Tax Matters

            Entergy regularly negotiates with the IRS to achieve settlements.  The results of all pending litigations and audit issues could result in significant changes to the amounts of unrecognized tax benefits, as discussed above.

In March 2010, Entergy filed an Application for Change in Accounting Method with the IRS. In the application, Entergy proposed to change the definition of unit of property for its generation assets to determine the appropriate characterization of costs associated with such units as capital or repair under the Internal Revenue Code and related Treasury Regulations. The effect of this change was an approximate $1.3 billion reduction in 2010 taxable income for Entergy, including reductions of $292 million for Entergy Arkansas, $132 million for Entergy Gulf States Louisiana, $185 million for Entergy Louisiana, $48 million for Entergy Mississippi, $45 million for Entergy Texas, $13 million for Entergy New Orleans, and $180 million for System Energy.

During the second quarter 2011, Entergy filed an Application for Change in Accounting Method with the IRS related to the allocation of overhead costs between production and non-production activities. The accounting method affects the amount of overhead that will be capitalized or deducted for tax purposes. The accounting method is expected to be implemented for the 2014 tax year.

Entergy Gulf States Louisiana [Member]

Income Taxes

NOTE 3. INCOME TAXES (Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

     Income taxes from continuing operations for 2012, 2011, and 2010 for Entergy Corporation and Subsidiaries consist of the following:

	2012	2011	2010
	(In Thousands)
Current:
Federal	($47,851)	$452,713	$145,161
Foreign	143	130	131
State	(41,516)	152,711	19,313
Total	(89,224)	605,554	164,605
Deferred and non-current -- net	131,130	(311,708)	468,698
Investment tax credit
adjustments -- net	(11,051)	(7,583)	(16,064)
Income tax expense from
continuing operations	$30,855	$286,263	$617,239

 

     Income taxes for 2012, 2011, and 2010 for Entergy's Registrant Subsidiaries consist of the following:

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2012	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Current:
Federal	$64,069	($66,081)	($132,999)	$3,188	($9,484)	($114,677)	($50,491)
State	6,712	9,535	(1,269)	(4,425)	(1,617)	4,933	(8,544)
Total	70,781	(56,546)	(134,268)	(1,237)	(11,101)	(109,744)	(59,035)
Deferred and non-current -- net	26,042	112,390	8,463	59,045	18,586	144,471	137,832
Investment tax credit
adjustments -- net	(2,017)	(3,228)	(3,117)	871	(245)	(1,609)	(1,682)
Income taxes	$94,806	$52,616	($128,922)	$58,679	$7,240	$33,118	$77,115

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2011	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Current:
Federal	($12,448)	($30,106)	($136,800)	($9,466)	$14,641	($33,045)	$139,529
State	(1,751)	15,950	34,832	6,069	1,724	3,153	16,825
Total	(14,199)	(14,156)	(101,968)	(3,397)	16,365	(29,892)	156,354
Deferred and non-current -- net	148,978	107,250	(265,046)	32,380	(201)	80,993	(84,505)
Investment tax credit
adjustments -- net	(2,014)	(3,358)	(3,197)	(182)	(302)	(1,609)	3,104
Income taxes	$132,765	$89,736	($370,211)	$28,801	$15,862	$49,492	$74,953

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2010	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Current:
Federal	$114,821	$196,230	$73,174	$13,722	($114,382)	($10,607)	($4,102)
State	(9,200)	481	(4,324)	5,959	1,427	1,060	3,328
Total	105,621	196,711	68,850	19,681	(112,955)	(9,547)	(774)
Deferred and non-current -- net	10,328	(101,007)	918	31,415	129,880	53,539	60,305
Investment tax credit
adjustments -- net	(3,005)	(3,407)	(3,222)	(985)	(324)	(1,609)	(3,482)
Income taxes	$112,944	$92,297	$66,546	$50,111	$16,601	$42,383	$56,049

     Total income taxes for Entergy Corporation and 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 2012, 2011, and 2010 are:

	2012	2011	2010
	(In Thousands)
Net income attributable to Entergy Corporation	$846,673	$1,346,439	$1,250,242
Preferred dividend requirements of subsidiaries	21,690	20,933	20,063
Consolidated net income	868,363	1,367,372	1,270,305
Income taxes	30,855	286,263	617,239
Income before income taxes	$899,218	$1,653,635	$1,887,544
Computed at statutory rate (35%)	$314,726	$578,772	$660,640
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	40,699	93,940	40,530
Regulatory differences - utility plant items	35,527	39,970	31,473
Equity component of AFUDC	(30,838)	(30,184)	(16,542)
Amortization of investment tax credits	(14,000)	(14,962)	(15,980)
Net-of-tax regulatory liability (a)	(4,356)	65,357	-
Deferred tax reversal on PPA settlement (a)	-	(421,819)	-
IRS decommissioning settlement (b)	(155,300)
Write-off of reorganization costs	-	-	(19,974)
Tax law change-Medicare Part D	-	-	13,616
Write-off of regulatory asset for income taxes	42,159	-	-
Capital gains / (losses)	(20,188)	-	-
Flow-through / permanent differences	(14,801)	(17,848)	(26,370)
Provision for uncertain tax positions	(159,957)	2,698	(43,115)
Change in regulatory recovery	-	-	-
Other - net	(2,816)	(9,661)	(7,039)
Total income taxes as reported	$30,855	$286,263	$617,239
Effective Income Tax Rate	3.4%	17.3%	32.7%
(a)  See "Income Tax Audits - 2006-2007 IRS Audit" below for discussion of these items.
(b)  See "Income Tax Audits - 2004-2005 IRS Audit" below for discussion of this item.

(c)  See "Income Tax Audits - 2008-2009 IRS Audit" below for discussion of the most significant item in 2012.

            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 2012, 2011, and 2010 are:

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2012	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Net income	$152,365	$158,977	$281,081	$46,768	$17,065	$41,971	$111,866
Income taxes (benefit)	94,806	52,616	(128,922)	58,679	7,240	33,118	77,115
Pretax income	$247,171	$211,593	$152,159	$105,447	$24,305	$75,089	$188,981
Computed at statutory rate (35%)	$86,510	$74,058	$53,256	$36,906	$8,507	$26,281	$66,143
Increases (reductions) in tax
resulting from:
State income taxes net of
federal income tax effect	11,282	5,087	1,976	3,944	505	3,115	6,652
Regulatory differences -
utility plant items	6,778	8,472	312	2,619	2,289	3,668	11,389
Equity component of AFUDC	(2,495)	(3,042)	(12,919)	(1,383)	(276)	(1,587)	(9,136)
Amortization of investment
tax credits	(1,992)	(3,204)	(3,089)	(264)	(240)	(1,596)	(3,480)
Net-of-tax regulatory liability (a)	-	-	(4,356)	-	-	-	-
Flow-through / permanent
differences	3,427	(7,646)	1,397	1,961	(4,385)	1,585	(357)
Non-taxable
dividend income	-	(9,836)	(27,336)	-	-	-	-
Benefit of Entergy Corporation
expenses	(19,403)	(17,703)	-	14,449	2,758	-	(10,241)
Provision for uncertain
tax positions	11,227	8,745	(143,583)	870	(2,095)	1,651	17,966
Change in regulatory recovery	-	(553)	7,854	-	-	-
Other -- net	(528)	(1,762)	(2,434)	(423)	177	1	(1,821)
Total income taxes	$94,806	$52,616	($128,922)	$58,679	$7,240	$33,118	$77,115
Effective Income Tax Rate	38.4%	24.9%	-84.7%	55.6%	29.8%	44.1%	40.8%

(a) See "Income Tax Audits - 2006-2007 IRS Audit" below for discussion of these items.

(b) See "Incomr Tax Audits - 2008-2009 IRS Audit" below for discussion of the most significant item in 2012.

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2011	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Net income	$164,891	$201,604	$473,923	$108,729	$35,976	$80,845	$64,197
Income taxes (benefit)	132,765	89,736	(370,211)	28,801	15,862	49,492	74,953
Pretax income	$297,656	$291,340	$103,712	$137,530	$51,838	$130,337	$139,150
Computed at statutory rate (35%)	$104,180	$101,969	$36,299	$48,136	$18,143	$45,618	$48,703
Increases (reductions) in tax
resulting from:
State income taxes net of
federal income tax effect	13,727	9,618	943	3,211	3,350	2,033	4,436
Regulatory differences -
utility plant items	10,079	8,379	1,404	2,038	3,860	4,003	10,207
Equity component of AFUDC	(3,363)	(3,181)	(11,315)	(2,963)	(215)	(1,322)	(7,825)
Amortization of investment
tax credits	(1,992)	(3,336)	(3,168)	(960)	(295)	(1,596)	(3,480)
Net-of-tax regulatory liability (a)	-	-	65,357	-	-	-	-
Deferred tax reversal on PPA
settlement (a)	-	-	(421,819)	-	-	-	-
Flow-through / permanent
differences	(1,365)	587	(1,285)	304	(4,983)	88	529
Non-taxable
dividend income	-	(11,364)	(27,336)	-	-	-	-
Benefit of Entergy Corporation
expenses	-	(5,694)	-	(21,248)	(6,235)	(16)	16,559
Provision for uncertain
tax positions	12,016	(7,144)	(4,880)	(2)	2,241	717	5,878
Other -- net	(517)	(98)	(4,411)	285	(4)	(33)	(54)
Total income taxes	$132,765	$89,736	($370,211)	$28,801	$15,862	$49,492	$74,953
Effective Income Tax Rate	44.6%	30.8%	-357.0%	20.9%	30.6%	38.0%	53.9%

(a) See "Income Tax Audits - 2006-2007 IRS Audit" below for discussion of these items.

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2010	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Net income	$172,618	$174,319	$231,435	$85,377	$31,114	$66,200	$82,624
Income taxes	112,944	92,297	66,546	50,111	16,601	42,383	56,049
Pretax income	$285,562	$266,616	$297,981	$135,488	$47,715	$108,583	$138,673
Computed at statutory rate (35%)	$99,947	$93,316	$104,293	$47,421	$16,700	$38,004	$48,536
Increases (reductions) in tax
resulting from:
State income taxes net of
federal income tax effect	13,156	1,142	(10,618)	1,245	1,387	424	2,206
Regulatory differences -
utility plant items	6,126	(4,004)	7,374	3,455	3,999	4,089	10,435
Equity component of AFUDC	(144)	(1,547)	(8,361)	(1,643)	(184)	(1,525)	(3,138)
Amortization of investment
tax credits	(2,983)	(3,309)	(3,192)	(972)	(313)	(1,596)	(3,480)
Flow-through / permanent
differences	(1,235)	8,423	(754)	153	(4,883)	236	(497)
Non-taxable
dividend income	-	(9,189)	(23,603)	-	-	-	-
Provision for uncertain
tax positions	(2,100)	7,200	2,200	700	(300)	2,800	2,090
Other -- net	177	265	(793)	(248)	195	(49)	(103)
Total income taxes	$112,944	$92,297	$66,546	$50,111	$16,601	$42,383	$56,049
Effective Income Tax Rate	39.6%	34.6%	22.3%	37.0%	34.8%	39.0%	40.4%

     Significant components of accumulated deferred income taxes and taxes accrued for Entergy Corporation and Subsidiaries as of December 31, 2012 and 2011 are as follows:

	2012	2011
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net	($8,240,342)	($7,043,758)
Regulatory assets	(898,143)	(930,370)
Nuclear decommissioning trusts	(848,918)	(553,558)
Combined unitary state taxes	(233,210)	(227,427)
Power purchase agreements	-	(17,138)
Other	(485,550)	(402,097)
Total	(10,706,163)	(9,174,348)
Deferred tax assets:
Nuclear decommissioning liabilities	733,103	612,945
Regulatory liabilities	404,852	197,554
Pension and other post-employment benefits	358,893	315,134
Sale and leaseback	195,074	217,430
Accumulated deferred investment tax credit	110,690	108,338
Provision for contingencies	61,576	28,504
Power purchase agreements	43,717	-
Other	141,592	160,620
Net operating loss carryforwards	960,235	253,518
Capital losses	13,631	12,995
Valuation allowance	(86,881)	(85,615)
Total	2,936,482	1,821,423
Noncurrent accrued taxes (including unrecognized
tax benefits)	(210,534)	(814,597)
Accumulated deferred income taxes and taxes accrued	($7,980,215)	($8,167,522)

Entergy's estimated tax attributes carryovers and their expiration dates as of December 31, 2012 are as follows:

Carryover Description	Carryover Amount	Year(s) of expiration
Federal net operating losses	$12.6 billion	2028-2032
State net operating losses	$11.2 billion	2013-2032
State capital losses	$177 million	2013-2015
Miscellaneous federal and state credits	$81.9 million	2013-2032

     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 and capital loss carryovers will not be utilized, a valuation allowance $69.6 million and $13.6 million of has been provided on the deferred tax assets relating to these state net operating and capital loss carryovers, respectively.

     Significant components of accumulated deferred income taxes and taxes accrued for the Registrant Subsidiaries as of December 31, 2012 and 2011 are as follows:

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2012	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net	($1,565,988)	($1,268,164)	($1,544,256)	($727,442)	($202,496)	($770,084)	($759,896)
Regulatory assets	(172,915)	(100,578)	(249,051)	(27,077)	(4,790)	(220,417)	(119,209)
Nuclear decommissioning trusts	(67,025)	(25,472)	(29,493)	-	-	-	(27,809)
Deferred fuel	(50,068)	(1,618)	(11,815)	(11,332)	(976)	3,932	(445)
Other	(55,000)	(27,501)	(92,433)	(12,641)	(10,576)	(23,681)	(6,592)
Total	($1,910,996)	($1,423,333)	($1,927,048)	($778,492)	($218,838)	($1,010,250)	($913,951)
Deferred tax assets:
Nuclear decommissioning liabilities	(63,189)	51,593	92,930	-	-	-	(65,564)
Regulatory liabilities	79,805	47,474	173,046	8,515	47,257	3,429	45,327
Pension and other post-
employment benefits	(75,278)	47,469	34,283	(22,140)	(10,815)	(40,389)	(19,160)
Sale and Leaseback	-	-	57,423	-	-	-	137,651
Accumulated deferred investment tax credit	16,062	36,642	27,008	2,776	500	6,210	21,492
Provision for contingencies	4,723	33,074	48,241	9,564	(2,865)	(35,505)	-
Power purchase agreements	94	37,771	-	84	21	2,752	-
Unbilled/deferred revenues	27,651	(23,150)	(7,101)	9,242	3,352	12,986	-
Compensation	3,587	580	18	(664)	13	4,547	180
Net operating loss carryforwards	102,034	-	460,367	45,475	-	20,307	86,228
Other	5,565	6,106	5,513	8,758	4,472	6,707	2,000
Total	101,054	237,559	891,728	61,610	41,935	(18,956)	208,154
Noncurrent accrued taxes (including
unrecognized tax benefits)	46,930	(239,670)	218,033	(1,121)	13,630	55,113	(4,130)
Accumulated deferred income
taxes and taxes accrued	($1,763,012)	($1,425,444)	($817,287)	($718,003)	($163,273)	($974,093)	($709,927)

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2011	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net	($1,334,016)	($1,124,284)	($1,077,835)	($608,596)	($148,296)	($735,310)	($505,369)
Regulatory assets	(222,429)	(103,585)	(249,459)	(32,611)	-	(227,224)	(120,886)
Nuclear decommissioning trusts	(53,789)	(21,096)	(22,441)	-	-	-	(19,138)
Deferred fuel	(82,452)	(1,225)	(4,285)	718	(331)	3,932	(8)
Other	(54,277)	(1,394)	(26,237)	(7,263)	(18,319)	(14,098)	(9,333)
Total	($1,746,963)	($1,251,584)	($1,380,257)	($647,752)	($166,946)	($972,700)	($654,734)
Deferred tax assets:
Nuclear decommissioning liabilities	(104,862)	(38,683)	56,399	-	-	-	(47,360)
Regulatory liabilities	29,473	(39,265)	111,705	1,497	53,191	35,072	18,301
Pension and other post-				-	-	-
employment benefits	(75,399)	123,085	19,866	(30,390)	(11,713)	(41,964)	(19,593)
Sale and Leaseback	-	-	66,801	-	-	-	150,629
Accumulated deferred
investment tax credit	16,843	31,367	28,197	2,437	592	6,769	22,133
Provision for contingencies	4,167	(1,406)	3,940	2,465	10,121	2,299	-
Power purchase agreements	94	3,938	(1)	2,383	22	2,547	-
Unbilled/deferred revenues	15,222	(21,918)	(7,108)	8,990	2,707	14,324	-
Net operating loss carryforwards	-	-	39,153	-	-	58,547	-
Other	56,116	27,548	33,675	6,206	1,899	8,753	40,759
Total	(58,346)	84,666	352,627	(6,412)	56,819	86,347	164,869
Noncurrent accrued taxes (including
unrecognized tax benefits)	(27,718)	(206,752)	(75,750)	(6,271)	(27,859)	39,799	(165,981)
Accumulated deferred income
taxes and taxes accrued	($1,833,027)	($1,373,670)	($1,103,380)	($660,435)	($137,986)	($846,554)	($655,846)

     The Registrant Subsidiaries' estimated tax attributes carryovers and their expiration dates as of December 31, 2012 are as follows:

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
	Arkansas	Louisiana	Louisiana	Mississippi New Orleans		Texas	Energy
Federal net operating
losses	$1.3 billion	$321 million	$2.3 billion	$155 million	$81 million	$60 million	$875 million
Year(s) of expiration	2029 -2031	2029 -2030	2028 -2032	2029 -2032	2030 -2032	2029 -2032	2029 -2032
State net operating losses	$48 million	$852 million	$3.2 billion	-	$94 million	-	$220 million
Year(s) of expiration	2023-2026	2024 -2025	2023 -2027	N/A	2025-2027	N/A	2029-2030
Federal minimum tax
credits	$2 million	$1 million	$4 million	$1 million	$1 million	$- million	$2 million
Year(s) of expiration	2024-2031	2024-2031	2026 -2031	2024 -2031	2024 -2031	N/A	2024-2031
Other federal credits	$0 million	$0 million	$0 million	$0 million	$0 million	-	$0 million
Year(s) of expiration	2024 -2030	2024 -2030	2024 -2030	2024 -2030	2024 -2030	N/A	2024 -2030
State credits	-	-	-	$10.1 million	-	$4.2 million	$15.6 million
Year(s) of expiration	N/A	N/A	N/A	2013 -2016	N/A	2013 -2027	2015 -2016

     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:

	2012	2011	2010
	(In Thousands)
Gross balance at January 1	$4,387,780	$4,949,788	$4,050,491
Additions based on tax positions related to the current year	163,612	211,966	480,843
Additions for tax positions of prior years	1,517,797	332,744	871,682
Reductions for tax positions of prior years	(476,873)	(259,895)	(438,460)
Settlements	(1,421,913)	(841,528)	(10,462)
Lapse of statute of limitations	-	(5,295)	(4,306)
Gross balance at December 31	4,170,403	4,387,780	4,949,788
Offsets to gross unrecognized tax benefits:
Credit and loss carryovers	(4,022,535)	(3,212,397)	(3,771,301)
Cash paid to taxing authorities	-	(363,266)	(373,000)
Unrecognized tax benefits net of unused tax attributes and payments (1)	$147,868	$812,117	$805,487

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

     The balances of unrecognized tax benefits include $203 million, $521 million, and $605 million as of December 31, 2012, 2011, and 2010, 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 $3.968 billion, $3.867 billion, and $4.345 billion as of December 31, 2012, 2011, and 2010, 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 has made deposits with the IRS against its potential liabilities arising from audit adjustments and settlements related to its uncertain tax positions.Deposits are expected to be made to the IRS as the cash tax benefits of uncertain tax positions are realized.The total amount of cash deposits shown for 2011 has been fully offset against settled liabilities which arose in 2012.

     Entergy accrues interest expense, if any, related to unrecognized tax benefits in income tax expense. Entergy's December 31, 2012, 2011, and 2010 accrued balance for the possible payment of interest is approximately $146.3 million, $99 million, and $45 million, respectively.

A reconciliation of the Registrant Subsidiaries' beginning and ending amount of unrecognized tax benefits for 2012, 2011, and 2010 is as follows:

2012	Entergy Arkansas	Entergy Gulf States Louisiana	Entergy Louisiana	Entergy Mississippi	Entergy New Orleans	Entergy Texas	System Energy
	(In Thousands)
Gross balance at January 1, 2012	$335,493	$390,493	$446,187	$11,052	$56,052	$19,225	$281,183
Additions based on tax
positions related to the
current year	10,409	8,974	67,721	8,401	497	1,656	8,715
Additions for tax positions
of prior years	429,232	392,548	331,432	4,057	445	4,834	271,172
Reductions for tax
positions of prior years	(39,534)	(50,518)	(169,465)	(5,703)	(2,506)	(11,649)	(20,934)
Settlements	(390,931)	(275,776)	(139,202)	(966)	(2,470)	(112)	(279,790)
Gross balance at December 31, 2012	344,669	465,721	536,673	16,841	52,018	13,954	260,346
Offsets to gross unrecognized
tax benefits:
Loss carryovers	(342,127)	(160,955)	(536,673)	(16,841)	(35,511)	(1,593)	(249,424)
Cash paid to taxing authorities	-	-	-	-	-	-	-
Unrecognized tax benefits net of
unused tax attributes and payments	$2,542	$304,766	$-	$-	$16,507	$12,361	$10,922

2011	Entergy Arkansas	Entergy Gulf States Louisiana	Entergy Louisiana	Entergy Mississippi	Entergy New Orleans	Entergy Texas	System Energy
	(In Thousands)
Gross balance at January 1, 2011	$240,239	$353,886	$505,188	$24,163	$18,176	$14,229	$224,518
Additions based on tax
positions related to the
current year	11,216	9,398	8,748	457	50,212	1,760	44,419
Additions for tax positions
of prior years	44,202	50,944	21,052	21,902	7,343	7,533	14,200
Reductions for tax
positions of prior years	(3,255)	(21,719)	(27,991)	(5,022)	(12,289)	(3,432)	(4,942)
Settlements	43,091	(2,016)	(60,810)	(30,448)	(7,390)	(865)	2,988
Gross balance at December 31, 2011	335,493	390,493	446,187	11,052	56,052	19,225	281,183
Offsets to gross unrecognized
tax benefits:
Loss carryovers	(146,429)	(26,394)	(216,720)	(5,930)	(1,211)	(10,645)	(10,752)
Cash paid to taxing authorities	(75,977)	(45,493)	0	(7,556)	(1,174)	(1,376)	(41,878)
Unrecognized tax benefits net of
unused tax attributes and payments	$113,087	$318,606	$229,467	($2,434)	$53,667	$7,204	$228,553

2010	Entergy Arkansas	Entergy Gulf States Louisiana	Entergy Louisiana	Entergy Mississippi	Entergy New Orleans	Entergy Texas	System Energy
	(In Thousands)
Gross balance at January 1, 2010	$293,920	$311,311	$352,577	$17,137	($53,295)	$32,299	$211,247
Additions based on tax
positions related to the
current year	38,205	87,755	183,188	4,679	173	5,169	16,829
Additions for tax positions
of prior years	1,838	25,960	34,236	6,857	72,169	5,868	10,402
Reductions for tax
positions of prior years	(92,699)	(71,033)	(64,868)	(4,469)	(863)	(29,100)	(13,116)
Settlements	(1,025)	(107)	55	(41)	(8)	(7)	(844)
Gross balance at December 31, 2010	240,239	353,886	505,188	24,163	18,176	14,229	224,518
Offsets to gross unrecognized
tax benefits:
Loss carryovers	(123,968)	(29,257)	(131,805)	(6,477)	(3,751)	(6,269)	(10,487)
Cash paid to taxing authorities	(75,977)	(45,493)	-	(7,556)	(1,174)	(1,376)	(41,878)
Unrecognized tax benefits net of
unused tax attributes and payments	$40,294	$279,136	$373,383	$10,130	$13,251	$6,584	$172,153

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

	December 31, 2012	December 31, 2011	December 31, 2010
	(In  Millions)
Entergy Arkansas	$0.6	$-	$0.2
Entergy Gulf States Louisiana	$44.0	$107.9	$129.6
Entergy Louisiana	$92.4	$281.3	$286.7
Entergy Mississippi	$3.9	$3.8	$5.3
Entergy New Orleans	$-	$-	$-
Entergy Texas	$8.6	$7.3	$6.0
System Energy	$3.5	$-	$12.1

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, 2012	December 31, 2011	December 31, 2010
	(In Millions)
Entergy Arkansas	$21.8	$11.4	$-
Entergy Gulf States Louisiana	$33.1	$14.4	$9.7
Entergy Louisiana	$0.9	$0.8	$3.3
Entergy Mississippi	$2.4	$1.7	$1.6
Entergy New Orleans	$0.1	$2.4	$-
Entergy Texas	$0.7	$0.1	$0.1
System Energy	$33.2	$18.5	$8.2

Income Tax Litigation

In October 2010 the U.S. Tax Court entered a decision in favor of Entergy for tax years 1997 and 1998. The issues decided by the Tax Court are as follows:

• The ability to credit the U.K. Windfall Tax against U.S. tax as a foreign tax credit.  The U.K. Windfall Tax relates to Entergy's former investment in London Electricity.
• The validity of Entergy's change in method of tax accounting for street lighting assets and the related increase in depreciation deductions.

The IRS did not appeal street lighting depreciation, and that matter is final. The IRS filed an appeal of the U.K. Windfall Tax decision, however, with the U.S. Court of Appeals for the Fifth Circuit in December 2010. Oral arguments were heard in November 2011. In June 2012 the U.S. Court of Appeals for the Fifth Circuit unanimously affirmed the U.S. Tax Court decision. As a result of this decision, Entergy reversed its liability for uncertain tax positions associated with this issue. On September 4, 2012, the U.S. Solicitor General, on behalf of the Commissioner of Internal Revenue, petitioned the U.S. Supreme Court for a writ of certiorari to review the Fifth Circuit judgment.

Concurrent with the Tax Court's issuance of a favorable decision regarding the above issues, the Tax Court issued a favorable decision in a separate proceeding, PPL Corp. v. Commissioner, regarding the creditability of the U.K. Windfall Tax.  The IRS appealed the PPL decision to the United States Court of Appeals for the Third Circuit.  In December 2011 the Third Circuit reversed the Tax Court's holding in PPL Corp. v. Commissioner, stating that the U.K. tax was not eligible for the foreign tax credit.  PPL Corp. petitioned the U.S. Supreme Court for a writ of certiorari to review the U.S. Court of Appeals for the Third Circuit decision.  On October 29, 2012, the U.S. Supreme Court granted PPL Corp.'s petition for certiorari.    The Solicitor General's petition for writ of certiorari in Entergy's case is currently on hold pending the disposition of the PPL case.  Entergy's case will be determined consistent with the U.S. Supreme Court's decision in the PPL proceeding.  Oral argument in PPL's case was heard on February 20, 2013.

The total tax at issue on the U.K. Windfall Tax credit matter is $152 million, and interest on the underpayment of such tax is estimated to be $102 million resulting in total exposure of $254 million.

            In February 2008 the IRS issued a Statutory Notice of Deficiency for the year 2000.  The deficiency resulted from a disallowance of foreign tax credits (the same issue discussed above) as well as the disallowance of depreciation deductions on non-utility nuclear plants.  Entergy filed a Tax Court petition in May 2008 challenging the IRS treatment of these issues.  In June 2010 a trial on the depreciation issue was held in Washington, D.C.  In February 2011 a joint stipulation of settled issues was filed under which the IRS conceded its position with respect to the depreciation issue.  The outcome of the foreign tax credit matter for the year 2000 will also be determined consistent with the U.S. Supreme Court's decision in the PPL proceeding.

Income Tax Audits

Entergy and its subsidiaries file U.S. federal and various state and foreign income tax returns.Other than the matters discussed in the Income Tax Litigation section above, the IRS's and substantially all state taxing authorities' examinations are completed for years before 2005.

2002-2003 IRS Audit

In September 2009, Entergy entered into a partial agreement with the IRS for the years 2002 and 2003. In the partial agreement, Entergy did not agree to the IRS's disallowance of foreign tax credits for the U.K. Windfall Tax and the street lighting depreciation issues. As discussed above, the IRS did not appeal the Tax Court ruling on the street lighting depreciation. The U.K. Windfall tax credit issue will be governed by the U.S. Supreme Court's decision in the PPL Corp. proceeding as explained in "Income Tax Litigation", above.

2004-2005 IRS Audit

            The IRS issued its 2004-2005 Revenue Agent's Report (RAR) in May 2009.

            In June 2009, Entergy filed a formal protest with the IRS Appeals Division indicating disagreement with certain issues contained in the 2004-2005 RAR.  The major issues in dispute are:

• Depreciation of street lighting assets (because the IRS did not appeal the Tax Court's 2010 decision on this issue, it will be fully allowed in the final Appeals Division calculations for this audit).
• Inclusion of nuclear decommissioning liabilities in cost of goods sold for the nuclear power plants owned by the Utility resulting from an Application for Change in Accounting Method for tax purposes (the "2004 CAM").

During the fourth quarter 2012, Entergy settled the position relating to the 2004 CAM.   Under the settlement Entergy conceded its tax position, resulting in an increase in taxable income of approximately $2.97 billion for the tax years 2004 - 2007.  The settlement provides that Entergy Louisiana is entitled to additional tax depreciation of approximately $547 million for years 2006 and beyond.  The deferred tax asset net of interest charges associated with the settlement is $155 million for Entergy.  There was a related increase to Entergy Louisiana's member's equity account.

2006-2007 IRS Audit

            The IRS issued its 2006-2007 RAR in October 2011.  In connection with the 2006-2007 IRS audit and resulting RAR, Entergy resolved the significant issues discussed below. 

In August 2011, Entergy entered into a settlement agreement with the IRS relating to the mark-to-market income tax treatment of various wholesale electric power purchase and sale agreements, including Entergy Louisiana's contract to purchase electricity from the Vidalia hydroelectric facility.  See Note 8 to the financial statements for further details regarding this contract and a previous LPSC-approved settlement regarding the tax treatment of the contract.

With respect to income tax accounting for wholesale electric power purchase agreements, Entergy recognized income for tax purposes of approximately $1.5 billion, which represents a reversal of previously deducted temporary differences on which deferred taxes had been provided.  Also in connection with this settlement, Entergy recognized a gain for income tax purposes of approximately $1.03 billion on the formation of a wholly-owned subsidiary in 2005 with a corresponding step-up in the tax basis of depreciable assets resulting in additional tax depreciation at Entergy Louisiana.  Because Entergy Louisiana is entitled to deduct additional tax depreciation of $1.03 billion in the future, Entergy Louisiana recorded a deferred tax asset for this additional tax basis. The tax expense associated with the gain is offset by recording the deferred tax asset and by utilization of net operating losses. With the recording of the deferred tax asset, there was a corresponding increase to Entergy Louisiana's member's equity account. The agreement with the IRS effectively settled the tax treatment of various wholesale electric power purchase and sale agreements, resulting in the reversal in third quarter 2011 of approximately $422 million of deferred tax liabilities and liabilities for uncertain tax positions at Entergy Louisiana, with a corresponding reduction in income tax expense. Under the terms of an LPSC-approved final settlement, Entergy Louisiana recorded a $199 million regulatory charge and a corresponding net-of-tax regulatory liability.

After consideration of the taxable income recognition and the additional depreciation deductions provided for in the settlement, Entergy's net operating loss carryover was reduced by approximately $2.5 billion.

2008-2009 IRS Audit

In the third quarter 2008, Entergy Louisiana and Entergy Gulf States Louisiana received $679 million and $274.7 million, respectively, from the Louisiana Utilities Restoration Corporation ("LURC"). These receipts from LURC were from the proceeds of a Louisiana Act 55 financing of the costs incurred to restore service following Hurricane Katrina and Hurricane Rita. See Note 2 to the financial statements for further details regarding the financings.

In June 2012, Entergy effectively settled the tax treatment of the receipt of these funds, which resulted in an increase to 2008 taxable income of $129 million and $104 million for Entergy Louisiana and Entergy Gulf States Louisiana, respectively. As a result of the settlement, Entergy recorded an income tax benefit of $172 million, including $143 million for Entergy Louisiana and $20 million for Entergy Gulf States Louisiana, resulting from the reversal of liabilities for uncertain tax positions. Under the terms of an LPSC-approved settlement related to the Louisiana Act 55 financings, Entergy Louisiana and Entergy Gulf States Louisiana recorded, respectively, a $137 million ($84 million net-of-tax) and a $28 million ($17 million net-of-tax) regulatory charge and a corresponding regulatory liability to reflect their obligations to customers with respect to the settlement. See Note 8 to the financial statements for further discussion of the LPSC settlement.

              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. Entergy has disagreed with this disallowance and will file a protest with IRS Appeals at the conclusion of the 2008-09 examination.

Other Tax Matters

            Entergy regularly negotiates with the IRS to achieve settlements.  The results of all pending litigations and audit issues could result in significant changes to the amounts of unrecognized tax benefits, as discussed above.

In March 2010, Entergy filed an Application for Change in Accounting Method with the IRS. In the application, Entergy proposed to change the definition of unit of property for its generation assets to determine the appropriate characterization of costs associated with such units as capital or repair under the Internal Revenue Code and related Treasury Regulations. The effect of this change was an approximate $1.3 billion reduction in 2010 taxable income for Entergy, including reductions of $292 million for Entergy Arkansas, $132 million for Entergy Gulf States Louisiana, $185 million for Entergy Louisiana, $48 million for Entergy Mississippi, $45 million for Entergy Texas, $13 million for Entergy New Orleans, and $180 million for System Energy.

During the second quarter 2011, Entergy filed an Application for Change in Accounting Method with the IRS related to the allocation of overhead costs between production and non-production activities. The accounting method affects the amount of overhead that will be capitalized or deducted for tax purposes. The accounting method is expected to be implemented for the 2014 tax year.

Entergy Louisiana [Member]

Income Taxes

NOTE 3. INCOME TAXES (Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

     Income taxes from continuing operations for 2012, 2011, and 2010 for Entergy Corporation and Subsidiaries consist of the following:

	2012	2011	2010
	(In Thousands)
Current:
Federal	($47,851)	$452,713	$145,161
Foreign	143	130	131
State	(41,516)	152,711	19,313
Total	(89,224)	605,554	164,605
Deferred and non-current -- net	131,130	(311,708)	468,698
Investment tax credit
adjustments -- net	(11,051)	(7,583)	(16,064)
Income tax expense from
continuing operations	$30,855	$286,263	$617,239

 

     Income taxes for 2012, 2011, and 2010 for Entergy's Registrant Subsidiaries consist of the following:

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2012	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Current:
Federal	$64,069	($66,081)	($132,999)	$3,188	($9,484)	($114,677)	($50,491)
State	6,712	9,535	(1,269)	(4,425)	(1,617)	4,933	(8,544)
Total	70,781	(56,546)	(134,268)	(1,237)	(11,101)	(109,744)	(59,035)
Deferred and non-current -- net	26,042	112,390	8,463	59,045	18,586	144,471	137,832
Investment tax credit
adjustments -- net	(2,017)	(3,228)	(3,117)	871	(245)	(1,609)	(1,682)
Income taxes	$94,806	$52,616	($128,922)	$58,679	$7,240	$33,118	$77,115

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2011	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Current:
Federal	($12,448)	($30,106)	($136,800)	($9,466)	$14,641	($33,045)	$139,529
State	(1,751)	15,950	34,832	6,069	1,724	3,153	16,825
Total	(14,199)	(14,156)	(101,968)	(3,397)	16,365	(29,892)	156,354
Deferred and non-current -- net	148,978	107,250	(265,046)	32,380	(201)	80,993	(84,505)
Investment tax credit
adjustments -- net	(2,014)	(3,358)	(3,197)	(182)	(302)	(1,609)	3,104
Income taxes	$132,765	$89,736	($370,211)	$28,801	$15,862	$49,492	$74,953

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2010	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Current:
Federal	$114,821	$196,230	$73,174	$13,722	($114,382)	($10,607)	($4,102)
State	(9,200)	481	(4,324)	5,959	1,427	1,060	3,328
Total	105,621	196,711	68,850	19,681	(112,955)	(9,547)	(774)
Deferred and non-current -- net	10,328	(101,007)	918	31,415	129,880	53,539	60,305
Investment tax credit
adjustments -- net	(3,005)	(3,407)	(3,222)	(985)	(324)	(1,609)	(3,482)
Income taxes	$112,944	$92,297	$66,546	$50,111	$16,601	$42,383	$56,049

     Total income taxes for Entergy Corporation and 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 2012, 2011, and 2010 are:

	2012	2011	2010
	(In Thousands)
Net income attributable to Entergy Corporation	$846,673	$1,346,439	$1,250,242
Preferred dividend requirements of subsidiaries	21,690	20,933	20,063
Consolidated net income	868,363	1,367,372	1,270,305
Income taxes	30,855	286,263	617,239
Income before income taxes	$899,218	$1,653,635	$1,887,544
Computed at statutory rate (35%)	$314,726	$578,772	$660,640
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	40,699	93,940	40,530
Regulatory differences - utility plant items	35,527	39,970	31,473
Equity component of AFUDC	(30,838)	(30,184)	(16,542)
Amortization of investment tax credits	(14,000)	(14,962)	(15,980)
Net-of-tax regulatory liability (a)	(4,356)	65,357	-
Deferred tax reversal on PPA settlement (a)	-	(421,819)	-
IRS decommissioning settlement (b)	(155,300)
Write-off of reorganization costs	-	-	(19,974)
Tax law change-Medicare Part D	-	-	13,616
Write-off of regulatory asset for income taxes	42,159	-	-
Capital gains / (losses)	(20,188)	-	-
Flow-through / permanent differences	(14,801)	(17,848)	(26,370)
Provision for uncertain tax positions	(159,957)	2,698	(43,115)
Change in regulatory recovery	-	-	-
Other - net	(2,816)	(9,661)	(7,039)
Total income taxes as reported	$30,855	$286,263	$617,239
Effective Income Tax Rate	3.4%	17.3%	32.7%
(a)  See "Income Tax Audits - 2006-2007 IRS Audit" below for discussion of these items.
(b)  See "Income Tax Audits - 2004-2005 IRS Audit" below for discussion of this item.

(c)  See "Income Tax Audits - 2008-2009 IRS Audit" below for discussion of the most significant item in 2012.

            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 2012, 2011, and 2010 are:

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2012	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Net income	$152,365	$158,977	$281,081	$46,768	$17,065	$41,971	$111,866
Income taxes (benefit)	94,806	52,616	(128,922)	58,679	7,240	33,118	77,115
Pretax income	$247,171	$211,593	$152,159	$105,447	$24,305	$75,089	$188,981
Computed at statutory rate (35%)	$86,510	$74,058	$53,256	$36,906	$8,507	$26,281	$66,143
Increases (reductions) in tax
resulting from:
State income taxes net of
federal income tax effect	11,282	5,087	1,976	3,944	505	3,115	6,652
Regulatory differences -
utility plant items	6,778	8,472	312	2,619	2,289	3,668	11,389
Equity component of AFUDC	(2,495)	(3,042)	(12,919)	(1,383)	(276)	(1,587)	(9,136)
Amortization of investment
tax credits	(1,992)	(3,204)	(3,089)	(264)	(240)	(1,596)	(3,480)
Net-of-tax regulatory liability (a)	-	-	(4,356)	-	-	-	-
Flow-through / permanent
differences	3,427	(7,646)	1,397	1,961	(4,385)	1,585	(357)
Non-taxable
dividend income	-	(9,836)	(27,336)	-	-	-	-
Benefit of Entergy Corporation
expenses	(19,403)	(17,703)	-	14,449	2,758	-	(10,241)
Provision for uncertain
tax positions	11,227	8,745	(143,583)	870	(2,095)	1,651	17,966
Change in regulatory recovery	-	(553)	7,854	-	-	-
Other -- net	(528)	(1,762)	(2,434)	(423)	177	1	(1,821)
Total income taxes	$94,806	$52,616	($128,922)	$58,679	$7,240	$33,118	$77,115
Effective Income Tax Rate	38.4%	24.9%	-84.7%	55.6%	29.8%	44.1%	40.8%

(a) See "Income Tax Audits - 2006-2007 IRS Audit" below for discussion of these items.

(b) See "Incomr Tax Audits - 2008-2009 IRS Audit" below for discussion of the most significant item in 2012.

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2011	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Net income	$164,891	$201,604	$473,923	$108,729	$35,976	$80,845	$64,197
Income taxes (benefit)	132,765	89,736	(370,211)	28,801	15,862	49,492	74,953
Pretax income	$297,656	$291,340	$103,712	$137,530	$51,838	$130,337	$139,150
Computed at statutory rate (35%)	$104,180	$101,969	$36,299	$48,136	$18,143	$45,618	$48,703
Increases (reductions) in tax
resulting from:
State income taxes net of
federal income tax effect	13,727	9,618	943	3,211	3,350	2,033	4,436
Regulatory differences -
utility plant items	10,079	8,379	1,404	2,038	3,860	4,003	10,207
Equity component of AFUDC	(3,363)	(3,181)	(11,315)	(2,963)	(215)	(1,322)	(7,825)
Amortization of investment
tax credits	(1,992)	(3,336)	(3,168)	(960)	(295)	(1,596)	(3,480)
Net-of-tax regulatory liability (a)	-	-	65,357	-	-	-	-
Deferred tax reversal on PPA
settlement (a)	-	-	(421,819)	-	-	-	-
Flow-through / permanent
differences	(1,365)	587	(1,285)	304	(4,983)	88	529
Non-taxable
dividend income	-	(11,364)	(27,336)	-	-	-	-
Benefit of Entergy Corporation
expenses	-	(5,694)	-	(21,248)	(6,235)	(16)	16,559
Provision for uncertain
tax positions	12,016	(7,144)	(4,880)	(2)	2,241	717	5,878
Other -- net	(517)	(98)	(4,411)	285	(4)	(33)	(54)
Total income taxes	$132,765	$89,736	($370,211)	$28,801	$15,862	$49,492	$74,953
Effective Income Tax Rate	44.6%	30.8%	-357.0%	20.9%	30.6%	38.0%	53.9%

(a) See "Income Tax Audits - 2006-2007 IRS Audit" below for discussion of these items.

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2010	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Net income	$172,618	$174,319	$231,435	$85,377	$31,114	$66,200	$82,624
Income taxes	112,944	92,297	66,546	50,111	16,601	42,383	56,049
Pretax income	$285,562	$266,616	$297,981	$135,488	$47,715	$108,583	$138,673
Computed at statutory rate (35%)	$99,947	$93,316	$104,293	$47,421	$16,700	$38,004	$48,536
Increases (reductions) in tax
resulting from:
State income taxes net of
federal income tax effect	13,156	1,142	(10,618)	1,245	1,387	424	2,206
Regulatory differences -
utility plant items	6,126	(4,004)	7,374	3,455	3,999	4,089	10,435
Equity component of AFUDC	(144)	(1,547)	(8,361)	(1,643)	(184)	(1,525)	(3,138)
Amortization of investment
tax credits	(2,983)	(3,309)	(3,192)	(972)	(313)	(1,596)	(3,480)
Flow-through / permanent
differences	(1,235)	8,423	(754)	153	(4,883)	236	(497)
Non-taxable
dividend income	-	(9,189)	(23,603)	-	-	-	-
Provision for uncertain
tax positions	(2,100)	7,200	2,200	700	(300)	2,800	2,090
Other -- net	177	265	(793)	(248)	195	(49)	(103)
Total income taxes	$112,944	$92,297	$66,546	$50,111	$16,601	$42,383	$56,049
Effective Income Tax Rate	39.6%	34.6%	22.3%	37.0%	34.8%	39.0%	40.4%

     Significant components of accumulated deferred income taxes and taxes accrued for Entergy Corporation and Subsidiaries as of December 31, 2012 and 2011 are as follows:

	2012	2011
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net	($8,240,342)	($7,043,758)
Regulatory assets	(898,143)	(930,370)
Nuclear decommissioning trusts	(848,918)	(553,558)
Combined unitary state taxes	(233,210)	(227,427)
Power purchase agreements	-	(17,138)
Other	(485,550)	(402,097)
Total	(10,706,163)	(9,174,348)
Deferred tax assets:
Nuclear decommissioning liabilities	733,103	612,945
Regulatory liabilities	404,852	197,554
Pension and other post-employment benefits	358,893	315,134
Sale and leaseback	195,074	217,430
Accumulated deferred investment tax credit	110,690	108,338
Provision for contingencies	61,576	28,504
Power purchase agreements	43,717	-
Other	141,592	160,620
Net operating loss carryforwards	960,235	253,518
Capital losses	13,631	12,995
Valuation allowance	(86,881)	(85,615)
Total	2,936,482	1,821,423
Noncurrent accrued taxes (including unrecognized
tax benefits)	(210,534)	(814,597)
Accumulated deferred income taxes and taxes accrued	($7,980,215)	($8,167,522)

Entergy's estimated tax attributes carryovers and their expiration dates as of December 31, 2012 are as follows:

Carryover Description	Carryover Amount	Year(s) of expiration
Federal net operating losses	$12.6 billion	2028-2032
State net operating losses	$11.2 billion	2013-2032
State capital losses	$177 million	2013-2015
Miscellaneous federal and state credits	$81.9 million	2013-2032

     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 and capital loss carryovers will not be utilized, a valuation allowance $69.6 million and $13.6 million of has been provided on the deferred tax assets relating to these state net operating and capital loss carryovers, respectively.

     Significant components of accumulated deferred income taxes and taxes accrued for the Registrant Subsidiaries as of December 31, 2012 and 2011 are as follows:

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2012	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net	($1,565,988)	($1,268,164)	($1,544,256)	($727,442)	($202,496)	($770,084)	($759,896)
Regulatory assets	(172,915)	(100,578)	(249,051)	(27,077)	(4,790)	(220,417)	(119,209)
Nuclear decommissioning trusts	(67,025)	(25,472)	(29,493)	-	-	-	(27,809)
Deferred fuel	(50,068)	(1,618)	(11,815)	(11,332)	(976)	3,932	(445)
Other	(55,000)	(27,501)	(92,433)	(12,641)	(10,576)	(23,681)	(6,592)
Total	($1,910,996)	($1,423,333)	($1,927,048)	($778,492)	($218,838)	($1,010,250)	($913,951)
Deferred tax assets:
Nuclear decommissioning liabilities	(63,189)	51,593	92,930	-	-	-	(65,564)
Regulatory liabilities	79,805	47,474	173,046	8,515	47,257	3,429	45,327
Pension and other post-
employment benefits	(75,278)	47,469	34,283	(22,140)	(10,815)	(40,389)	(19,160)
Sale and Leaseback	-	-	57,423	-	-	-	137,651
Accumulated deferred investment tax credit	16,062	36,642	27,008	2,776	500	6,210	21,492
Provision for contingencies	4,723	33,074	48,241	9,564	(2,865)	(35,505)	-
Power purchase agreements	94	37,771	-	84	21	2,752	-
Unbilled/deferred revenues	27,651	(23,150)	(7,101)	9,242	3,352	12,986	-
Compensation	3,587	580	18	(664)	13	4,547	180
Net operating loss carryforwards	102,034	-	460,367	45,475	-	20,307	86,228
Other	5,565	6,106	5,513	8,758	4,472	6,707	2,000
Total	101,054	237,559	891,728	61,610	41,935	(18,956)	208,154
Noncurrent accrued taxes (including
unrecognized tax benefits)	46,930	(239,670)	218,033	(1,121)	13,630	55,113	(4,130)
Accumulated deferred income
taxes and taxes accrued	($1,763,012)	($1,425,444)	($817,287)	($718,003)	($163,273)	($974,093)	($709,927)

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2011	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net	($1,334,016)	($1,124,284)	($1,077,835)	($608,596)	($148,296)	($735,310)	($505,369)
Regulatory assets	(222,429)	(103,585)	(249,459)	(32,611)	-	(227,224)	(120,886)
Nuclear decommissioning trusts	(53,789)	(21,096)	(22,441)	-	-	-	(19,138)
Deferred fuel	(82,452)	(1,225)	(4,285)	718	(331)	3,932	(8)
Other	(54,277)	(1,394)	(26,237)	(7,263)	(18,319)	(14,098)	(9,333)
Total	($1,746,963)	($1,251,584)	($1,380,257)	($647,752)	($166,946)	($972,700)	($654,734)
Deferred tax assets:
Nuclear decommissioning liabilities	(104,862)	(38,683)	56,399	-	-	-	(47,360)
Regulatory liabilities	29,473	(39,265)	111,705	1,497	53,191	35,072	18,301
Pension and other post-				-	-	-
employment benefits	(75,399)	123,085	19,866	(30,390)	(11,713)	(41,964)	(19,593)
Sale and Leaseback	-	-	66,801	-	-	-	150,629
Accumulated deferred
investment tax credit	16,843	31,367	28,197	2,437	592	6,769	22,133
Provision for contingencies	4,167	(1,406)	3,940	2,465	10,121	2,299	-
Power purchase agreements	94	3,938	(1)	2,383	22	2,547	-
Unbilled/deferred revenues	15,222	(21,918)	(7,108)	8,990	2,707	14,324	-
Net operating loss carryforwards	-	-	39,153	-	-	58,547	-
Other	56,116	27,548	33,675	6,206	1,899	8,753	40,759
Total	(58,346)	84,666	352,627	(6,412)	56,819	86,347	164,869
Noncurrent accrued taxes (including
unrecognized tax benefits)	(27,718)	(206,752)	(75,750)	(6,271)	(27,859)	39,799	(165,981)
Accumulated deferred income
taxes and taxes accrued	($1,833,027)	($1,373,670)	($1,103,380)	($660,435)	($137,986)	($846,554)	($655,846)

     The Registrant Subsidiaries' estimated tax attributes carryovers and their expiration dates as of December 31, 2012 are as follows:

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
	Arkansas	Louisiana	Louisiana	Mississippi New Orleans		Texas	Energy
Federal net operating
losses	$1.3 billion	$321 million	$2.3 billion	$155 million	$81 million	$60 million	$875 million
Year(s) of expiration	2029 -2031	2029 -2030	2028 -2032	2029 -2032	2030 -2032	2029 -2032	2029 -2032
State net operating losses	$48 million	$852 million	$3.2 billion	-	$94 million	-	$220 million
Year(s) of expiration	2023-2026	2024 -2025	2023 -2027	N/A	2025-2027	N/A	2029-2030
Federal minimum tax
credits	$2 million	$1 million	$4 million	$1 million	$1 million	$- million	$2 million
Year(s) of expiration	2024-2031	2024-2031	2026 -2031	2024 -2031	2024 -2031	N/A	2024-2031
Other federal credits	$0 million	$0 million	$0 million	$0 million	$0 million	-	$0 million
Year(s) of expiration	2024 -2030	2024 -2030	2024 -2030	2024 -2030	2024 -2030	N/A	2024 -2030
State credits	-	-	-	$10.1 million	-	$4.2 million	$15.6 million
Year(s) of expiration	N/A	N/A	N/A	2013 -2016	N/A	2013 -2027	2015 -2016

     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:

	2012	2011	2010
	(In Thousands)
Gross balance at January 1	$4,387,780	$4,949,788	$4,050,491
Additions based on tax positions related to the current year	163,612	211,966	480,843
Additions for tax positions of prior years	1,517,797	332,744	871,682
Reductions for tax positions of prior years	(476,873)	(259,895)	(438,460)
Settlements	(1,421,913)	(841,528)	(10,462)
Lapse of statute of limitations	-	(5,295)	(4,306)
Gross balance at December 31	4,170,403	4,387,780	4,949,788
Offsets to gross unrecognized tax benefits:
Credit and loss carryovers	(4,022,535)	(3,212,397)	(3,771,301)
Cash paid to taxing authorities	-	(363,266)	(373,000)
Unrecognized tax benefits net of unused tax attributes and payments (1)	$147,868	$812,117	$805,487

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

     The balances of unrecognized tax benefits include $203 million, $521 million, and $605 million as of December 31, 2012, 2011, and 2010, 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 $3.968 billion, $3.867 billion, and $4.345 billion as of December 31, 2012, 2011, and 2010, 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 has made deposits with the IRS against its potential liabilities arising from audit adjustments and settlements related to its uncertain tax positions.Deposits are expected to be made to the IRS as the cash tax benefits of uncertain tax positions are realized.The total amount of cash deposits shown for 2011 has been fully offset against settled liabilities which arose in 2012.

     Entergy accrues interest expense, if any, related to unrecognized tax benefits in income tax expense. Entergy's December 31, 2012, 2011, and 2010 accrued balance for the possible payment of interest is approximately $146.3 million, $99 million, and $45 million, respectively.

A reconciliation of the Registrant Subsidiaries' beginning and ending amount of unrecognized tax benefits for 2012, 2011, and 2010 is as follows:

2012	Entergy Arkansas	Entergy Gulf States Louisiana	Entergy Louisiana	Entergy Mississippi	Entergy New Orleans	Entergy Texas	System Energy
	(In Thousands)
Gross balance at January 1, 2012	$335,493	$390,493	$446,187	$11,052	$56,052	$19,225	$281,183
Additions based on tax
positions related to the
current year	10,409	8,974	67,721	8,401	497	1,656	8,715
Additions for tax positions
of prior years	429,232	392,548	331,432	4,057	445	4,834	271,172
Reductions for tax
positions of prior years	(39,534)	(50,518)	(169,465)	(5,703)	(2,506)	(11,649)	(20,934)
Settlements	(390,931)	(275,776)	(139,202)	(966)	(2,470)	(112)	(279,790)
Gross balance at December 31, 2012	344,669	465,721	536,673	16,841	52,018	13,954	260,346
Offsets to gross unrecognized
tax benefits:
Loss carryovers	(342,127)	(160,955)	(536,673)	(16,841)	(35,511)	(1,593)	(249,424)
Cash paid to taxing authorities	-	-	-	-	-	-	-
Unrecognized tax benefits net of
unused tax attributes and payments	$2,542	$304,766	$-	$-	$16,507	$12,361	$10,922

2011	Entergy Arkansas	Entergy Gulf States Louisiana	Entergy Louisiana	Entergy Mississippi	Entergy New Orleans	Entergy Texas	System Energy
	(In Thousands)
Gross balance at January 1, 2011	$240,239	$353,886	$505,188	$24,163	$18,176	$14,229	$224,518
Additions based on tax
positions related to the
current year	11,216	9,398	8,748	457	50,212	1,760	44,419
Additions for tax positions
of prior years	44,202	50,944	21,052	21,902	7,343	7,533	14,200
Reductions for tax
positions of prior years	(3,255)	(21,719)	(27,991)	(5,022)	(12,289)	(3,432)	(4,942)
Settlements	43,091	(2,016)	(60,810)	(30,448)	(7,390)	(865)	2,988
Gross balance at December 31, 2011	335,493	390,493	446,187	11,052	56,052	19,225	281,183
Offsets to gross unrecognized
tax benefits:
Loss carryovers	(146,429)	(26,394)	(216,720)	(5,930)	(1,211)	(10,645)	(10,752)
Cash paid to taxing authorities	(75,977)	(45,493)	0	(7,556)	(1,174)	(1,376)	(41,878)
Unrecognized tax benefits net of
unused tax attributes and payments	$113,087	$318,606	$229,467	($2,434)	$53,667	$7,204	$228,553

2010	Entergy Arkansas	Entergy Gulf States Louisiana	Entergy Louisiana	Entergy Mississippi	Entergy New Orleans	Entergy Texas	System Energy
	(In Thousands)
Gross balance at January 1, 2010	$293,920	$311,311	$352,577	$17,137	($53,295)	$32,299	$211,247
Additions based on tax
positions related to the
current year	38,205	87,755	183,188	4,679	173	5,169	16,829
Additions for tax positions
of prior years	1,838	25,960	34,236	6,857	72,169	5,868	10,402
Reductions for tax
positions of prior years	(92,699)	(71,033)	(64,868)	(4,469)	(863)	(29,100)	(13,116)
Settlements	(1,025)	(107)	55	(41)	(8)	(7)	(844)
Gross balance at December 31, 2010	240,239	353,886	505,188	24,163	18,176	14,229	224,518
Offsets to gross unrecognized
tax benefits:
Loss carryovers	(123,968)	(29,257)	(131,805)	(6,477)	(3,751)	(6,269)	(10,487)
Cash paid to taxing authorities	(75,977)	(45,493)	-	(7,556)	(1,174)	(1,376)	(41,878)
Unrecognized tax benefits net of
unused tax attributes and payments	$40,294	$279,136	$373,383	$10,130	$13,251	$6,584	$172,153

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

	December 31, 2012	December 31, 2011	December 31, 2010
	(In  Millions)
Entergy Arkansas	$0.6	$-	$0.2
Entergy Gulf States Louisiana	$44.0	$107.9	$129.6
Entergy Louisiana	$92.4	$281.3	$286.7
Entergy Mississippi	$3.9	$3.8	$5.3
Entergy New Orleans	$-	$-	$-
Entergy Texas	$8.6	$7.3	$6.0
System Energy	$3.5	$-	$12.1

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, 2012	December 31, 2011	December 31, 2010
	(In Millions)
Entergy Arkansas	$21.8	$11.4	$-
Entergy Gulf States Louisiana	$33.1	$14.4	$9.7
Entergy Louisiana	$0.9	$0.8	$3.3
Entergy Mississippi	$2.4	$1.7	$1.6
Entergy New Orleans	$0.1	$2.4	$-
Entergy Texas	$0.7	$0.1	$0.1
System Energy	$33.2	$18.5	$8.2

Income Tax Litigation

In October 2010 the U.S. Tax Court entered a decision in favor of Entergy for tax years 1997 and 1998. The issues decided by the Tax Court are as follows:

• The ability to credit the U.K. Windfall Tax against U.S. tax as a foreign tax credit.  The U.K. Windfall Tax relates to Entergy's former investment in London Electricity.
• The validity of Entergy's change in method of tax accounting for street lighting assets and the related increase in depreciation deductions.

The IRS did not appeal street lighting depreciation, and that matter is final. The IRS filed an appeal of the U.K. Windfall Tax decision, however, with the U.S. Court of Appeals for the Fifth Circuit in December 2010. Oral arguments were heard in November 2011. In June 2012 the U.S. Court of Appeals for the Fifth Circuit unanimously affirmed the U.S. Tax Court decision. As a result of this decision, Entergy reversed its liability for uncertain tax positions associated with this issue. On September 4, 2012, the U.S. Solicitor General, on behalf of the Commissioner of Internal Revenue, petitioned the U.S. Supreme Court for a writ of certiorari to review the Fifth Circuit judgment.

Concurrent with the Tax Court's issuance of a favorable decision regarding the above issues, the Tax Court issued a favorable decision in a separate proceeding, PPL Corp. v. Commissioner, regarding the creditability of the U.K. Windfall Tax.  The IRS appealed the PPL decision to the United States Court of Appeals for the Third Circuit.  In December 2011 the Third Circuit reversed the Tax Court's holding in PPL Corp. v. Commissioner, stating that the U.K. tax was not eligible for the foreign tax credit.  PPL Corp. petitioned the U.S. Supreme Court for a writ of certiorari to review the U.S. Court of Appeals for the Third Circuit decision.  On October 29, 2012, the U.S. Supreme Court granted PPL Corp.'s petition for certiorari.    The Solicitor General's petition for writ of certiorari in Entergy's case is currently on hold pending the disposition of the PPL case.  Entergy's case will be determined consistent with the U.S. Supreme Court's decision in the PPL proceeding.  Oral argument in PPL's case was heard on February 20, 2013.

The total tax at issue on the U.K. Windfall Tax credit matter is $152 million, and interest on the underpayment of such tax is estimated to be $102 million resulting in total exposure of $254 million.

            In February 2008 the IRS issued a Statutory Notice of Deficiency for the year 2000.  The deficiency resulted from a disallowance of foreign tax credits (the same issue discussed above) as well as the disallowance of depreciation deductions on non-utility nuclear plants.  Entergy filed a Tax Court petition in May 2008 challenging the IRS treatment of these issues.  In June 2010 a trial on the depreciation issue was held in Washington, D.C.  In February 2011 a joint stipulation of settled issues was filed under which the IRS conceded its position with respect to the depreciation issue.  The outcome of the foreign tax credit matter for the year 2000 will also be determined consistent with the U.S. Supreme Court's decision in the PPL proceeding.

Income Tax Audits

Entergy and its subsidiaries file U.S. federal and various state and foreign income tax returns.Other than the matters discussed in the Income Tax Litigation section above, the IRS's and substantially all state taxing authorities' examinations are completed for years before 2005.

2002-2003 IRS Audit

In September 2009, Entergy entered into a partial agreement with the IRS for the years 2002 and 2003. In the partial agreement, Entergy did not agree to the IRS's disallowance of foreign tax credits for the U.K. Windfall Tax and the street lighting depreciation issues. As discussed above, the IRS did not appeal the Tax Court ruling on the street lighting depreciation. The U.K. Windfall tax credit issue will be governed by the U.S. Supreme Court's decision in the PPL Corp. proceeding as explained in "Income Tax Litigation", above.

2004-2005 IRS Audit

            The IRS issued its 2004-2005 Revenue Agent's Report (RAR) in May 2009.

            In June 2009, Entergy filed a formal protest with the IRS Appeals Division indicating disagreement with certain issues contained in the 2004-2005 RAR.  The major issues in dispute are:

• Depreciation of street lighting assets (because the IRS did not appeal the Tax Court's 2010 decision on this issue, it will be fully allowed in the final Appeals Division calculations for this audit).
• Inclusion of nuclear decommissioning liabilities in cost of goods sold for the nuclear power plants owned by the Utility resulting from an Application for Change in Accounting Method for tax purposes (the "2004 CAM").

During the fourth quarter 2012, Entergy settled the position relating to the 2004 CAM.   Under the settlement Entergy conceded its tax position, resulting in an increase in taxable income of approximately $2.97 billion for the tax years 2004 - 2007.  The settlement provides that Entergy Louisiana is entitled to additional tax depreciation of approximately $547 million for years 2006 and beyond.  The deferred tax asset net of interest charges associated with the settlement is $155 million for Entergy.  There was a related increase to Entergy Louisiana's member's equity account.

2006-2007 IRS Audit

            The IRS issued its 2006-2007 RAR in October 2011.  In connection with the 2006-2007 IRS audit and resulting RAR, Entergy resolved the significant issues discussed below. 

In August 2011, Entergy entered into a settlement agreement with the IRS relating to the mark-to-market income tax treatment of various wholesale electric power purchase and sale agreements, including Entergy Louisiana's contract to purchase electricity from the Vidalia hydroelectric facility.  See Note 8 to the financial statements for further details regarding this contract and a previous LPSC-approved settlement regarding the tax treatment of the contract.

With respect to income tax accounting for wholesale electric power purchase agreements, Entergy recognized income for tax purposes of approximately $1.5 billion, which represents a reversal of previously deducted temporary differences on which deferred taxes had been provided.  Also in connection with this settlement, Entergy recognized a gain for income tax purposes of approximately $1.03 billion on the formation of a wholly-owned subsidiary in 2005 with a corresponding step-up in the tax basis of depreciable assets resulting in additional tax depreciation at Entergy Louisiana.  Because Entergy Louisiana is entitled to deduct additional tax depreciation of $1.03 billion in the future, Entergy Louisiana recorded a deferred tax asset for this additional tax basis. The tax expense associated with the gain is offset by recording the deferred tax asset and by utilization of net operating losses. With the recording of the deferred tax asset, there was a corresponding increase to Entergy Louisiana's member's equity account. The agreement with the IRS effectively settled the tax treatment of various wholesale electric power purchase and sale agreements, resulting in the reversal in third quarter 2011 of approximately $422 million of deferred tax liabilities and liabilities for uncertain tax positions at Entergy Louisiana, with a corresponding reduction in income tax expense. Under the terms of an LPSC-approved final settlement, Entergy Louisiana recorded a $199 million regulatory charge and a corresponding net-of-tax regulatory liability.

After consideration of the taxable income recognition and the additional depreciation deductions provided for in the settlement, Entergy's net operating loss carryover was reduced by approximately $2.5 billion.

2008-2009 IRS Audit

In the third quarter 2008, Entergy Louisiana and Entergy Gulf States Louisiana received $679 million and $274.7 million, respectively, from the Louisiana Utilities Restoration Corporation ("LURC"). These receipts from LURC were from the proceeds of a Louisiana Act 55 financing of the costs incurred to restore service following Hurricane Katrina and Hurricane Rita. See Note 2 to the financial statements for further details regarding the financings.

In June 2012, Entergy effectively settled the tax treatment of the receipt of these funds, which resulted in an increase to 2008 taxable income of $129 million and $104 million for Entergy Louisiana and Entergy Gulf States Louisiana, respectively. As a result of the settlement, Entergy recorded an income tax benefit of $172 million, including $143 million for Entergy Louisiana and $20 million for Entergy Gulf States Louisiana, resulting from the reversal of liabilities for uncertain tax positions. Under the terms of an LPSC-approved settlement related to the Louisiana Act 55 financings, Entergy Louisiana and Entergy Gulf States Louisiana recorded, respectively, a $137 million ($84 million net-of-tax) and a $28 million ($17 million net-of-tax) regulatory charge and a corresponding regulatory liability to reflect their obligations to customers with respect to the settlement. See Note 8 to the financial statements for further discussion of the LPSC settlement.

              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. Entergy has disagreed with this disallowance and will file a protest with IRS Appeals at the conclusion of the 2008-09 examination.

Other Tax Matters

            Entergy regularly negotiates with the IRS to achieve settlements.  The results of all pending litigations and audit issues could result in significant changes to the amounts of unrecognized tax benefits, as discussed above.

In March 2010, Entergy filed an Application for Change in Accounting Method with the IRS. In the application, Entergy proposed to change the definition of unit of property for its generation assets to determine the appropriate characterization of costs associated with such units as capital or repair under the Internal Revenue Code and related Treasury Regulations. The effect of this change was an approximate $1.3 billion reduction in 2010 taxable income for Entergy, including reductions of $292 million for Entergy Arkansas, $132 million for Entergy Gulf States Louisiana, $185 million for Entergy Louisiana, $48 million for Entergy Mississippi, $45 million for Entergy Texas, $13 million for Entergy New Orleans, and $180 million for System Energy.

During the second quarter 2011, Entergy filed an Application for Change in Accounting Method with the IRS related to the allocation of overhead costs between production and non-production activities. The accounting method affects the amount of overhead that will be capitalized or deducted for tax purposes. The accounting method is expected to be implemented for the 2014 tax year.

Entergy Mississippi [Member]

Income Taxes

NOTE 3. INCOME TAXES (Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

     Income taxes from continuing operations for 2012, 2011, and 2010 for Entergy Corporation and Subsidiaries consist of the following:

	2012	2011	2010
	(In Thousands)
Current:
Federal	($47,851)	$452,713	$145,161
Foreign	143	130	131
State	(41,516)	152,711	19,313
Total	(89,224)	605,554	164,605
Deferred and non-current -- net	131,130	(311,708)	468,698
Investment tax credit
adjustments -- net	(11,051)	(7,583)	(16,064)
Income tax expense from
continuing operations	$30,855	$286,263	$617,239

 

     Income taxes for 2012, 2011, and 2010 for Entergy's Registrant Subsidiaries consist of the following:

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2012	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Current:
Federal	$64,069	($66,081)	($132,999)	$3,188	($9,484)	($114,677)	($50,491)
State	6,712	9,535	(1,269)	(4,425)	(1,617)	4,933	(8,544)
Total	70,781	(56,546)	(134,268)	(1,237)	(11,101)	(109,744)	(59,035)
Deferred and non-current -- net	26,042	112,390	8,463	59,045	18,586	144,471	137,832
Investment tax credit
adjustments -- net	(2,017)	(3,228)	(3,117)	871	(245)	(1,609)	(1,682)
Income taxes	$94,806	$52,616	($128,922)	$58,679	$7,240	$33,118	$77,115

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2011	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Current:
Federal	($12,448)	($30,106)	($136,800)	($9,466)	$14,641	($33,045)	$139,529
State	(1,751)	15,950	34,832	6,069	1,724	3,153	16,825
Total	(14,199)	(14,156)	(101,968)	(3,397)	16,365	(29,892)	156,354
Deferred and non-current -- net	148,978	107,250	(265,046)	32,380	(201)	80,993	(84,505)
Investment tax credit
adjustments -- net	(2,014)	(3,358)	(3,197)	(182)	(302)	(1,609)	3,104
Income taxes	$132,765	$89,736	($370,211)	$28,801	$15,862	$49,492	$74,953

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2010	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Current:
Federal	$114,821	$196,230	$73,174	$13,722	($114,382)	($10,607)	($4,102)
State	(9,200)	481	(4,324)	5,959	1,427	1,060	3,328
Total	105,621	196,711	68,850	19,681	(112,955)	(9,547)	(774)
Deferred and non-current -- net	10,328	(101,007)	918	31,415	129,880	53,539	60,305
Investment tax credit
adjustments -- net	(3,005)	(3,407)	(3,222)	(985)	(324)	(1,609)	(3,482)
Income taxes	$112,944	$92,297	$66,546	$50,111	$16,601	$42,383	$56,049

     Total income taxes for Entergy Corporation and 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 2012, 2011, and 2010 are:

	2012	2011	2010
	(In Thousands)
Net income attributable to Entergy Corporation	$846,673	$1,346,439	$1,250,242
Preferred dividend requirements of subsidiaries	21,690	20,933	20,063
Consolidated net income	868,363	1,367,372	1,270,305
Income taxes	30,855	286,263	617,239
Income before income taxes	$899,218	$1,653,635	$1,887,544
Computed at statutory rate (35%)	$314,726	$578,772	$660,640
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	40,699	93,940	40,530
Regulatory differences - utility plant items	35,527	39,970	31,473
Equity component of AFUDC	(30,838)	(30,184)	(16,542)
Amortization of investment tax credits	(14,000)	(14,962)	(15,980)
Net-of-tax regulatory liability (a)	(4,356)	65,357	-
Deferred tax reversal on PPA settlement (a)	-	(421,819)	-
IRS decommissioning settlement (b)	(155,300)
Write-off of reorganization costs	-	-	(19,974)
Tax law change-Medicare Part D	-	-	13,616
Write-off of regulatory asset for income taxes	42,159	-	-
Capital gains / (losses)	(20,188)	-	-
Flow-through / permanent differences	(14,801)	(17,848)	(26,370)
Provision for uncertain tax positions	(159,957)	2,698	(43,115)
Change in regulatory recovery	-	-	-
Other - net	(2,816)	(9,661)	(7,039)
Total income taxes as reported	$30,855	$286,263	$617,239
Effective Income Tax Rate	3.4%	17.3%	32.7%
(a)  See "Income Tax Audits - 2006-2007 IRS Audit" below for discussion of these items.
(b)  See "Income Tax Audits - 2004-2005 IRS Audit" below for discussion of this item.

(c)  See "Income Tax Audits - 2008-2009 IRS Audit" below for discussion of the most significant item in 2012.

            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 2012, 2011, and 2010 are:

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2012	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Net income	$152,365	$158,977	$281,081	$46,768	$17,065	$41,971	$111,866
Income taxes (benefit)	94,806	52,616	(128,922)	58,679	7,240	33,118	77,115
Pretax income	$247,171	$211,593	$152,159	$105,447	$24,305	$75,089	$188,981
Computed at statutory rate (35%)	$86,510	$74,058	$53,256	$36,906	$8,507	$26,281	$66,143
Increases (reductions) in tax
resulting from:
State income taxes net of
federal income tax effect	11,282	5,087	1,976	3,944	505	3,115	6,652
Regulatory differences -
utility plant items	6,778	8,472	312	2,619	2,289	3,668	11,389
Equity component of AFUDC	(2,495)	(3,042)	(12,919)	(1,383)	(276)	(1,587)	(9,136)
Amortization of investment
tax credits	(1,992)	(3,204)	(3,089)	(264)	(240)	(1,596)	(3,480)
Net-of-tax regulatory liability (a)	-	-	(4,356)	-	-	-	-
Flow-through / permanent
differences	3,427	(7,646)	1,397	1,961	(4,385)	1,585	(357)
Non-taxable
dividend income	-	(9,836)	(27,336)	-	-	-	-
Benefit of Entergy Corporation
expenses	(19,403)	(17,703)	-	14,449	2,758	-	(10,241)
Provision for uncertain
tax positions	11,227	8,745	(143,583)	870	(2,095)	1,651	17,966
Change in regulatory recovery	-	(553)	7,854	-	-	-
Other -- net	(528)	(1,762)	(2,434)	(423)	177	1	(1,821)
Total income taxes	$94,806	$52,616	($128,922)	$58,679	$7,240	$33,118	$77,115
Effective Income Tax Rate	38.4%	24.9%	-84.7%	55.6%	29.8%	44.1%	40.8%

(a) See "Income Tax Audits - 2006-2007 IRS Audit" below for discussion of these items.

(b) See "Incomr Tax Audits - 2008-2009 IRS Audit" below for discussion of the most significant item in 2012.

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2011	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Net income	$164,891	$201,604	$473,923	$108,729	$35,976	$80,845	$64,197
Income taxes (benefit)	132,765	89,736	(370,211)	28,801	15,862	49,492	74,953
Pretax income	$297,656	$291,340	$103,712	$137,530	$51,838	$130,337	$139,150
Computed at statutory rate (35%)	$104,180	$101,969	$36,299	$48,136	$18,143	$45,618	$48,703
Increases (reductions) in tax
resulting from:
State income taxes net of
federal income tax effect	13,727	9,618	943	3,211	3,350	2,033	4,436
Regulatory differences -
utility plant items	10,079	8,379	1,404	2,038	3,860	4,003	10,207
Equity component of AFUDC	(3,363)	(3,181)	(11,315)	(2,963)	(215)	(1,322)	(7,825)
Amortization of investment
tax credits	(1,992)	(3,336)	(3,168)	(960)	(295)	(1,596)	(3,480)
Net-of-tax regulatory liability (a)	-	-	65,357	-	-	-	-
Deferred tax reversal on PPA
settlement (a)	-	-	(421,819)	-	-	-	-
Flow-through / permanent
differences	(1,365)	587	(1,285)	304	(4,983)	88	529
Non-taxable
dividend income	-	(11,364)	(27,336)	-	-	-	-
Benefit of Entergy Corporation
expenses	-	(5,694)	-	(21,248)	(6,235)	(16)	16,559
Provision for uncertain
tax positions	12,016	(7,144)	(4,880)	(2)	2,241	717	5,878
Other -- net	(517)	(98)	(4,411)	285	(4)	(33)	(54)
Total income taxes	$132,765	$89,736	($370,211)	$28,801	$15,862	$49,492	$74,953
Effective Income Tax Rate	44.6%	30.8%	-357.0%	20.9%	30.6%	38.0%	53.9%

(a) See "Income Tax Audits - 2006-2007 IRS Audit" below for discussion of these items.

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2010	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Net income	$172,618	$174,319	$231,435	$85,377	$31,114	$66,200	$82,624
Income taxes	112,944	92,297	66,546	50,111	16,601	42,383	56,049
Pretax income	$285,562	$266,616	$297,981	$135,488	$47,715	$108,583	$138,673
Computed at statutory rate (35%)	$99,947	$93,316	$104,293	$47,421	$16,700	$38,004	$48,536
Increases (reductions) in tax
resulting from:
State income taxes net of
federal income tax effect	13,156	1,142	(10,618)	1,245	1,387	424	2,206
Regulatory differences -
utility plant items	6,126	(4,004)	7,374	3,455	3,999	4,089	10,435
Equity component of AFUDC	(144)	(1,547)	(8,361)	(1,643)	(184)	(1,525)	(3,138)
Amortization of investment
tax credits	(2,983)	(3,309)	(3,192)	(972)	(313)	(1,596)	(3,480)
Flow-through / permanent
differences	(1,235)	8,423	(754)	153	(4,883)	236	(497)
Non-taxable
dividend income	-	(9,189)	(23,603)	-	-	-	-
Provision for uncertain
tax positions	(2,100)	7,200	2,200	700	(300)	2,800	2,090
Other -- net	177	265	(793)	(248)	195	(49)	(103)
Total income taxes	$112,944	$92,297	$66,546	$50,111	$16,601	$42,383	$56,049
Effective Income Tax Rate	39.6%	34.6%	22.3%	37.0%	34.8%	39.0%	40.4%

     Significant components of accumulated deferred income taxes and taxes accrued for Entergy Corporation and Subsidiaries as of December 31, 2012 and 2011 are as follows:

	2012	2011
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net	($8,240,342)	($7,043,758)
Regulatory assets	(898,143)	(930,370)
Nuclear decommissioning trusts	(848,918)	(553,558)
Combined unitary state taxes	(233,210)	(227,427)
Power purchase agreements	-	(17,138)
Other	(485,550)	(402,097)
Total	(10,706,163)	(9,174,348)
Deferred tax assets:
Nuclear decommissioning liabilities	733,103	612,945
Regulatory liabilities	404,852	197,554
Pension and other post-employment benefits	358,893	315,134
Sale and leaseback	195,074	217,430
Accumulated deferred investment tax credit	110,690	108,338
Provision for contingencies	61,576	28,504
Power purchase agreements	43,717	-
Other	141,592	160,620
Net operating loss carryforwards	960,235	253,518
Capital losses	13,631	12,995
Valuation allowance	(86,881)	(85,615)
Total	2,936,482	1,821,423
Noncurrent accrued taxes (including unrecognized
tax benefits)	(210,534)	(814,597)
Accumulated deferred income taxes and taxes accrued	($7,980,215)	($8,167,522)

Entergy's estimated tax attributes carryovers and their expiration dates as of December 31, 2012 are as follows:

Carryover Description	Carryover Amount	Year(s) of expiration
Federal net operating losses	$12.6 billion	2028-2032
State net operating losses	$11.2 billion	2013-2032
State capital losses	$177 million	2013-2015
Miscellaneous federal and state credits	$81.9 million	2013-2032

     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 and capital loss carryovers will not be utilized, a valuation allowance $69.6 million and $13.6 million of has been provided on the deferred tax assets relating to these state net operating and capital loss carryovers, respectively.

     Significant components of accumulated deferred income taxes and taxes accrued for the Registrant Subsidiaries as of December 31, 2012 and 2011 are as follows:

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2012	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net	($1,565,988)	($1,268,164)	($1,544,256)	($727,442)	($202,496)	($770,084)	($759,896)
Regulatory assets	(172,915)	(100,578)	(249,051)	(27,077)	(4,790)	(220,417)	(119,209)
Nuclear decommissioning trusts	(67,025)	(25,472)	(29,493)	-	-	-	(27,809)
Deferred fuel	(50,068)	(1,618)	(11,815)	(11,332)	(976)	3,932	(445)
Other	(55,000)	(27,501)	(92,433)	(12,641)	(10,576)	(23,681)	(6,592)
Total	($1,910,996)	($1,423,333)	($1,927,048)	($778,492)	($218,838)	($1,010,250)	($913,951)
Deferred tax assets:
Nuclear decommissioning liabilities	(63,189)	51,593	92,930	-	-	-	(65,564)
Regulatory liabilities	79,805	47,474	173,046	8,515	47,257	3,429	45,327
Pension and other post-
employment benefits	(75,278)	47,469	34,283	(22,140)	(10,815)	(40,389)	(19,160)
Sale and Leaseback	-	-	57,423	-	-	-	137,651
Accumulated deferred investment tax credit	16,062	36,642	27,008	2,776	500	6,210	21,492
Provision for contingencies	4,723	33,074	48,241	9,564	(2,865)	(35,505)	-
Power purchase agreements	94	37,771	-	84	21	2,752	-
Unbilled/deferred revenues	27,651	(23,150)	(7,101)	9,242	3,352	12,986	-
Compensation	3,587	580	18	(664)	13	4,547	180
Net operating loss carryforwards	102,034	-	460,367	45,475	-	20,307	86,228
Other	5,565	6,106	5,513	8,758	4,472	6,707	2,000
Total	101,054	237,559	891,728	61,610	41,935	(18,956)	208,154
Noncurrent accrued taxes (including
unrecognized tax benefits)	46,930	(239,670)	218,033	(1,121)	13,630	55,113	(4,130)
Accumulated deferred income
taxes and taxes accrued	($1,763,012)	($1,425,444)	($817,287)	($718,003)	($163,273)	($974,093)	($709,927)

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2011	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net	($1,334,016)	($1,124,284)	($1,077,835)	($608,596)	($148,296)	($735,310)	($505,369)
Regulatory assets	(222,429)	(103,585)	(249,459)	(32,611)	-	(227,224)	(120,886)
Nuclear decommissioning trusts	(53,789)	(21,096)	(22,441)	-	-	-	(19,138)
Deferred fuel	(82,452)	(1,225)	(4,285)	718	(331)	3,932	(8)
Other	(54,277)	(1,394)	(26,237)	(7,263)	(18,319)	(14,098)	(9,333)
Total	($1,746,963)	($1,251,584)	($1,380,257)	($647,752)	($166,946)	($972,700)	($654,734)
Deferred tax assets:
Nuclear decommissioning liabilities	(104,862)	(38,683)	56,399	-	-	-	(47,360)
Regulatory liabilities	29,473	(39,265)	111,705	1,497	53,191	35,072	18,301
Pension and other post-				-	-	-
employment benefits	(75,399)	123,085	19,866	(30,390)	(11,713)	(41,964)	(19,593)
Sale and Leaseback	-	-	66,801	-	-	-	150,629
Accumulated deferred
investment tax credit	16,843	31,367	28,197	2,437	592	6,769	22,133
Provision for contingencies	4,167	(1,406)	3,940	2,465	10,121	2,299	-
Power purchase agreements	94	3,938	(1)	2,383	22	2,547	-
Unbilled/deferred revenues	15,222	(21,918)	(7,108)	8,990	2,707	14,324	-
Net operating loss carryforwards	-	-	39,153	-	-	58,547	-
Other	56,116	27,548	33,675	6,206	1,899	8,753	40,759
Total	(58,346)	84,666	352,627	(6,412)	56,819	86,347	164,869
Noncurrent accrued taxes (including
unrecognized tax benefits)	(27,718)	(206,752)	(75,750)	(6,271)	(27,859)	39,799	(165,981)
Accumulated deferred income
taxes and taxes accrued	($1,833,027)	($1,373,670)	($1,103,380)	($660,435)	($137,986)	($846,554)	($655,846)

     The Registrant Subsidiaries' estimated tax attributes carryovers and their expiration dates as of December 31, 2012 are as follows:

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
	Arkansas	Louisiana	Louisiana	Mississippi New Orleans		Texas	Energy
Federal net operating
losses	$1.3 billion	$321 million	$2.3 billion	$155 million	$81 million	$60 million	$875 million
Year(s) of expiration	2029 -2031	2029 -2030	2028 -2032	2029 -2032	2030 -2032	2029 -2032	2029 -2032
State net operating losses	$48 million	$852 million	$3.2 billion	-	$94 million	-	$220 million
Year(s) of expiration	2023-2026	2024 -2025	2023 -2027	N/A	2025-2027	N/A	2029-2030
Federal minimum tax
credits	$2 million	$1 million	$4 million	$1 million	$1 million	$- million	$2 million
Year(s) of expiration	2024-2031	2024-2031	2026 -2031	2024 -2031	2024 -2031	N/A	2024-2031
Other federal credits	$0 million	$0 million	$0 million	$0 million	$0 million	-	$0 million
Year(s) of expiration	2024 -2030	2024 -2030	2024 -2030	2024 -2030	2024 -2030	N/A	2024 -2030
State credits	-	-	-	$10.1 million	-	$4.2 million	$15.6 million
Year(s) of expiration	N/A	N/A	N/A	2013 -2016	N/A	2013 -2027	2015 -2016

     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:

	2012	2011	2010
	(In Thousands)
Gross balance at January 1	$4,387,780	$4,949,788	$4,050,491
Additions based on tax positions related to the current year	163,612	211,966	480,843
Additions for tax positions of prior years	1,517,797	332,744	871,682
Reductions for tax positions of prior years	(476,873)	(259,895)	(438,460)
Settlements	(1,421,913)	(841,528)	(10,462)
Lapse of statute of limitations	-	(5,295)	(4,306)
Gross balance at December 31	4,170,403	4,387,780	4,949,788
Offsets to gross unrecognized tax benefits:
Credit and loss carryovers	(4,022,535)	(3,212,397)	(3,771,301)
Cash paid to taxing authorities	-	(363,266)	(373,000)
Unrecognized tax benefits net of unused tax attributes and payments (1)	$147,868	$812,117	$805,487

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

     The balances of unrecognized tax benefits include $203 million, $521 million, and $605 million as of December 31, 2012, 2011, and 2010, 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 $3.968 billion, $3.867 billion, and $4.345 billion as of December 31, 2012, 2011, and 2010, 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 has made deposits with the IRS against its potential liabilities arising from audit adjustments and settlements related to its uncertain tax positions.Deposits are expected to be made to the IRS as the cash tax benefits of uncertain tax positions are realized.The total amount of cash deposits shown for 2011 has been fully offset against settled liabilities which arose in 2012.

     Entergy accrues interest expense, if any, related to unrecognized tax benefits in income tax expense. Entergy's December 31, 2012, 2011, and 2010 accrued balance for the possible payment of interest is approximately $146.3 million, $99 million, and $45 million, respectively.

A reconciliation of the Registrant Subsidiaries' beginning and ending amount of unrecognized tax benefits for 2012, 2011, and 2010 is as follows:

2012	Entergy Arkansas	Entergy Gulf States Louisiana	Entergy Louisiana	Entergy Mississippi	Entergy New Orleans	Entergy Texas	System Energy
	(In Thousands)
Gross balance at January 1, 2012	$335,493	$390,493	$446,187	$11,052	$56,052	$19,225	$281,183
Additions based on tax
positions related to the
current year	10,409	8,974	67,721	8,401	497	1,656	8,715
Additions for tax positions
of prior years	429,232	392,548	331,432	4,057	445	4,834	271,172
Reductions for tax
positions of prior years	(39,534)	(50,518)	(169,465)	(5,703)	(2,506)	(11,649)	(20,934)
Settlements	(390,931)	(275,776)	(139,202)	(966)	(2,470)	(112)	(279,790)
Gross balance at December 31, 2012	344,669	465,721	536,673	16,841	52,018	13,954	260,346
Offsets to gross unrecognized
tax benefits:
Loss carryovers	(342,127)	(160,955)	(536,673)	(16,841)	(35,511)	(1,593)	(249,424)
Cash paid to taxing authorities	-	-	-	-	-	-	-
Unrecognized tax benefits net of
unused tax attributes and payments	$2,542	$304,766	$-	$-	$16,507	$12,361	$10,922

2011	Entergy Arkansas	Entergy Gulf States Louisiana	Entergy Louisiana	Entergy Mississippi	Entergy New Orleans	Entergy Texas	System Energy
	(In Thousands)
Gross balance at January 1, 2011	$240,239	$353,886	$505,188	$24,163	$18,176	$14,229	$224,518
Additions based on tax
positions related to the
current year	11,216	9,398	8,748	457	50,212	1,760	44,419
Additions for tax positions
of prior years	44,202	50,944	21,052	21,902	7,343	7,533	14,200
Reductions for tax
positions of prior years	(3,255)	(21,719)	(27,991)	(5,022)	(12,289)	(3,432)	(4,942)
Settlements	43,091	(2,016)	(60,810)	(30,448)	(7,390)	(865)	2,988
Gross balance at December 31, 2011	335,493	390,493	446,187	11,052	56,052	19,225	281,183
Offsets to gross unrecognized
tax benefits:
Loss carryovers	(146,429)	(26,394)	(216,720)	(5,930)	(1,211)	(10,645)	(10,752)
Cash paid to taxing authorities	(75,977)	(45,493)	0	(7,556)	(1,174)	(1,376)	(41,878)
Unrecognized tax benefits net of
unused tax attributes and payments	$113,087	$318,606	$229,467	($2,434)	$53,667	$7,204	$228,553

2010	Entergy Arkansas	Entergy Gulf States Louisiana	Entergy Louisiana	Entergy Mississippi	Entergy New Orleans	Entergy Texas	System Energy
	(In Thousands)
Gross balance at January 1, 2010	$293,920	$311,311	$352,577	$17,137	($53,295)	$32,299	$211,247
Additions based on tax
positions related to the
current year	38,205	87,755	183,188	4,679	173	5,169	16,829
Additions for tax positions
of prior years	1,838	25,960	34,236	6,857	72,169	5,868	10,402
Reductions for tax
positions of prior years	(92,699)	(71,033)	(64,868)	(4,469)	(863)	(29,100)	(13,116)
Settlements	(1,025)	(107)	55	(41)	(8)	(7)	(844)
Gross balance at December 31, 2010	240,239	353,886	505,188	24,163	18,176	14,229	224,518
Offsets to gross unrecognized
tax benefits:
Loss carryovers	(123,968)	(29,257)	(131,805)	(6,477)	(3,751)	(6,269)	(10,487)
Cash paid to taxing authorities	(75,977)	(45,493)	-	(7,556)	(1,174)	(1,376)	(41,878)
Unrecognized tax benefits net of
unused tax attributes and payments	$40,294	$279,136	$373,383	$10,130	$13,251	$6,584	$172,153

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

	December 31, 2012	December 31, 2011	December 31, 2010
	(In  Millions)
Entergy Arkansas	$0.6	$-	$0.2
Entergy Gulf States Louisiana	$44.0	$107.9	$129.6
Entergy Louisiana	$92.4	$281.3	$286.7
Entergy Mississippi	$3.9	$3.8	$5.3
Entergy New Orleans	$-	$-	$-
Entergy Texas	$8.6	$7.3	$6.0
System Energy	$3.5	$-	$12.1

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, 2012	December 31, 2011	December 31, 2010
	(In Millions)
Entergy Arkansas	$21.8	$11.4	$-
Entergy Gulf States Louisiana	$33.1	$14.4	$9.7
Entergy Louisiana	$0.9	$0.8	$3.3
Entergy Mississippi	$2.4	$1.7	$1.6
Entergy New Orleans	$0.1	$2.4	$-
Entergy Texas	$0.7	$0.1	$0.1
System Energy	$33.2	$18.5	$8.2

Income Tax Litigation

In October 2010 the U.S. Tax Court entered a decision in favor of Entergy for tax years 1997 and 1998. The issues decided by the Tax Court are as follows:

• The ability to credit the U.K. Windfall Tax against U.S. tax as a foreign tax credit.  The U.K. Windfall Tax relates to Entergy's former investment in London Electricity.
• The validity of Entergy's change in method of tax accounting for street lighting assets and the related increase in depreciation deductions.

The IRS did not appeal street lighting depreciation, and that matter is final. The IRS filed an appeal of the U.K. Windfall Tax decision, however, with the U.S. Court of Appeals for the Fifth Circuit in December 2010. Oral arguments were heard in November 2011. In June 2012 the U.S. Court of Appeals for the Fifth Circuit unanimously affirmed the U.S. Tax Court decision. As a result of this decision, Entergy reversed its liability for uncertain tax positions associated with this issue. On September 4, 2012, the U.S. Solicitor General, on behalf of the Commissioner of Internal Revenue, petitioned the U.S. Supreme Court for a writ of certiorari to review the Fifth Circuit judgment.

Concurrent with the Tax Court's issuance of a favorable decision regarding the above issues, the Tax Court issued a favorable decision in a separate proceeding, PPL Corp. v. Commissioner, regarding the creditability of the U.K. Windfall Tax.  The IRS appealed the PPL decision to the United States Court of Appeals for the Third Circuit.  In December 2011 the Third Circuit reversed the Tax Court's holding in PPL Corp. v. Commissioner, stating that the U.K. tax was not eligible for the foreign tax credit.  PPL Corp. petitioned the U.S. Supreme Court for a writ of certiorari to review the U.S. Court of Appeals for the Third Circuit decision.  On October 29, 2012, the U.S. Supreme Court granted PPL Corp.'s petition for certiorari.    The Solicitor General's petition for writ of certiorari in Entergy's case is currently on hold pending the disposition of the PPL case.  Entergy's case will be determined consistent with the U.S. Supreme Court's decision in the PPL proceeding.  Oral argument in PPL's case was heard on February 20, 2013.

The total tax at issue on the U.K. Windfall Tax credit matter is $152 million, and interest on the underpayment of such tax is estimated to be $102 million resulting in total exposure of $254 million.

            In February 2008 the IRS issued a Statutory Notice of Deficiency for the year 2000.  The deficiency resulted from a disallowance of foreign tax credits (the same issue discussed above) as well as the disallowance of depreciation deductions on non-utility nuclear plants.  Entergy filed a Tax Court petition in May 2008 challenging the IRS treatment of these issues.  In June 2010 a trial on the depreciation issue was held in Washington, D.C.  In February 2011 a joint stipulation of settled issues was filed under which the IRS conceded its position with respect to the depreciation issue.  The outcome of the foreign tax credit matter for the year 2000 will also be determined consistent with the U.S. Supreme Court's decision in the PPL proceeding.

Income Tax Audits

Entergy and its subsidiaries file U.S. federal and various state and foreign income tax returns.Other than the matters discussed in the Income Tax Litigation section above, the IRS's and substantially all state taxing authorities' examinations are completed for years before 2005.

2002-2003 IRS Audit

In September 2009, Entergy entered into a partial agreement with the IRS for the years 2002 and 2003. In the partial agreement, Entergy did not agree to the IRS's disallowance of foreign tax credits for the U.K. Windfall Tax and the street lighting depreciation issues. As discussed above, the IRS did not appeal the Tax Court ruling on the street lighting depreciation. The U.K. Windfall tax credit issue will be governed by the U.S. Supreme Court's decision in the PPL Corp. proceeding as explained in "Income Tax Litigation", above.

2004-2005 IRS Audit

            The IRS issued its 2004-2005 Revenue Agent's Report (RAR) in May 2009.

            In June 2009, Entergy filed a formal protest with the IRS Appeals Division indicating disagreement with certain issues contained in the 2004-2005 RAR.  The major issues in dispute are:

• Depreciation of street lighting assets (because the IRS did not appeal the Tax Court's 2010 decision on this issue, it will be fully allowed in the final Appeals Division calculations for this audit).
• Inclusion of nuclear decommissioning liabilities in cost of goods sold for the nuclear power plants owned by the Utility resulting from an Application for Change in Accounting Method for tax purposes (the "2004 CAM").

During the fourth quarter 2012, Entergy settled the position relating to the 2004 CAM.   Under the settlement Entergy conceded its tax position, resulting in an increase in taxable income of approximately $2.97 billion for the tax years 2004 - 2007.  The settlement provides that Entergy Louisiana is entitled to additional tax depreciation of approximately $547 million for years 2006 and beyond.  The deferred tax asset net of interest charges associated with the settlement is $155 million for Entergy.  There was a related increase to Entergy Louisiana's member's equity account.

2006-2007 IRS Audit

            The IRS issued its 2006-2007 RAR in October 2011.  In connection with the 2006-2007 IRS audit and resulting RAR, Entergy resolved the significant issues discussed below. 

In August 2011, Entergy entered into a settlement agreement with the IRS relating to the mark-to-market income tax treatment of various wholesale electric power purchase and sale agreements, including Entergy Louisiana's contract to purchase electricity from the Vidalia hydroelectric facility.  See Note 8 to the financial statements for further details regarding this contract and a previous LPSC-approved settlement regarding the tax treatment of the contract.

With respect to income tax accounting for wholesale electric power purchase agreements, Entergy recognized income for tax purposes of approximately $1.5 billion, which represents a reversal of previously deducted temporary differences on which deferred taxes had been provided.  Also in connection with this settlement, Entergy recognized a gain for income tax purposes of approximately $1.03 billion on the formation of a wholly-owned subsidiary in 2005 with a corresponding step-up in the tax basis of depreciable assets resulting in additional tax depreciation at Entergy Louisiana.  Because Entergy Louisiana is entitled to deduct additional tax depreciation of $1.03 billion in the future, Entergy Louisiana recorded a deferred tax asset for this additional tax basis. The tax expense associated with the gain is offset by recording the deferred tax asset and by utilization of net operating losses. With the recording of the deferred tax asset, there was a corresponding increase to Entergy Louisiana's member's equity account. The agreement with the IRS effectively settled the tax treatment of various wholesale electric power purchase and sale agreements, resulting in the reversal in third quarter 2011 of approximately $422 million of deferred tax liabilities and liabilities for uncertain tax positions at Entergy Louisiana, with a corresponding reduction in income tax expense. Under the terms of an LPSC-approved final settlement, Entergy Louisiana recorded a $199 million regulatory charge and a corresponding net-of-tax regulatory liability.

After consideration of the taxable income recognition and the additional depreciation deductions provided for in the settlement, Entergy's net operating loss carryover was reduced by approximately $2.5 billion.

2008-2009 IRS Audit

In the third quarter 2008, Entergy Louisiana and Entergy Gulf States Louisiana received $679 million and $274.7 million, respectively, from the Louisiana Utilities Restoration Corporation ("LURC"). These receipts from LURC were from the proceeds of a Louisiana Act 55 financing of the costs incurred to restore service following Hurricane Katrina and Hurricane Rita. See Note 2 to the financial statements for further details regarding the financings.

In June 2012, Entergy effectively settled the tax treatment of the receipt of these funds, which resulted in an increase to 2008 taxable income of $129 million and $104 million for Entergy Louisiana and Entergy Gulf States Louisiana, respectively. As a result of the settlement, Entergy recorded an income tax benefit of $172 million, including $143 million for Entergy Louisiana and $20 million for Entergy Gulf States Louisiana, resulting from the reversal of liabilities for uncertain tax positions. Under the terms of an LPSC-approved settlement related to the Louisiana Act 55 financings, Entergy Louisiana and Entergy Gulf States Louisiana recorded, respectively, a $137 million ($84 million net-of-tax) and a $28 million ($17 million net-of-tax) regulatory charge and a corresponding regulatory liability to reflect their obligations to customers with respect to the settlement. See Note 8 to the financial statements for further discussion of the LPSC settlement.

              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. Entergy has disagreed with this disallowance and will file a protest with IRS Appeals at the conclusion of the 2008-09 examination.

Other Tax Matters

            Entergy regularly negotiates with the IRS to achieve settlements.  The results of all pending litigations and audit issues could result in significant changes to the amounts of unrecognized tax benefits, as discussed above.

In March 2010, Entergy filed an Application for Change in Accounting Method with the IRS. In the application, Entergy proposed to change the definition of unit of property for its generation assets to determine the appropriate characterization of costs associated with such units as capital or repair under the Internal Revenue Code and related Treasury Regulations. The effect of this change was an approximate $1.3 billion reduction in 2010 taxable income for Entergy, including reductions of $292 million for Entergy Arkansas, $132 million for Entergy Gulf States Louisiana, $185 million for Entergy Louisiana, $48 million for Entergy Mississippi, $45 million for Entergy Texas, $13 million for Entergy New Orleans, and $180 million for System Energy.

During the second quarter 2011, Entergy filed an Application for Change in Accounting Method with the IRS related to the allocation of overhead costs between production and non-production activities. The accounting method affects the amount of overhead that will be capitalized or deducted for tax purposes. The accounting method is expected to be implemented for the 2014 tax year.

Entergy New Orleans [Member]

Income Taxes

NOTE 3. INCOME TAXES (Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

     Income taxes from continuing operations for 2012, 2011, and 2010 for Entergy Corporation and Subsidiaries consist of the following:

	2012	2011	2010
	(In Thousands)
Current:
Federal	($47,851)	$452,713	$145,161
Foreign	143	130	131
State	(41,516)	152,711	19,313
Total	(89,224)	605,554	164,605
Deferred and non-current -- net	131,130	(311,708)	468,698
Investment tax credit
adjustments -- net	(11,051)	(7,583)	(16,064)
Income tax expense from
continuing operations	$30,855	$286,263	$617,239

 

     Income taxes for 2012, 2011, and 2010 for Entergy's Registrant Subsidiaries consist of the following:

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2012	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Current:
Federal	$64,069	($66,081)	($132,999)	$3,188	($9,484)	($114,677)	($50,491)
State	6,712	9,535	(1,269)	(4,425)	(1,617)	4,933	(8,544)
Total	70,781	(56,546)	(134,268)	(1,237)	(11,101)	(109,744)	(59,035)
Deferred and non-current -- net	26,042	112,390	8,463	59,045	18,586	144,471	137,832
Investment tax credit
adjustments -- net	(2,017)	(3,228)	(3,117)	871	(245)	(1,609)	(1,682)
Income taxes	$94,806	$52,616	($128,922)	$58,679	$7,240	$33,118	$77,115

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2011	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Current:
Federal	($12,448)	($30,106)	($136,800)	($9,466)	$14,641	($33,045)	$139,529
State	(1,751)	15,950	34,832	6,069	1,724	3,153	16,825
Total	(14,199)	(14,156)	(101,968)	(3,397)	16,365	(29,892)	156,354
Deferred and non-current -- net	148,978	107,250	(265,046)	32,380	(201)	80,993	(84,505)
Investment tax credit
adjustments -- net	(2,014)	(3,358)	(3,197)	(182)	(302)	(1,609)	3,104
Income taxes	$132,765	$89,736	($370,211)	$28,801	$15,862	$49,492	$74,953

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2010	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Current:
Federal	$114,821	$196,230	$73,174	$13,722	($114,382)	($10,607)	($4,102)
State	(9,200)	481	(4,324)	5,959	1,427	1,060	3,328
Total	105,621	196,711	68,850	19,681	(112,955)	(9,547)	(774)
Deferred and non-current -- net	10,328	(101,007)	918	31,415	129,880	53,539	60,305
Investment tax credit
adjustments -- net	(3,005)	(3,407)	(3,222)	(985)	(324)	(1,609)	(3,482)
Income taxes	$112,944	$92,297	$66,546	$50,111	$16,601	$42,383	$56,049

     Total income taxes for Entergy Corporation and 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 2012, 2011, and 2010 are:

	2012	2011	2010
	(In Thousands)
Net income attributable to Entergy Corporation	$846,673	$1,346,439	$1,250,242
Preferred dividend requirements of subsidiaries	21,690	20,933	20,063
Consolidated net income	868,363	1,367,372	1,270,305
Income taxes	30,855	286,263	617,239
Income before income taxes	$899,218	$1,653,635	$1,887,544
Computed at statutory rate (35%)	$314,726	$578,772	$660,640
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	40,699	93,940	40,530
Regulatory differences - utility plant items	35,527	39,970	31,473
Equity component of AFUDC	(30,838)	(30,184)	(16,542)
Amortization of investment tax credits	(14,000)	(14,962)	(15,980)
Net-of-tax regulatory liability (a)	(4,356)	65,357	-
Deferred tax reversal on PPA settlement (a)	-	(421,819)	-
IRS decommissioning settlement (b)	(155,300)
Write-off of reorganization costs	-	-	(19,974)
Tax law change-Medicare Part D	-	-	13,616
Write-off of regulatory asset for income taxes	42,159	-	-
Capital gains / (losses)	(20,188)	-	-
Flow-through / permanent differences	(14,801)	(17,848)	(26,370)
Provision for uncertain tax positions	(159,957)	2,698	(43,115)
Change in regulatory recovery	-	-	-
Other - net	(2,816)	(9,661)	(7,039)
Total income taxes as reported	$30,855	$286,263	$617,239
Effective Income Tax Rate	3.4%	17.3%	32.7%
(a)  See "Income Tax Audits - 2006-2007 IRS Audit" below for discussion of these items.
(b)  See "Income Tax Audits - 2004-2005 IRS Audit" below for discussion of this item.

(c)  See "Income Tax Audits - 2008-2009 IRS Audit" below for discussion of the most significant item in 2012.

            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 2012, 2011, and 2010 are:

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2012	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Net income	$152,365	$158,977	$281,081	$46,768	$17,065	$41,971	$111,866
Income taxes (benefit)	94,806	52,616	(128,922)	58,679	7,240	33,118	77,115
Pretax income	$247,171	$211,593	$152,159	$105,447	$24,305	$75,089	$188,981
Computed at statutory rate (35%)	$86,510	$74,058	$53,256	$36,906	$8,507	$26,281	$66,143
Increases (reductions) in tax
resulting from:
State income taxes net of
federal income tax effect	11,282	5,087	1,976	3,944	505	3,115	6,652
Regulatory differences -
utility plant items	6,778	8,472	312	2,619	2,289	3,668	11,389
Equity component of AFUDC	(2,495)	(3,042)	(12,919)	(1,383)	(276)	(1,587)	(9,136)
Amortization of investment
tax credits	(1,992)	(3,204)	(3,089)	(264)	(240)	(1,596)	(3,480)
Net-of-tax regulatory liability (a)	-	-	(4,356)	-	-	-	-
Flow-through / permanent
differences	3,427	(7,646)	1,397	1,961	(4,385)	1,585	(357)
Non-taxable
dividend income	-	(9,836)	(27,336)	-	-	-	-
Benefit of Entergy Corporation
expenses	(19,403)	(17,703)	-	14,449	2,758	-	(10,241)
Provision for uncertain
tax positions	11,227	8,745	(143,583)	870	(2,095)	1,651	17,966
Change in regulatory recovery	-	(553)	7,854	-	-	-
Other -- net	(528)	(1,762)	(2,434)	(423)	177	1	(1,821)
Total income taxes	$94,806	$52,616	($128,922)	$58,679	$7,240	$33,118	$77,115
Effective Income Tax Rate	38.4%	24.9%	-84.7%	55.6%	29.8%	44.1%	40.8%

(a) See "Income Tax Audits - 2006-2007 IRS Audit" below for discussion of these items.

(b) See "Incomr Tax Audits - 2008-2009 IRS Audit" below for discussion of the most significant item in 2012.

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2011	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Net income	$164,891	$201,604	$473,923	$108,729	$35,976	$80,845	$64,197
Income taxes (benefit)	132,765	89,736	(370,211)	28,801	15,862	49,492	74,953
Pretax income	$297,656	$291,340	$103,712	$137,530	$51,838	$130,337	$139,150
Computed at statutory rate (35%)	$104,180	$101,969	$36,299	$48,136	$18,143	$45,618	$48,703
Increases (reductions) in tax
resulting from:
State income taxes net of
federal income tax effect	13,727	9,618	943	3,211	3,350	2,033	4,436
Regulatory differences -
utility plant items	10,079	8,379	1,404	2,038	3,860	4,003	10,207
Equity component of AFUDC	(3,363)	(3,181)	(11,315)	(2,963)	(215)	(1,322)	(7,825)
Amortization of investment
tax credits	(1,992)	(3,336)	(3,168)	(960)	(295)	(1,596)	(3,480)
Net-of-tax regulatory liability (a)	-	-	65,357	-	-	-	-
Deferred tax reversal on PPA
settlement (a)	-	-	(421,819)	-	-	-	-
Flow-through / permanent
differences	(1,365)	587	(1,285)	304	(4,983)	88	529
Non-taxable
dividend income	-	(11,364)	(27,336)	-	-	-	-
Benefit of Entergy Corporation
expenses	-	(5,694)	-	(21,248)	(6,235)	(16)	16,559
Provision for uncertain
tax positions	12,016	(7,144)	(4,880)	(2)	2,241	717	5,878
Other -- net	(517)	(98)	(4,411)	285	(4)	(33)	(54)
Total income taxes	$132,765	$89,736	($370,211)	$28,801	$15,862	$49,492	$74,953
Effective Income Tax Rate	44.6%	30.8%	-357.0%	20.9%	30.6%	38.0%	53.9%

(a) See "Income Tax Audits - 2006-2007 IRS Audit" below for discussion of these items.

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2010	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Net income	$172,618	$174,319	$231,435	$85,377	$31,114	$66,200	$82,624
Income taxes	112,944	92,297	66,546	50,111	16,601	42,383	56,049
Pretax income	$285,562	$266,616	$297,981	$135,488	$47,715	$108,583	$138,673
Computed at statutory rate (35%)	$99,947	$93,316	$104,293	$47,421	$16,700	$38,004	$48,536
Increases (reductions) in tax
resulting from:
State income taxes net of
federal income tax effect	13,156	1,142	(10,618)	1,245	1,387	424	2,206
Regulatory differences -
utility plant items	6,126	(4,004)	7,374	3,455	3,999	4,089	10,435
Equity component of AFUDC	(144)	(1,547)	(8,361)	(1,643)	(184)	(1,525)	(3,138)
Amortization of investment
tax credits	(2,983)	(3,309)	(3,192)	(972)	(313)	(1,596)	(3,480)
Flow-through / permanent
differences	(1,235)	8,423	(754)	153	(4,883)	236	(497)
Non-taxable
dividend income	-	(9,189)	(23,603)	-	-	-	-
Provision for uncertain
tax positions	(2,100)	7,200	2,200	700	(300)	2,800	2,090
Other -- net	177	265	(793)	(248)	195	(49)	(103)
Total income taxes	$112,944	$92,297	$66,546	$50,111	$16,601	$42,383	$56,049
Effective Income Tax Rate	39.6%	34.6%	22.3%	37.0%	34.8%	39.0%	40.4%

     Significant components of accumulated deferred income taxes and taxes accrued for Entergy Corporation and Subsidiaries as of December 31, 2012 and 2011 are as follows:

	2012	2011
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net	($8,240,342)	($7,043,758)
Regulatory assets	(898,143)	(930,370)
Nuclear decommissioning trusts	(848,918)	(553,558)
Combined unitary state taxes	(233,210)	(227,427)
Power purchase agreements	-	(17,138)
Other	(485,550)	(402,097)
Total	(10,706,163)	(9,174,348)
Deferred tax assets:
Nuclear decommissioning liabilities	733,103	612,945
Regulatory liabilities	404,852	197,554
Pension and other post-employment benefits	358,893	315,134
Sale and leaseback	195,074	217,430
Accumulated deferred investment tax credit	110,690	108,338
Provision for contingencies	61,576	28,504
Power purchase agreements	43,717	-
Other	141,592	160,620
Net operating loss carryforwards	960,235	253,518
Capital losses	13,631	12,995
Valuation allowance	(86,881)	(85,615)
Total	2,936,482	1,821,423
Noncurrent accrued taxes (including unrecognized
tax benefits)	(210,534)	(814,597)
Accumulated deferred income taxes and taxes accrued	($7,980,215)	($8,167,522)

Entergy's estimated tax attributes carryovers and their expiration dates as of December 31, 2012 are as follows:

Carryover Description	Carryover Amount	Year(s) of expiration
Federal net operating losses	$12.6 billion	2028-2032
State net operating losses	$11.2 billion	2013-2032
State capital losses	$177 million	2013-2015
Miscellaneous federal and state credits	$81.9 million	2013-2032

     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 and capital loss carryovers will not be utilized, a valuation allowance $69.6 million and $13.6 million of has been provided on the deferred tax assets relating to these state net operating and capital loss carryovers, respectively.

     Significant components of accumulated deferred income taxes and taxes accrued for the Registrant Subsidiaries as of December 31, 2012 and 2011 are as follows:

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2012	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net	($1,565,988)	($1,268,164)	($1,544,256)	($727,442)	($202,496)	($770,084)	($759,896)
Regulatory assets	(172,915)	(100,578)	(249,051)	(27,077)	(4,790)	(220,417)	(119,209)
Nuclear decommissioning trusts	(67,025)	(25,472)	(29,493)	-	-	-	(27,809)
Deferred fuel	(50,068)	(1,618)	(11,815)	(11,332)	(976)	3,932	(445)
Other	(55,000)	(27,501)	(92,433)	(12,641)	(10,576)	(23,681)	(6,592)
Total	($1,910,996)	($1,423,333)	($1,927,048)	($778,492)	($218,838)	($1,010,250)	($913,951)
Deferred tax assets:
Nuclear decommissioning liabilities	(63,189)	51,593	92,930	-	-	-	(65,564)
Regulatory liabilities	79,805	47,474	173,046	8,515	47,257	3,429	45,327
Pension and other post-
employment benefits	(75,278)	47,469	34,283	(22,140)	(10,815)	(40,389)	(19,160)
Sale and Leaseback	-	-	57,423	-	-	-	137,651
Accumulated deferred investment tax credit	16,062	36,642	27,008	2,776	500	6,210	21,492
Provision for contingencies	4,723	33,074	48,241	9,564	(2,865)	(35,505)	-
Power purchase agreements	94	37,771	-	84	21	2,752	-
Unbilled/deferred revenues	27,651	(23,150)	(7,101)	9,242	3,352	12,986	-
Compensation	3,587	580	18	(664)	13	4,547	180
Net operating loss carryforwards	102,034	-	460,367	45,475	-	20,307	86,228
Other	5,565	6,106	5,513	8,758	4,472	6,707	2,000
Total	101,054	237,559	891,728	61,610	41,935	(18,956)	208,154
Noncurrent accrued taxes (including
unrecognized tax benefits)	46,930	(239,670)	218,033	(1,121)	13,630	55,113	(4,130)
Accumulated deferred income
taxes and taxes accrued	($1,763,012)	($1,425,444)	($817,287)	($718,003)	($163,273)	($974,093)	($709,927)

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2011	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net	($1,334,016)	($1,124,284)	($1,077,835)	($608,596)	($148,296)	($735,310)	($505,369)
Regulatory assets	(222,429)	(103,585)	(249,459)	(32,611)	-	(227,224)	(120,886)
Nuclear decommissioning trusts	(53,789)	(21,096)	(22,441)	-	-	-	(19,138)
Deferred fuel	(82,452)	(1,225)	(4,285)	718	(331)	3,932	(8)
Other	(54,277)	(1,394)	(26,237)	(7,263)	(18,319)	(14,098)	(9,333)
Total	($1,746,963)	($1,251,584)	($1,380,257)	($647,752)	($166,946)	($972,700)	($654,734)
Deferred tax assets:
Nuclear decommissioning liabilities	(104,862)	(38,683)	56,399	-	-	-	(47,360)
Regulatory liabilities	29,473	(39,265)	111,705	1,497	53,191	35,072	18,301
Pension and other post-				-	-	-
employment benefits	(75,399)	123,085	19,866	(30,390)	(11,713)	(41,964)	(19,593)
Sale and Leaseback	-	-	66,801	-	-	-	150,629
Accumulated deferred
investment tax credit	16,843	31,367	28,197	2,437	592	6,769	22,133
Provision for contingencies	4,167	(1,406)	3,940	2,465	10,121	2,299	-
Power purchase agreements	94	3,938	(1)	2,383	22	2,547	-
Unbilled/deferred revenues	15,222	(21,918)	(7,108)	8,990	2,707	14,324	-
Net operating loss carryforwards	-	-	39,153	-	-	58,547	-
Other	56,116	27,548	33,675	6,206	1,899	8,753	40,759
Total	(58,346)	84,666	352,627	(6,412)	56,819	86,347	164,869
Noncurrent accrued taxes (including
unrecognized tax benefits)	(27,718)	(206,752)	(75,750)	(6,271)	(27,859)	39,799	(165,981)
Accumulated deferred income
taxes and taxes accrued	($1,833,027)	($1,373,670)	($1,103,380)	($660,435)	($137,986)	($846,554)	($655,846)

     The Registrant Subsidiaries' estimated tax attributes carryovers and their expiration dates as of December 31, 2012 are as follows:

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
	Arkansas	Louisiana	Louisiana	Mississippi New Orleans		Texas	Energy
Federal net operating
losses	$1.3 billion	$321 million	$2.3 billion	$155 million	$81 million	$60 million	$875 million
Year(s) of expiration	2029 -2031	2029 -2030	2028 -2032	2029 -2032	2030 -2032	2029 -2032	2029 -2032
State net operating losses	$48 million	$852 million	$3.2 billion	-	$94 million	-	$220 million
Year(s) of expiration	2023-2026	2024 -2025	2023 -2027	N/A	2025-2027	N/A	2029-2030
Federal minimum tax
credits	$2 million	$1 million	$4 million	$1 million	$1 million	$- million	$2 million
Year(s) of expiration	2024-2031	2024-2031	2026 -2031	2024 -2031	2024 -2031	N/A	2024-2031
Other federal credits	$0 million	$0 million	$0 million	$0 million	$0 million	-	$0 million
Year(s) of expiration	2024 -2030	2024 -2030	2024 -2030	2024 -2030	2024 -2030	N/A	2024 -2030
State credits	-	-	-	$10.1 million	-	$4.2 million	$15.6 million
Year(s) of expiration	N/A	N/A	N/A	2013 -2016	N/A	2013 -2027	2015 -2016

     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:

	2012	2011	2010
	(In Thousands)
Gross balance at January 1	$4,387,780	$4,949,788	$4,050,491
Additions based on tax positions related to the current year	163,612	211,966	480,843
Additions for tax positions of prior years	1,517,797	332,744	871,682
Reductions for tax positions of prior years	(476,873)	(259,895)	(438,460)
Settlements	(1,421,913)	(841,528)	(10,462)
Lapse of statute of limitations	-	(5,295)	(4,306)
Gross balance at December 31	4,170,403	4,387,780	4,949,788
Offsets to gross unrecognized tax benefits:
Credit and loss carryovers	(4,022,535)	(3,212,397)	(3,771,301)
Cash paid to taxing authorities	-	(363,266)	(373,000)
Unrecognized tax benefits net of unused tax attributes and payments (1)	$147,868	$812,117	$805,487

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

     The balances of unrecognized tax benefits include $203 million, $521 million, and $605 million as of December 31, 2012, 2011, and 2010, 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 $3.968 billion, $3.867 billion, and $4.345 billion as of December 31, 2012, 2011, and 2010, 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 has made deposits with the IRS against its potential liabilities arising from audit adjustments and settlements related to its uncertain tax positions.Deposits are expected to be made to the IRS as the cash tax benefits of uncertain tax positions are realized.The total amount of cash deposits shown for 2011 has been fully offset against settled liabilities which arose in 2012.

     Entergy accrues interest expense, if any, related to unrecognized tax benefits in income tax expense. Entergy's December 31, 2012, 2011, and 2010 accrued balance for the possible payment of interest is approximately $146.3 million, $99 million, and $45 million, respectively.

A reconciliation of the Registrant Subsidiaries' beginning and ending amount of unrecognized tax benefits for 2012, 2011, and 2010 is as follows:

2012	Entergy Arkansas	Entergy Gulf States Louisiana	Entergy Louisiana	Entergy Mississippi	Entergy New Orleans	Entergy Texas	System Energy
	(In Thousands)
Gross balance at January 1, 2012	$335,493	$390,493	$446,187	$11,052	$56,052	$19,225	$281,183
Additions based on tax
positions related to the
current year	10,409	8,974	67,721	8,401	497	1,656	8,715
Additions for tax positions
of prior years	429,232	392,548	331,432	4,057	445	4,834	271,172
Reductions for tax
positions of prior years	(39,534)	(50,518)	(169,465)	(5,703)	(2,506)	(11,649)	(20,934)
Settlements	(390,931)	(275,776)	(139,202)	(966)	(2,470)	(112)	(279,790)
Gross balance at December 31, 2012	344,669	465,721	536,673	16,841	52,018	13,954	260,346
Offsets to gross unrecognized
tax benefits:
Loss carryovers	(342,127)	(160,955)	(536,673)	(16,841)	(35,511)	(1,593)	(249,424)
Cash paid to taxing authorities	-	-	-	-	-	-	-
Unrecognized tax benefits net of
unused tax attributes and payments	$2,542	$304,766	$-	$-	$16,507	$12,361	$10,922

2011	Entergy Arkansas	Entergy Gulf States Louisiana	Entergy Louisiana	Entergy Mississippi	Entergy New Orleans	Entergy Texas	System Energy
	(In Thousands)
Gross balance at January 1, 2011	$240,239	$353,886	$505,188	$24,163	$18,176	$14,229	$224,518
Additions based on tax
positions related to the
current year	11,216	9,398	8,748	457	50,212	1,760	44,419
Additions for tax positions
of prior years	44,202	50,944	21,052	21,902	7,343	7,533	14,200
Reductions for tax
positions of prior years	(3,255)	(21,719)	(27,991)	(5,022)	(12,289)	(3,432)	(4,942)
Settlements	43,091	(2,016)	(60,810)	(30,448)	(7,390)	(865)	2,988
Gross balance at December 31, 2011	335,493	390,493	446,187	11,052	56,052	19,225	281,183
Offsets to gross unrecognized
tax benefits:
Loss carryovers	(146,429)	(26,394)	(216,720)	(5,930)	(1,211)	(10,645)	(10,752)
Cash paid to taxing authorities	(75,977)	(45,493)	0	(7,556)	(1,174)	(1,376)	(41,878)
Unrecognized tax benefits net of
unused tax attributes and payments	$113,087	$318,606	$229,467	($2,434)	$53,667	$7,204	$228,553

2010	Entergy Arkansas	Entergy Gulf States Louisiana	Entergy Louisiana	Entergy Mississippi	Entergy New Orleans	Entergy Texas	System Energy
	(In Thousands)
Gross balance at January 1, 2010	$293,920	$311,311	$352,577	$17,137	($53,295)	$32,299	$211,247
Additions based on tax
positions related to the
current year	38,205	87,755	183,188	4,679	173	5,169	16,829
Additions for tax positions
of prior years	1,838	25,960	34,236	6,857	72,169	5,868	10,402
Reductions for tax
positions of prior years	(92,699)	(71,033)	(64,868)	(4,469)	(863)	(29,100)	(13,116)
Settlements	(1,025)	(107)	55	(41)	(8)	(7)	(844)
Gross balance at December 31, 2010	240,239	353,886	505,188	24,163	18,176	14,229	224,518
Offsets to gross unrecognized
tax benefits:
Loss carryovers	(123,968)	(29,257)	(131,805)	(6,477)	(3,751)	(6,269)	(10,487)
Cash paid to taxing authorities	(75,977)	(45,493)	-	(7,556)	(1,174)	(1,376)	(41,878)
Unrecognized tax benefits net of
unused tax attributes and payments	$40,294	$279,136	$373,383	$10,130	$13,251	$6,584	$172,153

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

	December 31, 2012	December 31, 2011	December 31, 2010
	(In  Millions)
Entergy Arkansas	$0.6	$-	$0.2
Entergy Gulf States Louisiana	$44.0	$107.9	$129.6
Entergy Louisiana	$92.4	$281.3	$286.7
Entergy Mississippi	$3.9	$3.8	$5.3
Entergy New Orleans	$-	$-	$-
Entergy Texas	$8.6	$7.3	$6.0
System Energy	$3.5	$-	$12.1

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, 2012	December 31, 2011	December 31, 2010
	(In Millions)
Entergy Arkansas	$21.8	$11.4	$-
Entergy Gulf States Louisiana	$33.1	$14.4	$9.7
Entergy Louisiana	$0.9	$0.8	$3.3
Entergy Mississippi	$2.4	$1.7	$1.6
Entergy New Orleans	$0.1	$2.4	$-
Entergy Texas	$0.7	$0.1	$0.1
System Energy	$33.2	$18.5	$8.2

Income Tax Litigation

In October 2010 the U.S. Tax Court entered a decision in favor of Entergy for tax years 1997 and 1998. The issues decided by the Tax Court are as follows:

• The ability to credit the U.K. Windfall Tax against U.S. tax as a foreign tax credit.  The U.K. Windfall Tax relates to Entergy's former investment in London Electricity.
• The validity of Entergy's change in method of tax accounting for street lighting assets and the related increase in depreciation deductions.

The IRS did not appeal street lighting depreciation, and that matter is final. The IRS filed an appeal of the U.K. Windfall Tax decision, however, with the U.S. Court of Appeals for the Fifth Circuit in December 2010. Oral arguments were heard in November 2011. In June 2012 the U.S. Court of Appeals for the Fifth Circuit unanimously affirmed the U.S. Tax Court decision. As a result of this decision, Entergy reversed its liability for uncertain tax positions associated with this issue. On September 4, 2012, the U.S. Solicitor General, on behalf of the Commissioner of Internal Revenue, petitioned the U.S. Supreme Court for a writ of certiorari to review the Fifth Circuit judgment.

Concurrent with the Tax Court's issuance of a favorable decision regarding the above issues, the Tax Court issued a favorable decision in a separate proceeding, PPL Corp. v. Commissioner, regarding the creditability of the U.K. Windfall Tax.  The IRS appealed the PPL decision to the United States Court of Appeals for the Third Circuit.  In December 2011 the Third Circuit reversed the Tax Court's holding in PPL Corp. v. Commissioner, stating that the U.K. tax was not eligible for the foreign tax credit.  PPL Corp. petitioned the U.S. Supreme Court for a writ of certiorari to review the U.S. Court of Appeals for the Third Circuit decision.  On October 29, 2012, the U.S. Supreme Court granted PPL Corp.'s petition for certiorari.    The Solicitor General's petition for writ of certiorari in Entergy's case is currently on hold pending the disposition of the PPL case.  Entergy's case will be determined consistent with the U.S. Supreme Court's decision in the PPL proceeding.  Oral argument in PPL's case was heard on February 20, 2013.

The total tax at issue on the U.K. Windfall Tax credit matter is $152 million, and interest on the underpayment of such tax is estimated to be $102 million resulting in total exposure of $254 million.

            In February 2008 the IRS issued a Statutory Notice of Deficiency for the year 2000.  The deficiency resulted from a disallowance of foreign tax credits (the same issue discussed above) as well as the disallowance of depreciation deductions on non-utility nuclear plants.  Entergy filed a Tax Court petition in May 2008 challenging the IRS treatment of these issues.  In June 2010 a trial on the depreciation issue was held in Washington, D.C.  In February 2011 a joint stipulation of settled issues was filed under which the IRS conceded its position with respect to the depreciation issue.  The outcome of the foreign tax credit matter for the year 2000 will also be determined consistent with the U.S. Supreme Court's decision in the PPL proceeding.

Income Tax Audits

Entergy and its subsidiaries file U.S. federal and various state and foreign income tax returns.Other than the matters discussed in the Income Tax Litigation section above, the IRS's and substantially all state taxing authorities' examinations are completed for years before 2005.

2002-2003 IRS Audit

In September 2009, Entergy entered into a partial agreement with the IRS for the years 2002 and 2003. In the partial agreement, Entergy did not agree to the IRS's disallowance of foreign tax credits for the U.K. Windfall Tax and the street lighting depreciation issues. As discussed above, the IRS did not appeal the Tax Court ruling on the street lighting depreciation. The U.K. Windfall tax credit issue will be governed by the U.S. Supreme Court's decision in the PPL Corp. proceeding as explained in "Income Tax Litigation", above.

2004-2005 IRS Audit

            The IRS issued its 2004-2005 Revenue Agent's Report (RAR) in May 2009.

            In June 2009, Entergy filed a formal protest with the IRS Appeals Division indicating disagreement with certain issues contained in the 2004-2005 RAR.  The major issues in dispute are:

• Depreciation of street lighting assets (because the IRS did not appeal the Tax Court's 2010 decision on this issue, it will be fully allowed in the final Appeals Division calculations for this audit).
• Inclusion of nuclear decommissioning liabilities in cost of goods sold for the nuclear power plants owned by the Utility resulting from an Application for Change in Accounting Method for tax purposes (the "2004 CAM").

During the fourth quarter 2012, Entergy settled the position relating to the 2004 CAM.   Under the settlement Entergy conceded its tax position, resulting in an increase in taxable income of approximately $2.97 billion for the tax years 2004 - 2007.  The settlement provides that Entergy Louisiana is entitled to additional tax depreciation of approximately $547 million for years 2006 and beyond.  The deferred tax asset net of interest charges associated with the settlement is $155 million for Entergy.  There was a related increase to Entergy Louisiana's member's equity account.

2006-2007 IRS Audit

            The IRS issued its 2006-2007 RAR in October 2011.  In connection with the 2006-2007 IRS audit and resulting RAR, Entergy resolved the significant issues discussed below. 

In August 2011, Entergy entered into a settlement agreement with the IRS relating to the mark-to-market income tax treatment of various wholesale electric power purchase and sale agreements, including Entergy Louisiana's contract to purchase electricity from the Vidalia hydroelectric facility.  See Note 8 to the financial statements for further details regarding this contract and a previous LPSC-approved settlement regarding the tax treatment of the contract.

With respect to income tax accounting for wholesale electric power purchase agreements, Entergy recognized income for tax purposes of approximately $1.5 billion, which represents a reversal of previously deducted temporary differences on which deferred taxes had been provided.  Also in connection with this settlement, Entergy recognized a gain for income tax purposes of approximately $1.03 billion on the formation of a wholly-owned subsidiary in 2005 with a corresponding step-up in the tax basis of depreciable assets resulting in additional tax depreciation at Entergy Louisiana.  Because Entergy Louisiana is entitled to deduct additional tax depreciation of $1.03 billion in the future, Entergy Louisiana recorded a deferred tax asset for this additional tax basis. The tax expense associated with the gain is offset by recording the deferred tax asset and by utilization of net operating losses. With the recording of the deferred tax asset, there was a corresponding increase to Entergy Louisiana's member's equity account. The agreement with the IRS effectively settled the tax treatment of various wholesale electric power purchase and sale agreements, resulting in the reversal in third quarter 2011 of approximately $422 million of deferred tax liabilities and liabilities for uncertain tax positions at Entergy Louisiana, with a corresponding reduction in income tax expense. Under the terms of an LPSC-approved final settlement, Entergy Louisiana recorded a $199 million regulatory charge and a corresponding net-of-tax regulatory liability.

After consideration of the taxable income recognition and the additional depreciation deductions provided for in the settlement, Entergy's net operating loss carryover was reduced by approximately $2.5 billion.

2008-2009 IRS Audit

In the third quarter 2008, Entergy Louisiana and Entergy Gulf States Louisiana received $679 million and $274.7 million, respectively, from the Louisiana Utilities Restoration Corporation ("LURC"). These receipts from LURC were from the proceeds of a Louisiana Act 55 financing of the costs incurred to restore service following Hurricane Katrina and Hurricane Rita. See Note 2 to the financial statements for further details regarding the financings.

In June 2012, Entergy effectively settled the tax treatment of the receipt of these funds, which resulted in an increase to 2008 taxable income of $129 million and $104 million for Entergy Louisiana and Entergy Gulf States Louisiana, respectively. As a result of the settlement, Entergy recorded an income tax benefit of $172 million, including $143 million for Entergy Louisiana and $20 million for Entergy Gulf States Louisiana, resulting from the reversal of liabilities for uncertain tax positions. Under the terms of an LPSC-approved settlement related to the Louisiana Act 55 financings, Entergy Louisiana and Entergy Gulf States Louisiana recorded, respectively, a $137 million ($84 million net-of-tax) and a $28 million ($17 million net-of-tax) regulatory charge and a corresponding regulatory liability to reflect their obligations to customers with respect to the settlement. See Note 8 to the financial statements for further discussion of the LPSC settlement.

              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. Entergy has disagreed with this disallowance and will file a protest with IRS Appeals at the conclusion of the 2008-09 examination.

Other Tax Matters

            Entergy regularly negotiates with the IRS to achieve settlements.  The results of all pending litigations and audit issues could result in significant changes to the amounts of unrecognized tax benefits, as discussed above.

In March 2010, Entergy filed an Application for Change in Accounting Method with the IRS. In the application, Entergy proposed to change the definition of unit of property for its generation assets to determine the appropriate characterization of costs associated with such units as capital or repair under the Internal Revenue Code and related Treasury Regulations. The effect of this change was an approximate $1.3 billion reduction in 2010 taxable income for Entergy, including reductions of $292 million for Entergy Arkansas, $132 million for Entergy Gulf States Louisiana, $185 million for Entergy Louisiana, $48 million for Entergy Mississippi, $45 million for Entergy Texas, $13 million for Entergy New Orleans, and $180 million for System Energy.

During the second quarter 2011, Entergy filed an Application for Change in Accounting Method with the IRS related to the allocation of overhead costs between production and non-production activities. The accounting method affects the amount of overhead that will be capitalized or deducted for tax purposes. The accounting method is expected to be implemented for the 2014 tax year.

Entergy Texas [Member]

Income Taxes

NOTE 3. INCOME TAXES (Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

     Income taxes from continuing operations for 2012, 2011, and 2010 for Entergy Corporation and Subsidiaries consist of the following:

	2012	2011	2010
	(In Thousands)
Current:
Federal	($47,851)	$452,713	$145,161
Foreign	143	130	131
State	(41,516)	152,711	19,313
Total	(89,224)	605,554	164,605
Deferred and non-current -- net	131,130	(311,708)	468,698
Investment tax credit
adjustments -- net	(11,051)	(7,583)	(16,064)
Income tax expense from
continuing operations	$30,855	$286,263	$617,239

 

     Income taxes for 2012, 2011, and 2010 for Entergy's Registrant Subsidiaries consist of the following:

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2012	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Current:
Federal	$64,069	($66,081)	($132,999)	$3,188	($9,484)	($114,677)	($50,491)
State	6,712	9,535	(1,269)	(4,425)	(1,617)	4,933	(8,544)
Total	70,781	(56,546)	(134,268)	(1,237)	(11,101)	(109,744)	(59,035)
Deferred and non-current -- net	26,042	112,390	8,463	59,045	18,586	144,471	137,832
Investment tax credit
adjustments -- net	(2,017)	(3,228)	(3,117)	871	(245)	(1,609)	(1,682)
Income taxes	$94,806	$52,616	($128,922)	$58,679	$7,240	$33,118	$77,115

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2011	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Current:
Federal	($12,448)	($30,106)	($136,800)	($9,466)	$14,641	($33,045)	$139,529
State	(1,751)	15,950	34,832	6,069	1,724	3,153	16,825
Total	(14,199)	(14,156)	(101,968)	(3,397)	16,365	(29,892)	156,354
Deferred and non-current -- net	148,978	107,250	(265,046)	32,380	(201)	80,993	(84,505)
Investment tax credit
adjustments -- net	(2,014)	(3,358)	(3,197)	(182)	(302)	(1,609)	3,104
Income taxes	$132,765	$89,736	($370,211)	$28,801	$15,862	$49,492	$74,953

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2010	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Current:
Federal	$114,821	$196,230	$73,174	$13,722	($114,382)	($10,607)	($4,102)
State	(9,200)	481	(4,324)	5,959	1,427	1,060	3,328
Total	105,621	196,711	68,850	19,681	(112,955)	(9,547)	(774)
Deferred and non-current -- net	10,328	(101,007)	918	31,415	129,880	53,539	60,305
Investment tax credit
adjustments -- net	(3,005)	(3,407)	(3,222)	(985)	(324)	(1,609)	(3,482)
Income taxes	$112,944	$92,297	$66,546	$50,111	$16,601	$42,383	$56,049

     Total income taxes for Entergy Corporation and 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 2012, 2011, and 2010 are:

	2012	2011	2010
	(In Thousands)
Net income attributable to Entergy Corporation	$846,673	$1,346,439	$1,250,242
Preferred dividend requirements of subsidiaries	21,690	20,933	20,063
Consolidated net income	868,363	1,367,372	1,270,305
Income taxes	30,855	286,263	617,239
Income before income taxes	$899,218	$1,653,635	$1,887,544
Computed at statutory rate (35%)	$314,726	$578,772	$660,640
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	40,699	93,940	40,530
Regulatory differences - utility plant items	35,527	39,970	31,473
Equity component of AFUDC	(30,838)	(30,184)	(16,542)
Amortization of investment tax credits	(14,000)	(14,962)	(15,980)
Net-of-tax regulatory liability (a)	(4,356)	65,357	-
Deferred tax reversal on PPA settlement (a)	-	(421,819)	-
IRS decommissioning settlement (b)	(155,300)
Write-off of reorganization costs	-	-	(19,974)
Tax law change-Medicare Part D	-	-	13,616
Write-off of regulatory asset for income taxes	42,159	-	-
Capital gains / (losses)	(20,188)	-	-
Flow-through / permanent differences	(14,801)	(17,848)	(26,370)
Provision for uncertain tax positions	(159,957)	2,698	(43,115)
Change in regulatory recovery	-	-	-
Other - net	(2,816)	(9,661)	(7,039)
Total income taxes as reported	$30,855	$286,263	$617,239
Effective Income Tax Rate	3.4%	17.3%	32.7%
(a)  See "Income Tax Audits - 2006-2007 IRS Audit" below for discussion of these items.
(b)  See "Income Tax Audits - 2004-2005 IRS Audit" below for discussion of this item.

(c)  See "Income Tax Audits - 2008-2009 IRS Audit" below for discussion of the most significant item in 2012.

            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 2012, 2011, and 2010 are:

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2012	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Net income	$152,365	$158,977	$281,081	$46,768	$17,065	$41,971	$111,866
Income taxes (benefit)	94,806	52,616	(128,922)	58,679	7,240	33,118	77,115
Pretax income	$247,171	$211,593	$152,159	$105,447	$24,305	$75,089	$188,981
Computed at statutory rate (35%)	$86,510	$74,058	$53,256	$36,906	$8,507	$26,281	$66,143
Increases (reductions) in tax
resulting from:
State income taxes net of
federal income tax effect	11,282	5,087	1,976	3,944	505	3,115	6,652
Regulatory differences -
utility plant items	6,778	8,472	312	2,619	2,289	3,668	11,389
Equity component of AFUDC	(2,495)	(3,042)	(12,919)	(1,383)	(276)	(1,587)	(9,136)
Amortization of investment
tax credits	(1,992)	(3,204)	(3,089)	(264)	(240)	(1,596)	(3,480)
Net-of-tax regulatory liability (a)	-	-	(4,356)	-	-	-	-
Flow-through / permanent
differences	3,427	(7,646)	1,397	1,961	(4,385)	1,585	(357)
Non-taxable
dividend income	-	(9,836)	(27,336)	-	-	-	-
Benefit of Entergy Corporation
expenses	(19,403)	(17,703)	-	14,449	2,758	-	(10,241)
Provision for uncertain
tax positions	11,227	8,745	(143,583)	870	(2,095)	1,651	17,966
Change in regulatory recovery	-	(553)	7,854	-	-	-
Other -- net	(528)	(1,762)	(2,434)	(423)	177	1	(1,821)
Total income taxes	$94,806	$52,616	($128,922)	$58,679	$7,240	$33,118	$77,115
Effective Income Tax Rate	38.4%	24.9%	-84.7%	55.6%	29.8%	44.1%	40.8%

(a) See "Income Tax Audits - 2006-2007 IRS Audit" below for discussion of these items.

(b) See "Incomr Tax Audits - 2008-2009 IRS Audit" below for discussion of the most significant item in 2012.

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2011	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Net income	$164,891	$201,604	$473,923	$108,729	$35,976	$80,845	$64,197
Income taxes (benefit)	132,765	89,736	(370,211)	28,801	15,862	49,492	74,953
Pretax income	$297,656	$291,340	$103,712	$137,530	$51,838	$130,337	$139,150
Computed at statutory rate (35%)	$104,180	$101,969	$36,299	$48,136	$18,143	$45,618	$48,703
Increases (reductions) in tax
resulting from:
State income taxes net of
federal income tax effect	13,727	9,618	943	3,211	3,350	2,033	4,436
Regulatory differences -
utility plant items	10,079	8,379	1,404	2,038	3,860	4,003	10,207
Equity component of AFUDC	(3,363)	(3,181)	(11,315)	(2,963)	(215)	(1,322)	(7,825)
Amortization of investment
tax credits	(1,992)	(3,336)	(3,168)	(960)	(295)	(1,596)	(3,480)
Net-of-tax regulatory liability (a)	-	-	65,357	-	-	-	-
Deferred tax reversal on PPA
settlement (a)	-	-	(421,819)	-	-	-	-
Flow-through / permanent
differences	(1,365)	587	(1,285)	304	(4,983)	88	529
Non-taxable
dividend income	-	(11,364)	(27,336)	-	-	-	-
Benefit of Entergy Corporation
expenses	-	(5,694)	-	(21,248)	(6,235)	(16)	16,559
Provision for uncertain
tax positions	12,016	(7,144)	(4,880)	(2)	2,241	717	5,878
Other -- net	(517)	(98)	(4,411)	285	(4)	(33)	(54)
Total income taxes	$132,765	$89,736	($370,211)	$28,801	$15,862	$49,492	$74,953
Effective Income Tax Rate	44.6%	30.8%	-357.0%	20.9%	30.6%	38.0%	53.9%

(a) See "Income Tax Audits - 2006-2007 IRS Audit" below for discussion of these items.

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2010	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Net income	$172,618	$174,319	$231,435	$85,377	$31,114	$66,200	$82,624
Income taxes	112,944	92,297	66,546	50,111	16,601	42,383	56,049
Pretax income	$285,562	$266,616	$297,981	$135,488	$47,715	$108,583	$138,673
Computed at statutory rate (35%)	$99,947	$93,316	$104,293	$47,421	$16,700	$38,004	$48,536
Increases (reductions) in tax
resulting from:
State income taxes net of
federal income tax effect	13,156	1,142	(10,618)	1,245	1,387	424	2,206
Regulatory differences -
utility plant items	6,126	(4,004)	7,374	3,455	3,999	4,089	10,435
Equity component of AFUDC	(144)	(1,547)	(8,361)	(1,643)	(184)	(1,525)	(3,138)
Amortization of investment
tax credits	(2,983)	(3,309)	(3,192)	(972)	(313)	(1,596)	(3,480)
Flow-through / permanent
differences	(1,235)	8,423	(754)	153	(4,883)	236	(497)
Non-taxable
dividend income	-	(9,189)	(23,603)	-	-	-	-
Provision for uncertain
tax positions	(2,100)	7,200	2,200	700	(300)	2,800	2,090
Other -- net	177	265	(793)	(248)	195	(49)	(103)
Total income taxes	$112,944	$92,297	$66,546	$50,111	$16,601	$42,383	$56,049
Effective Income Tax Rate	39.6%	34.6%	22.3%	37.0%	34.8%	39.0%	40.4%

     Significant components of accumulated deferred income taxes and taxes accrued for Entergy Corporation and Subsidiaries as of December 31, 2012 and 2011 are as follows:

	2012	2011
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net	($8,240,342)	($7,043,758)
Regulatory assets	(898,143)	(930,370)
Nuclear decommissioning trusts	(848,918)	(553,558)
Combined unitary state taxes	(233,210)	(227,427)
Power purchase agreements	-	(17,138)
Other	(485,550)	(402,097)
Total	(10,706,163)	(9,174,348)
Deferred tax assets:
Nuclear decommissioning liabilities	733,103	612,945
Regulatory liabilities	404,852	197,554
Pension and other post-employment benefits	358,893	315,134
Sale and leaseback	195,074	217,430
Accumulated deferred investment tax credit	110,690	108,338
Provision for contingencies	61,576	28,504
Power purchase agreements	43,717	-
Other	141,592	160,620
Net operating loss carryforwards	960,235	253,518
Capital losses	13,631	12,995
Valuation allowance	(86,881)	(85,615)
Total	2,936,482	1,821,423
Noncurrent accrued taxes (including unrecognized
tax benefits)	(210,534)	(814,597)
Accumulated deferred income taxes and taxes accrued	($7,980,215)	($8,167,522)

Entergy's estimated tax attributes carryovers and their expiration dates as of December 31, 2012 are as follows:

Carryover Description	Carryover Amount	Year(s) of expiration
Federal net operating losses	$12.6 billion	2028-2032
State net operating losses	$11.2 billion	2013-2032
State capital losses	$177 million	2013-2015
Miscellaneous federal and state credits	$81.9 million	2013-2032

     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 and capital loss carryovers will not be utilized, a valuation allowance $69.6 million and $13.6 million of has been provided on the deferred tax assets relating to these state net operating and capital loss carryovers, respectively.

     Significant components of accumulated deferred income taxes and taxes accrued for the Registrant Subsidiaries as of December 31, 2012 and 2011 are as follows:

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2012	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net	($1,565,988)	($1,268,164)	($1,544,256)	($727,442)	($202,496)	($770,084)	($759,896)
Regulatory assets	(172,915)	(100,578)	(249,051)	(27,077)	(4,790)	(220,417)	(119,209)
Nuclear decommissioning trusts	(67,025)	(25,472)	(29,493)	-	-	-	(27,809)
Deferred fuel	(50,068)	(1,618)	(11,815)	(11,332)	(976)	3,932	(445)
Other	(55,000)	(27,501)	(92,433)	(12,641)	(10,576)	(23,681)	(6,592)
Total	($1,910,996)	($1,423,333)	($1,927,048)	($778,492)	($218,838)	($1,010,250)	($913,951)
Deferred tax assets:
Nuclear decommissioning liabilities	(63,189)	51,593	92,930	-	-	-	(65,564)
Regulatory liabilities	79,805	47,474	173,046	8,515	47,257	3,429	45,327
Pension and other post-
employment benefits	(75,278)	47,469	34,283	(22,140)	(10,815)	(40,389)	(19,160)
Sale and Leaseback	-	-	57,423	-	-	-	137,651
Accumulated deferred investment tax credit	16,062	36,642	27,008	2,776	500	6,210	21,492
Provision for contingencies	4,723	33,074	48,241	9,564	(2,865)	(35,505)	-
Power purchase agreements	94	37,771	-	84	21	2,752	-
Unbilled/deferred revenues	27,651	(23,150)	(7,101)	9,242	3,352	12,986	-
Compensation	3,587	580	18	(664)	13	4,547	180
Net operating loss carryforwards	102,034	-	460,367	45,475	-	20,307	86,228
Other	5,565	6,106	5,513	8,758	4,472	6,707	2,000
Total	101,054	237,559	891,728	61,610	41,935	(18,956)	208,154
Noncurrent accrued taxes (including
unrecognized tax benefits)	46,930	(239,670)	218,033	(1,121)	13,630	55,113	(4,130)
Accumulated deferred income
taxes and taxes accrued	($1,763,012)	($1,425,444)	($817,287)	($718,003)	($163,273)	($974,093)	($709,927)

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2011	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net	($1,334,016)	($1,124,284)	($1,077,835)	($608,596)	($148,296)	($735,310)	($505,369)
Regulatory assets	(222,429)	(103,585)	(249,459)	(32,611)	-	(227,224)	(120,886)
Nuclear decommissioning trusts	(53,789)	(21,096)	(22,441)	-	-	-	(19,138)
Deferred fuel	(82,452)	(1,225)	(4,285)	718	(331)	3,932	(8)
Other	(54,277)	(1,394)	(26,237)	(7,263)	(18,319)	(14,098)	(9,333)
Total	($1,746,963)	($1,251,584)	($1,380,257)	($647,752)	($166,946)	($972,700)	($654,734)
Deferred tax assets:
Nuclear decommissioning liabilities	(104,862)	(38,683)	56,399	-	-	-	(47,360)
Regulatory liabilities	29,473	(39,265)	111,705	1,497	53,191	35,072	18,301
Pension and other post-				-	-	-
employment benefits	(75,399)	123,085	19,866	(30,390)	(11,713)	(41,964)	(19,593)
Sale and Leaseback	-	-	66,801	-	-	-	150,629
Accumulated deferred
investment tax credit	16,843	31,367	28,197	2,437	592	6,769	22,133
Provision for contingencies	4,167	(1,406)	3,940	2,465	10,121	2,299	-
Power purchase agreements	94	3,938	(1)	2,383	22	2,547	-
Unbilled/deferred revenues	15,222	(21,918)	(7,108)	8,990	2,707	14,324	-
Net operating loss carryforwards	-	-	39,153	-	-	58,547	-
Other	56,116	27,548	33,675	6,206	1,899	8,753	40,759
Total	(58,346)	84,666	352,627	(6,412)	56,819	86,347	164,869
Noncurrent accrued taxes (including
unrecognized tax benefits)	(27,718)	(206,752)	(75,750)	(6,271)	(27,859)	39,799	(165,981)
Accumulated deferred income
taxes and taxes accrued	($1,833,027)	($1,373,670)	($1,103,380)	($660,435)	($137,986)	($846,554)	($655,846)

     The Registrant Subsidiaries' estimated tax attributes carryovers and their expiration dates as of December 31, 2012 are as follows:

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
	Arkansas	Louisiana	Louisiana	Mississippi New Orleans		Texas	Energy
Federal net operating
losses	$1.3 billion	$321 million	$2.3 billion	$155 million	$81 million	$60 million	$875 million
Year(s) of expiration	2029 -2031	2029 -2030	2028 -2032	2029 -2032	2030 -2032	2029 -2032	2029 -2032
State net operating losses	$48 million	$852 million	$3.2 billion	-	$94 million	-	$220 million
Year(s) of expiration	2023-2026	2024 -2025	2023 -2027	N/A	2025-2027	N/A	2029-2030
Federal minimum tax
credits	$2 million	$1 million	$4 million	$1 million	$1 million	$- million	$2 million
Year(s) of expiration	2024-2031	2024-2031	2026 -2031	2024 -2031	2024 -2031	N/A	2024-2031
Other federal credits	$0 million	$0 million	$0 million	$0 million	$0 million	-	$0 million
Year(s) of expiration	2024 -2030	2024 -2030	2024 -2030	2024 -2030	2024 -2030	N/A	2024 -2030
State credits	-	-	-	$10.1 million	-	$4.2 million	$15.6 million
Year(s) of expiration	N/A	N/A	N/A	2013 -2016	N/A	2013 -2027	2015 -2016

     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:

	2012	2011	2010
	(In Thousands)
Gross balance at January 1	$4,387,780	$4,949,788	$4,050,491
Additions based on tax positions related to the current year	163,612	211,966	480,843
Additions for tax positions of prior years	1,517,797	332,744	871,682
Reductions for tax positions of prior years	(476,873)	(259,895)	(438,460)
Settlements	(1,421,913)	(841,528)	(10,462)
Lapse of statute of limitations	-	(5,295)	(4,306)
Gross balance at December 31	4,170,403	4,387,780	4,949,788
Offsets to gross unrecognized tax benefits:
Credit and loss carryovers	(4,022,535)	(3,212,397)	(3,771,301)
Cash paid to taxing authorities	-	(363,266)	(373,000)
Unrecognized tax benefits net of unused tax attributes and payments (1)	$147,868	$812,117	$805,487

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

     The balances of unrecognized tax benefits include $203 million, $521 million, and $605 million as of December 31, 2012, 2011, and 2010, 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 $3.968 billion, $3.867 billion, and $4.345 billion as of December 31, 2012, 2011, and 2010, 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 has made deposits with the IRS against its potential liabilities arising from audit adjustments and settlements related to its uncertain tax positions.Deposits are expected to be made to the IRS as the cash tax benefits of uncertain tax positions are realized.The total amount of cash deposits shown for 2011 has been fully offset against settled liabilities which arose in 2012.

     Entergy accrues interest expense, if any, related to unrecognized tax benefits in income tax expense. Entergy's December 31, 2012, 2011, and 2010 accrued balance for the possible payment of interest is approximately $146.3 million, $99 million, and $45 million, respectively.

A reconciliation of the Registrant Subsidiaries' beginning and ending amount of unrecognized tax benefits for 2012, 2011, and 2010 is as follows:

2012	Entergy Arkansas	Entergy Gulf States Louisiana	Entergy Louisiana	Entergy Mississippi	Entergy New Orleans	Entergy Texas	System Energy
	(In Thousands)
Gross balance at January 1, 2012	$335,493	$390,493	$446,187	$11,052	$56,052	$19,225	$281,183
Additions based on tax
positions related to the
current year	10,409	8,974	67,721	8,401	497	1,656	8,715
Additions for tax positions
of prior years	429,232	392,548	331,432	4,057	445	4,834	271,172
Reductions for tax
positions of prior years	(39,534)	(50,518)	(169,465)	(5,703)	(2,506)	(11,649)	(20,934)
Settlements	(390,931)	(275,776)	(139,202)	(966)	(2,470)	(112)	(279,790)
Gross balance at December 31, 2012	344,669	465,721	536,673	16,841	52,018	13,954	260,346
Offsets to gross unrecognized
tax benefits:
Loss carryovers	(342,127)	(160,955)	(536,673)	(16,841)	(35,511)	(1,593)	(249,424)
Cash paid to taxing authorities	-	-	-	-	-	-	-
Unrecognized tax benefits net of
unused tax attributes and payments	$2,542	$304,766	$-	$-	$16,507	$12,361	$10,922

2011	Entergy Arkansas	Entergy Gulf States Louisiana	Entergy Louisiana	Entergy Mississippi	Entergy New Orleans	Entergy Texas	System Energy
	(In Thousands)
Gross balance at January 1, 2011	$240,239	$353,886	$505,188	$24,163	$18,176	$14,229	$224,518
Additions based on tax
positions related to the
current year	11,216	9,398	8,748	457	50,212	1,760	44,419
Additions for tax positions
of prior years	44,202	50,944	21,052	21,902	7,343	7,533	14,200
Reductions for tax
positions of prior years	(3,255)	(21,719)	(27,991)	(5,022)	(12,289)	(3,432)	(4,942)
Settlements	43,091	(2,016)	(60,810)	(30,448)	(7,390)	(865)	2,988
Gross balance at December 31, 2011	335,493	390,493	446,187	11,052	56,052	19,225	281,183
Offsets to gross unrecognized
tax benefits:
Loss carryovers	(146,429)	(26,394)	(216,720)	(5,930)	(1,211)	(10,645)	(10,752)
Cash paid to taxing authorities	(75,977)	(45,493)	0	(7,556)	(1,174)	(1,376)	(41,878)
Unrecognized tax benefits net of
unused tax attributes and payments	$113,087	$318,606	$229,467	($2,434)	$53,667	$7,204	$228,553

2010	Entergy Arkansas	Entergy Gulf States Louisiana	Entergy Louisiana	Entergy Mississippi	Entergy New Orleans	Entergy Texas	System Energy
	(In Thousands)
Gross balance at January 1, 2010	$293,920	$311,311	$352,577	$17,137	($53,295)	$32,299	$211,247
Additions based on tax
positions related to the
current year	38,205	87,755	183,188	4,679	173	5,169	16,829
Additions for tax positions
of prior years	1,838	25,960	34,236	6,857	72,169	5,868	10,402
Reductions for tax
positions of prior years	(92,699)	(71,033)	(64,868)	(4,469)	(863)	(29,100)	(13,116)
Settlements	(1,025)	(107)	55	(41)	(8)	(7)	(844)
Gross balance at December 31, 2010	240,239	353,886	505,188	24,163	18,176	14,229	224,518
Offsets to gross unrecognized
tax benefits:
Loss carryovers	(123,968)	(29,257)	(131,805)	(6,477)	(3,751)	(6,269)	(10,487)
Cash paid to taxing authorities	(75,977)	(45,493)	-	(7,556)	(1,174)	(1,376)	(41,878)
Unrecognized tax benefits net of
unused tax attributes and payments	$40,294	$279,136	$373,383	$10,130	$13,251	$6,584	$172,153

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

	December 31, 2012	December 31, 2011	December 31, 2010
	(In  Millions)
Entergy Arkansas	$0.6	$-	$0.2
Entergy Gulf States Louisiana	$44.0	$107.9	$129.6
Entergy Louisiana	$92.4	$281.3	$286.7
Entergy Mississippi	$3.9	$3.8	$5.3
Entergy New Orleans	$-	$-	$-
Entergy Texas	$8.6	$7.3	$6.0
System Energy	$3.5	$-	$12.1

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, 2012	December 31, 2011	December 31, 2010
	(In Millions)
Entergy Arkansas	$21.8	$11.4	$-
Entergy Gulf States Louisiana	$33.1	$14.4	$9.7
Entergy Louisiana	$0.9	$0.8	$3.3
Entergy Mississippi	$2.4	$1.7	$1.6
Entergy New Orleans	$0.1	$2.4	$-
Entergy Texas	$0.7	$0.1	$0.1
System Energy	$33.2	$18.5	$8.2

Income Tax Litigation

In October 2010 the U.S. Tax Court entered a decision in favor of Entergy for tax years 1997 and 1998. The issues decided by the Tax Court are as follows:

• The ability to credit the U.K. Windfall Tax against U.S. tax as a foreign tax credit.  The U.K. Windfall Tax relates to Entergy's former investment in London Electricity.
• The validity of Entergy's change in method of tax accounting for street lighting assets and the related increase in depreciation deductions.

The IRS did not appeal street lighting depreciation, and that matter is final. The IRS filed an appeal of the U.K. Windfall Tax decision, however, with the U.S. Court of Appeals for the Fifth Circuit in December 2010. Oral arguments were heard in November 2011. In June 2012 the U.S. Court of Appeals for the Fifth Circuit unanimously affirmed the U.S. Tax Court decision. As a result of this decision, Entergy reversed its liability for uncertain tax positions associated with this issue. On September 4, 2012, the U.S. Solicitor General, on behalf of the Commissioner of Internal Revenue, petitioned the U.S. Supreme Court for a writ of certiorari to review the Fifth Circuit judgment.

Concurrent with the Tax Court's issuance of a favorable decision regarding the above issues, the Tax Court issued a favorable decision in a separate proceeding, PPL Corp. v. Commissioner, regarding the creditability of the U.K. Windfall Tax.  The IRS appealed the PPL decision to the United States Court of Appeals for the Third Circuit.  In December 2011 the Third Circuit reversed the Tax Court's holding in PPL Corp. v. Commissioner, stating that the U.K. tax was not eligible for the foreign tax credit.  PPL Corp. petitioned the U.S. Supreme Court for a writ of certiorari to review the U.S. Court of Appeals for the Third Circuit decision.  On October 29, 2012, the U.S. Supreme Court granted PPL Corp.'s petition for certiorari.    The Solicitor General's petition for writ of certiorari in Entergy's case is currently on hold pending the disposition of the PPL case.  Entergy's case will be determined consistent with the U.S. Supreme Court's decision in the PPL proceeding.  Oral argument in PPL's case was heard on February 20, 2013.

The total tax at issue on the U.K. Windfall Tax credit matter is $152 million, and interest on the underpayment of such tax is estimated to be $102 million resulting in total exposure of $254 million.

            In February 2008 the IRS issued a Statutory Notice of Deficiency for the year 2000.  The deficiency resulted from a disallowance of foreign tax credits (the same issue discussed above) as well as the disallowance of depreciation deductions on non-utility nuclear plants.  Entergy filed a Tax Court petition in May 2008 challenging the IRS treatment of these issues.  In June 2010 a trial on the depreciation issue was held in Washington, D.C.  In February 2011 a joint stipulation of settled issues was filed under which the IRS conceded its position with respect to the depreciation issue.  The outcome of the foreign tax credit matter for the year 2000 will also be determined consistent with the U.S. Supreme Court's decision in the PPL proceeding.

Income Tax Audits

Entergy and its subsidiaries file U.S. federal and various state and foreign income tax returns.Other than the matters discussed in the Income Tax Litigation section above, the IRS's and substantially all state taxing authorities' examinations are completed for years before 2005.

2002-2003 IRS Audit

In September 2009, Entergy entered into a partial agreement with the IRS for the years 2002 and 2003. In the partial agreement, Entergy did not agree to the IRS's disallowance of foreign tax credits for the U.K. Windfall Tax and the street lighting depreciation issues. As discussed above, the IRS did not appeal the Tax Court ruling on the street lighting depreciation. The U.K. Windfall tax credit issue will be governed by the U.S. Supreme Court's decision in the PPL Corp. proceeding as explained in "Income Tax Litigation", above.

2004-2005 IRS Audit

            The IRS issued its 2004-2005 Revenue Agent's Report (RAR) in May 2009.

            In June 2009, Entergy filed a formal protest with the IRS Appeals Division indicating disagreement with certain issues contained in the 2004-2005 RAR.  The major issues in dispute are:

• Depreciation of street lighting assets (because the IRS did not appeal the Tax Court's 2010 decision on this issue, it will be fully allowed in the final Appeals Division calculations for this audit).
• Inclusion of nuclear decommissioning liabilities in cost of goods sold for the nuclear power plants owned by the Utility resulting from an Application for Change in Accounting Method for tax purposes (the "2004 CAM").

During the fourth quarter 2012, Entergy settled the position relating to the 2004 CAM.   Under the settlement Entergy conceded its tax position, resulting in an increase in taxable income of approximately $2.97 billion for the tax years 2004 - 2007.  The settlement provides that Entergy Louisiana is entitled to additional tax depreciation of approximately $547 million for years 2006 and beyond.  The deferred tax asset net of interest charges associated with the settlement is $155 million for Entergy.  There was a related increase to Entergy Louisiana's member's equity account.

2006-2007 IRS Audit

            The IRS issued its 2006-2007 RAR in October 2011.  In connection with the 2006-2007 IRS audit and resulting RAR, Entergy resolved the significant issues discussed below. 

In August 2011, Entergy entered into a settlement agreement with the IRS relating to the mark-to-market income tax treatment of various wholesale electric power purchase and sale agreements, including Entergy Louisiana's contract to purchase electricity from the Vidalia hydroelectric facility.  See Note 8 to the financial statements for further details regarding this contract and a previous LPSC-approved settlement regarding the tax treatment of the contract.

With respect to income tax accounting for wholesale electric power purchase agreements, Entergy recognized income for tax purposes of approximately $1.5 billion, which represents a reversal of previously deducted temporary differences on which deferred taxes had been provided.  Also in connection with this settlement, Entergy recognized a gain for income tax purposes of approximately $1.03 billion on the formation of a wholly-owned subsidiary in 2005 with a corresponding step-up in the tax basis of depreciable assets resulting in additional tax depreciation at Entergy Louisiana.  Because Entergy Louisiana is entitled to deduct additional tax depreciation of $1.03 billion in the future, Entergy Louisiana recorded a deferred tax asset for this additional tax basis. The tax expense associated with the gain is offset by recording the deferred tax asset and by utilization of net operating losses. With the recording of the deferred tax asset, there was a corresponding increase to Entergy Louisiana's member's equity account. The agreement with the IRS effectively settled the tax treatment of various wholesale electric power purchase and sale agreements, resulting in the reversal in third quarter 2011 of approximately $422 million of deferred tax liabilities and liabilities for uncertain tax positions at Entergy Louisiana, with a corresponding reduction in income tax expense. Under the terms of an LPSC-approved final settlement, Entergy Louisiana recorded a $199 million regulatory charge and a corresponding net-of-tax regulatory liability.

After consideration of the taxable income recognition and the additional depreciation deductions provided for in the settlement, Entergy's net operating loss carryover was reduced by approximately $2.5 billion.

2008-2009 IRS Audit

In the third quarter 2008, Entergy Louisiana and Entergy Gulf States Louisiana received $679 million and $274.7 million, respectively, from the Louisiana Utilities Restoration Corporation ("LURC"). These receipts from LURC were from the proceeds of a Louisiana Act 55 financing of the costs incurred to restore service following Hurricane Katrina and Hurricane Rita. See Note 2 to the financial statements for further details regarding the financings.

In June 2012, Entergy effectively settled the tax treatment of the receipt of these funds, which resulted in an increase to 2008 taxable income of $129 million and $104 million for Entergy Louisiana and Entergy Gulf States Louisiana, respectively. As a result of the settlement, Entergy recorded an income tax benefit of $172 million, including $143 million for Entergy Louisiana and $20 million for Entergy Gulf States Louisiana, resulting from the reversal of liabilities for uncertain tax positions. Under the terms of an LPSC-approved settlement related to the Louisiana Act 55 financings, Entergy Louisiana and Entergy Gulf States Louisiana recorded, respectively, a $137 million ($84 million net-of-tax) and a $28 million ($17 million net-of-tax) regulatory charge and a corresponding regulatory liability to reflect their obligations to customers with respect to the settlement. See Note 8 to the financial statements for further discussion of the LPSC settlement.

              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. Entergy has disagreed with this disallowance and will file a protest with IRS Appeals at the conclusion of the 2008-09 examination.

Other Tax Matters

            Entergy regularly negotiates with the IRS to achieve settlements.  The results of all pending litigations and audit issues could result in significant changes to the amounts of unrecognized tax benefits, as discussed above.

In March 2010, Entergy filed an Application for Change in Accounting Method with the IRS. In the application, Entergy proposed to change the definition of unit of property for its generation assets to determine the appropriate characterization of costs associated with such units as capital or repair under the Internal Revenue Code and related Treasury Regulations. The effect of this change was an approximate $1.3 billion reduction in 2010 taxable income for Entergy, including reductions of $292 million for Entergy Arkansas, $132 million for Entergy Gulf States Louisiana, $185 million for Entergy Louisiana, $48 million for Entergy Mississippi, $45 million for Entergy Texas, $13 million for Entergy New Orleans, and $180 million for System Energy.

During the second quarter 2011, Entergy filed an Application for Change in Accounting Method with the IRS related to the allocation of overhead costs between production and non-production activities. The accounting method affects the amount of overhead that will be capitalized or deducted for tax purposes. The accounting method is expected to be implemented for the 2014 tax year.

System Energy [Member]

Income Taxes

NOTE 3. INCOME TAXES (Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

     Income taxes from continuing operations for 2012, 2011, and 2010 for Entergy Corporation and Subsidiaries consist of the following:

	2012	2011	2010
	(In Thousands)
Current:
Federal	($47,851)	$452,713	$145,161
Foreign	143	130	131
State	(41,516)	152,711	19,313
Total	(89,224)	605,554	164,605
Deferred and non-current -- net	131,130	(311,708)	468,698
Investment tax credit
adjustments -- net	(11,051)	(7,583)	(16,064)
Income tax expense from
continuing operations	$30,855	$286,263	$617,239

 

     Income taxes for 2012, 2011, and 2010 for Entergy's Registrant Subsidiaries consist of the following:

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2012	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Current:
Federal	$64,069	($66,081)	($132,999)	$3,188	($9,484)	($114,677)	($50,491)
State	6,712	9,535	(1,269)	(4,425)	(1,617)	4,933	(8,544)
Total	70,781	(56,546)	(134,268)	(1,237)	(11,101)	(109,744)	(59,035)
Deferred and non-current -- net	26,042	112,390	8,463	59,045	18,586	144,471	137,832
Investment tax credit
adjustments -- net	(2,017)	(3,228)	(3,117)	871	(245)	(1,609)	(1,682)
Income taxes	$94,806	$52,616	($128,922)	$58,679	$7,240	$33,118	$77,115

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2011	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Current:
Federal	($12,448)	($30,106)	($136,800)	($9,466)	$14,641	($33,045)	$139,529
State	(1,751)	15,950	34,832	6,069	1,724	3,153	16,825
Total	(14,199)	(14,156)	(101,968)	(3,397)	16,365	(29,892)	156,354
Deferred and non-current -- net	148,978	107,250	(265,046)	32,380	(201)	80,993	(84,505)
Investment tax credit
adjustments -- net	(2,014)	(3,358)	(3,197)	(182)	(302)	(1,609)	3,104
Income taxes	$132,765	$89,736	($370,211)	$28,801	$15,862	$49,492	$74,953

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2010	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Current:
Federal	$114,821	$196,230	$73,174	$13,722	($114,382)	($10,607)	($4,102)
State	(9,200)	481	(4,324)	5,959	1,427	1,060	3,328
Total	105,621	196,711	68,850	19,681	(112,955)	(9,547)	(774)
Deferred and non-current -- net	10,328	(101,007)	918	31,415	129,880	53,539	60,305
Investment tax credit
adjustments -- net	(3,005)	(3,407)	(3,222)	(985)	(324)	(1,609)	(3,482)
Income taxes	$112,944	$92,297	$66,546	$50,111	$16,601	$42,383	$56,049

     Total income taxes for Entergy Corporation and 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 2012, 2011, and 2010 are:

	2012	2011	2010
	(In Thousands)
Net income attributable to Entergy Corporation	$846,673	$1,346,439	$1,250,242
Preferred dividend requirements of subsidiaries	21,690	20,933	20,063
Consolidated net income	868,363	1,367,372	1,270,305
Income taxes	30,855	286,263	617,239
Income before income taxes	$899,218	$1,653,635	$1,887,544
Computed at statutory rate (35%)	$314,726	$578,772	$660,640
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	40,699	93,940	40,530
Regulatory differences - utility plant items	35,527	39,970	31,473
Equity component of AFUDC	(30,838)	(30,184)	(16,542)
Amortization of investment tax credits	(14,000)	(14,962)	(15,980)
Net-of-tax regulatory liability (a)	(4,356)	65,357	-
Deferred tax reversal on PPA settlement (a)	-	(421,819)	-
IRS decommissioning settlement (b)	(155,300)
Write-off of reorganization costs	-	-	(19,974)
Tax law change-Medicare Part D	-	-	13,616
Write-off of regulatory asset for income taxes	42,159	-	-
Capital gains / (losses)	(20,188)	-	-
Flow-through / permanent differences	(14,801)	(17,848)	(26,370)
Provision for uncertain tax positions	(159,957)	2,698	(43,115)
Change in regulatory recovery	-	-	-
Other - net	(2,816)	(9,661)	(7,039)
Total income taxes as reported	$30,855	$286,263	$617,239
Effective Income Tax Rate	3.4%	17.3%	32.7%
(a)  See "Income Tax Audits - 2006-2007 IRS Audit" below for discussion of these items.
(b)  See "Income Tax Audits - 2004-2005 IRS Audit" below for discussion of this item.

(c)  See "Income Tax Audits - 2008-2009 IRS Audit" below for discussion of the most significant item in 2012.

            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 2012, 2011, and 2010 are:

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2012	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Net income	$152,365	$158,977	$281,081	$46,768	$17,065	$41,971	$111,866
Income taxes (benefit)	94,806	52,616	(128,922)	58,679	7,240	33,118	77,115
Pretax income	$247,171	$211,593	$152,159	$105,447	$24,305	$75,089	$188,981
Computed at statutory rate (35%)	$86,510	$74,058	$53,256	$36,906	$8,507	$26,281	$66,143
Increases (reductions) in tax
resulting from:
State income taxes net of
federal income tax effect	11,282	5,087	1,976	3,944	505	3,115	6,652
Regulatory differences -
utility plant items	6,778	8,472	312	2,619	2,289	3,668	11,389
Equity component of AFUDC	(2,495)	(3,042)	(12,919)	(1,383)	(276)	(1,587)	(9,136)
Amortization of investment
tax credits	(1,992)	(3,204)	(3,089)	(264)	(240)	(1,596)	(3,480)
Net-of-tax regulatory liability (a)	-	-	(4,356)	-	-	-	-
Flow-through / permanent
differences	3,427	(7,646)	1,397	1,961	(4,385)	1,585	(357)
Non-taxable
dividend income	-	(9,836)	(27,336)	-	-	-	-
Benefit of Entergy Corporation
expenses	(19,403)	(17,703)	-	14,449	2,758	-	(10,241)
Provision for uncertain
tax positions	11,227	8,745	(143,583)	870	(2,095)	1,651	17,966
Change in regulatory recovery	-	(553)	7,854	-	-	-
Other -- net	(528)	(1,762)	(2,434)	(423)	177	1	(1,821)
Total income taxes	$94,806	$52,616	($128,922)	$58,679	$7,240	$33,118	$77,115
Effective Income Tax Rate	38.4%	24.9%	-84.7%	55.6%	29.8%	44.1%	40.8%

(a) See "Income Tax Audits - 2006-2007 IRS Audit" below for discussion of these items.

(b) See "Incomr Tax Audits - 2008-2009 IRS Audit" below for discussion of the most significant item in 2012.

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2011	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Net income	$164,891	$201,604	$473,923	$108,729	$35,976	$80,845	$64,197
Income taxes (benefit)	132,765	89,736	(370,211)	28,801	15,862	49,492	74,953
Pretax income	$297,656	$291,340	$103,712	$137,530	$51,838	$130,337	$139,150
Computed at statutory rate (35%)	$104,180	$101,969	$36,299	$48,136	$18,143	$45,618	$48,703
Increases (reductions) in tax
resulting from:
State income taxes net of
federal income tax effect	13,727	9,618	943	3,211	3,350	2,033	4,436
Regulatory differences -
utility plant items	10,079	8,379	1,404	2,038	3,860	4,003	10,207
Equity component of AFUDC	(3,363)	(3,181)	(11,315)	(2,963)	(215)	(1,322)	(7,825)
Amortization of investment
tax credits	(1,992)	(3,336)	(3,168)	(960)	(295)	(1,596)	(3,480)
Net-of-tax regulatory liability (a)	-	-	65,357	-	-	-	-
Deferred tax reversal on PPA
settlement (a)	-	-	(421,819)	-	-	-	-
Flow-through / permanent
differences	(1,365)	587	(1,285)	304	(4,983)	88	529
Non-taxable
dividend income	-	(11,364)	(27,336)	-	-	-	-
Benefit of Entergy Corporation
expenses	-	(5,694)	-	(21,248)	(6,235)	(16)	16,559
Provision for uncertain
tax positions	12,016	(7,144)	(4,880)	(2)	2,241	717	5,878
Other -- net	(517)	(98)	(4,411)	285	(4)	(33)	(54)
Total income taxes	$132,765	$89,736	($370,211)	$28,801	$15,862	$49,492	$74,953
Effective Income Tax Rate	44.6%	30.8%	-357.0%	20.9%	30.6%	38.0%	53.9%

(a) See "Income Tax Audits - 2006-2007 IRS Audit" below for discussion of these items.

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2010	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Net income	$172,618	$174,319	$231,435	$85,377	$31,114	$66,200	$82,624
Income taxes	112,944	92,297	66,546	50,111	16,601	42,383	56,049
Pretax income	$285,562	$266,616	$297,981	$135,488	$47,715	$108,583	$138,673
Computed at statutory rate (35%)	$99,947	$93,316	$104,293	$47,421	$16,700	$38,004	$48,536
Increases (reductions) in tax
resulting from:
State income taxes net of
federal income tax effect	13,156	1,142	(10,618)	1,245	1,387	424	2,206
Regulatory differences -
utility plant items	6,126	(4,004)	7,374	3,455	3,999	4,089	10,435
Equity component of AFUDC	(144)	(1,547)	(8,361)	(1,643)	(184)	(1,525)	(3,138)
Amortization of investment
tax credits	(2,983)	(3,309)	(3,192)	(972)	(313)	(1,596)	(3,480)
Flow-through / permanent
differences	(1,235)	8,423	(754)	153	(4,883)	236	(497)
Non-taxable
dividend income	-	(9,189)	(23,603)	-	-	-	-
Provision for uncertain
tax positions	(2,100)	7,200	2,200	700	(300)	2,800	2,090
Other -- net	177	265	(793)	(248)	195	(49)	(103)
Total income taxes	$112,944	$92,297	$66,546	$50,111	$16,601	$42,383	$56,049
Effective Income Tax Rate	39.6%	34.6%	22.3%	37.0%	34.8%	39.0%	40.4%

     Significant components of accumulated deferred income taxes and taxes accrued for Entergy Corporation and Subsidiaries as of December 31, 2012 and 2011 are as follows:

	2012	2011
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net	($8,240,342)	($7,043,758)
Regulatory assets	(898,143)	(930,370)
Nuclear decommissioning trusts	(848,918)	(553,558)
Combined unitary state taxes	(233,210)	(227,427)
Power purchase agreements	-	(17,138)
Other	(485,550)	(402,097)
Total	(10,706,163)	(9,174,348)
Deferred tax assets:
Nuclear decommissioning liabilities	733,103	612,945
Regulatory liabilities	404,852	197,554
Pension and other post-employment benefits	358,893	315,134
Sale and leaseback	195,074	217,430
Accumulated deferred investment tax credit	110,690	108,338
Provision for contingencies	61,576	28,504
Power purchase agreements	43,717	-
Other	141,592	160,620
Net operating loss carryforwards	960,235	253,518
Capital losses	13,631	12,995
Valuation allowance	(86,881)	(85,615)
Total	2,936,482	1,821,423
Noncurrent accrued taxes (including unrecognized
tax benefits)	(210,534)	(814,597)
Accumulated deferred income taxes and taxes accrued	($7,980,215)	($8,167,522)

Entergy's estimated tax attributes carryovers and their expiration dates as of December 31, 2012 are as follows:

Carryover Description	Carryover Amount	Year(s) of expiration
Federal net operating losses	$12.6 billion	2028-2032
State net operating losses	$11.2 billion	2013-2032
State capital losses	$177 million	2013-2015
Miscellaneous federal and state credits	$81.9 million	2013-2032

     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 and capital loss carryovers will not be utilized, a valuation allowance $69.6 million and $13.6 million of has been provided on the deferred tax assets relating to these state net operating and capital loss carryovers, respectively.

     Significant components of accumulated deferred income taxes and taxes accrued for the Registrant Subsidiaries as of December 31, 2012 and 2011 are as follows:

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2012	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net	($1,565,988)	($1,268,164)	($1,544,256)	($727,442)	($202,496)	($770,084)	($759,896)
Regulatory assets	(172,915)	(100,578)	(249,051)	(27,077)	(4,790)	(220,417)	(119,209)
Nuclear decommissioning trusts	(67,025)	(25,472)	(29,493)	-	-	-	(27,809)
Deferred fuel	(50,068)	(1,618)	(11,815)	(11,332)	(976)	3,932	(445)
Other	(55,000)	(27,501)	(92,433)	(12,641)	(10,576)	(23,681)	(6,592)
Total	($1,910,996)	($1,423,333)	($1,927,048)	($778,492)	($218,838)	($1,010,250)	($913,951)
Deferred tax assets:
Nuclear decommissioning liabilities	(63,189)	51,593	92,930	-	-	-	(65,564)
Regulatory liabilities	79,805	47,474	173,046	8,515	47,257	3,429	45,327
Pension and other post-
employment benefits	(75,278)	47,469	34,283	(22,140)	(10,815)	(40,389)	(19,160)
Sale and Leaseback	-	-	57,423	-	-	-	137,651
Accumulated deferred investment tax credit	16,062	36,642	27,008	2,776	500	6,210	21,492
Provision for contingencies	4,723	33,074	48,241	9,564	(2,865)	(35,505)	-
Power purchase agreements	94	37,771	-	84	21	2,752	-
Unbilled/deferred revenues	27,651	(23,150)	(7,101)	9,242	3,352	12,986	-
Compensation	3,587	580	18	(664)	13	4,547	180
Net operating loss carryforwards	102,034	-	460,367	45,475	-	20,307	86,228
Other	5,565	6,106	5,513	8,758	4,472	6,707	2,000
Total	101,054	237,559	891,728	61,610	41,935	(18,956)	208,154
Noncurrent accrued taxes (including
unrecognized tax benefits)	46,930	(239,670)	218,033	(1,121)	13,630	55,113	(4,130)
Accumulated deferred income
taxes and taxes accrued	($1,763,012)	($1,425,444)	($817,287)	($718,003)	($163,273)	($974,093)	($709,927)

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
2011	Arkansas	Louisiana	Louisiana	Mississippi	New Orleans	Texas	Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net	($1,334,016)	($1,124,284)	($1,077,835)	($608,596)	($148,296)	($735,310)	($505,369)
Regulatory assets	(222,429)	(103,585)	(249,459)	(32,611)	-	(227,224)	(120,886)
Nuclear decommissioning trusts	(53,789)	(21,096)	(22,441)	-	-	-	(19,138)
Deferred fuel	(82,452)	(1,225)	(4,285)	718	(331)	3,932	(8)
Other	(54,277)	(1,394)	(26,237)	(7,263)	(18,319)	(14,098)	(9,333)
Total	($1,746,963)	($1,251,584)	($1,380,257)	($647,752)	($166,946)	($972,700)	($654,734)
Deferred tax assets:
Nuclear decommissioning liabilities	(104,862)	(38,683)	56,399	-	-	-	(47,360)
Regulatory liabilities	29,473	(39,265)	111,705	1,497	53,191	35,072	18,301
Pension and other post-				-	-	-
employment benefits	(75,399)	123,085	19,866	(30,390)	(11,713)	(41,964)	(19,593)
Sale and Leaseback	-	-	66,801	-	-	-	150,629
Accumulated deferred
investment tax credit	16,843	31,367	28,197	2,437	592	6,769	22,133
Provision for contingencies	4,167	(1,406)	3,940	2,465	10,121	2,299	-
Power purchase agreements	94	3,938	(1)	2,383	22	2,547	-
Unbilled/deferred revenues	15,222	(21,918)	(7,108)	8,990	2,707	14,324	-
Net operating loss carryforwards	-	-	39,153	-	-	58,547	-
Other	56,116	27,548	33,675	6,206	1,899	8,753	40,759
Total	(58,346)	84,666	352,627	(6,412)	56,819	86,347	164,869
Noncurrent accrued taxes (including
unrecognized tax benefits)	(27,718)	(206,752)	(75,750)	(6,271)	(27,859)	39,799	(165,981)
Accumulated deferred income
taxes and taxes accrued	($1,833,027)	($1,373,670)	($1,103,380)	($660,435)	($137,986)	($846,554)	($655,846)

     The Registrant Subsidiaries' estimated tax attributes carryovers and their expiration dates as of December 31, 2012 are as follows:

		Entergy
	Entergy	Gulf States	Entergy	Entergy	Entergy	Entergy	System
	Arkansas	Louisiana	Louisiana	Mississippi New Orleans		Texas	Energy
Federal net operating
losses	$1.3 billion	$321 million	$2.3 billion	$155 million	$81 million	$60 million	$875 million
Year(s) of expiration	2029 -2031	2029 -2030	2028 -2032	2029 -2032	2030 -2032	2029 -2032	2029 -2032
State net operating losses	$48 million	$852 million	$3.2 billion	-	$94 million	-	$220 million
Year(s) of expiration	2023-2026	2024 -2025	2023 -2027	N/A	2025-2027	N/A	2029-2030
Federal minimum tax
credits	$2 million	$1 million	$4 million	$1 million	$1 million	$- million	$2 million
Year(s) of expiration	2024-2031	2024-2031	2026 -2031	2024 -2031	2024 -2031	N/A	2024-2031
Other federal credits	$0 million	$0 million	$0 million	$0 million	$0 million	-	$0 million
Year(s) of expiration	2024 -2030	2024 -2030	2024 -2030	2024 -2030	2024 -2030	N/A	2024 -2030
State credits	-	-	-	$10.1 million	-	$4.2 million	$15.6 million
Year(s) of expiration	N/A	N/A	N/A	2013 -2016	N/A	2013 -2027	2015 -2016

     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:

	2012	2011	2010
	(In Thousands)
Gross balance at January 1	$4,387,780	$4,949,788	$4,050,491
Additions based on tax positions related to the current year	163,612	211,966	480,843
Additions for tax positions of prior years	1,517,797	332,744	871,682
Reductions for tax positions of prior years	(476,873)	(259,895)	(438,460)
Settlements	(1,421,913)	(841,528)	(10,462)
Lapse of statute of limitations	-	(5,295)	(4,306)
Gross balance at December 31	4,170,403	4,387,780	4,949,788
Offsets to gross unrecognized tax benefits:
Credit and loss carryovers	(4,022,535)	(3,212,397)	(3,771,301)
Cash paid to taxing authorities	-	(363,266)	(373,000)
Unrecognized tax benefits net of unused tax attributes and payments (1)	$147,868	$812,117	$805,487

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

     The balances of unrecognized tax benefits include $203 million, $521 million, and $605 million as of December 31, 2012, 2011, and 2010, 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 $3.968 billion, $3.867 billion, and $4.345 billion as of December 31, 2012, 2011, and 2010, 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 has made deposits with the IRS against its potential liabilities arising from audit adjustments and settlements related to its uncertain tax positions.Deposits are expected to be made to the IRS as the cash tax benefits of uncertain tax positions are realized.The total amount of cash deposits shown for 2011 has been fully offset against settled liabilities which arose in 2012.

     Entergy accrues interest expense, if any, related to unrecognized tax benefits in income tax expense. Entergy's December 31, 2012, 2011, and 2010 accrued balance for the possible payment of interest is approximately $146.3 million, $99 million, and $45 million, respectively.

A reconciliation of the Registrant Subsidiaries' beginning and ending amount of unrecognized tax benefits for 2012, 2011, and 2010 is as follows:

2012	Entergy Arkansas	Entergy Gulf States Louisiana	Entergy Louisiana	Entergy Mississippi	Entergy New Orleans	Entergy Texas	System Energy
	(In Thousands)
Gross balance at January 1, 2012	$335,493	$390,493	$446,187	$11,052	$56,052	$19,225	$281,183
Additions based on tax
positions related to the
current year	10,409	8,974	67,721	8,401	497	1,656	8,715
Additions for tax positions
of prior years	429,232	392,548	331,432	4,057	445	4,834	271,172
Reductions for tax
positions of prior years	(39,534)	(50,518)	(169,465)	(5,703)	(2,506)	(11,649)	(20,934)
Settlements	(390,931)	(275,776)	(139,202)	(966)	(2,470)	(112)	(279,790)
Gross balance at December 31, 2012	344,669	465,721	536,673	16,841	52,018	13,954	260,346
Offsets to gross unrecognized
tax benefits:
Loss carryovers	(342,127)	(160,955)	(536,673)	(16,841)	(35,511)	(1,593)	(249,424)
Cash paid to taxing authorities	-	-	-	-	-	-	-
Unrecognized tax benefits net of
unused tax attributes and payments	$2,542	$304,766	$-	$-	$16,507	$12,361	$10,922

2011	Entergy Arkansas	Entergy Gulf States Louisiana	Entergy Louisiana	Entergy Mississippi	Entergy New Orleans	Entergy Texas	System Energy
	(In Thousands)
Gross balance at January 1, 2011	$240,239	$353,886	$505,188	$24,163	$18,176	$14,229	$224,518
Additions based on tax
positions related to the
current year	11,216	9,398	8,748	457	50,212	1,760	44,419
Additions for tax positions
of prior years	44,202	50,944	21,052	21,902	7,343	7,533	14,200
Reductions for tax
positions of prior years	(3,255)	(21,719)	(27,991)	(5,022)	(12,289)	(3,432)	(4,942)
Settlements	43,091	(2,016)	(60,810)	(30,448)	(7,390)	(865)	2,988
Gross balance at December 31, 2011	335,493	390,493	446,187	11,052	56,052	19,225	281,183
Offsets to gross unrecognized
tax benefits:
Loss carryovers	(146,429)	(26,394)	(216,720)	(5,930)	(1,211)	(10,645)	(10,752)
Cash paid to taxing authorities	(75,977)	(45,493)	0	(7,556)	(1,174)	(1,376)	(41,878)
Unrecognized tax benefits net of
unused tax attributes and payments	$113,087	$318,606	$229,467	($2,434)	$53,667	$7,204	$228,553

2010	Entergy Arkansas	Entergy Gulf States Louisiana	Entergy Louisiana	Entergy Mississippi	Entergy New Orleans	Entergy Texas	System Energy
	(In Thousands)
Gross balance at January 1, 2010	$293,920	$311,311	$352,577	$17,137	($53,295)	$32,299	$211,247
Additions based on tax
positions related to the
current year	38,205	87,755	183,188	4,679	173	5,169	16,829
Additions for tax positions
of prior years	1,838	25,960	34,236	6,857	72,169	5,868	10,402
Reductions for tax
positions of prior years	(92,699)	(71,033)	(64,868)	(4,469)	(863)	(29,100)	(13,116)
Settlements	(1,025)	(107)	55	(41)	(8)	(7)	(844)
Gross balance at December 31, 2010	240,239	353,886	505,188	24,163	18,176	14,229	224,518
Offsets to gross unrecognized
tax benefits:
Loss carryovers	(123,968)	(29,257)	(131,805)	(6,477)	(3,751)	(6,269)	(10,487)
Cash paid to taxing authorities	(75,977)	(45,493)	-	(7,556)	(1,174)	(1,376)	(41,878)
Unrecognized tax benefits net of
unused tax attributes and payments	$40,294	$279,136	$373,383	$10,130	$13,251	$6,584	$172,153

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

	December 31, 2012	December 31, 2011	December 31, 2010
	(In  Millions)
Entergy Arkansas	$0.6	$-	$0.2
Entergy Gulf States Louisiana	$44.0	$107.9	$129.6
Entergy Louisiana	$92.4	$281.3	$286.7
Entergy Mississippi	$3.9	$3.8	$5.3
Entergy New Orleans	$-	$-	$-
Entergy Texas	$8.6	$7.3	$6.0
System Energy	$3.5	$-	$12.1

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, 2012	December 31, 2011	December 31, 2010
	(In Millions)
Entergy Arkansas	$21.8	$11.4	$-
Entergy Gulf States Louisiana	$33.1	$14.4	$9.7
Entergy Louisiana	$0.9	$0.8	$3.3
Entergy Mississippi	$2.4	$1.7	$1.6
Entergy New Orleans	$0.1	$2.4	$-
Entergy Texas	$0.7	$0.1	$0.1
System Energy	$33.2	$18.5	$8.2

Income Tax Litigation

In October 2010 the U.S. Tax Court entered a decision in favor of Entergy for tax years 1997 and 1998. The issues decided by the Tax Court are as follows:

• The ability to credit the U.K. Windfall Tax against U.S. tax as a foreign tax credit.  The U.K. Windfall Tax relates to Entergy's former investment in London Electricity.
• The validity of Entergy's change in method of tax accounting for street lighting assets and the related increase in depreciation deductions.

The IRS did not appeal street lighting depreciation, and that matter is final. The IRS filed an appeal of the U.K. Windfall Tax decision, however, with the U.S. Court of Appeals for the Fifth Circuit in December 2010. Oral arguments were heard in November 2011. In June 2012 the U.S. Court of Appeals for the Fifth Circuit unanimously affirmed the U.S. Tax Court decision. As a result of this decision, Entergy reversed its liability for uncertain tax positions associated with this issue. On September 4, 2012, the U.S. Solicitor General, on behalf of the Commissioner of Internal Revenue, petitioned the U.S. Supreme Court for a writ of certiorari to review the Fifth Circuit judgment.

Concurrent with the Tax Court's issuance of a favorable decision regarding the above issues, the Tax Court issued a favorable decision in a separate proceeding, PPL Corp. v. Commissioner, regarding the creditability of the U.K. Windfall Tax.  The IRS appealed the PPL decision to the United States Court of Appeals for the Third Circuit.  In December 2011 the Third Circuit reversed the Tax Court's holding in PPL Corp. v. Commissioner, stating that the U.K. tax was not eligible for the foreign tax credit.  PPL Corp. petitioned the U.S. Supreme Court for a writ of certiorari to review the U.S. Court of Appeals for the Third Circuit decision.  On October 29, 2012, the U.S. Supreme Court granted PPL Corp.'s petition for certiorari.    The Solicitor General's petition for writ of certiorari in Entergy's case is currently on hold pending the disposition of the PPL case.  Entergy's case will be determined consistent with the U.S. Supreme Court's decision in the PPL proceeding.  Oral argument in PPL's case was heard on February 20, 2013.

The total tax at issue on the U.K. Windfall Tax credit matter is $152 million, and interest on the underpayment of such tax is estimated to be $102 million resulting in total exposure of $254 million.

            In February 2008 the IRS issued a Statutory Notice of Deficiency for the year 2000.  The deficiency resulted from a disallowance of foreign tax credits (the same issue discussed above) as well as the disallowance of depreciation deductions on non-utility nuclear plants.  Entergy filed a Tax Court petition in May 2008 challenging the IRS treatment of these issues.  In June 2010 a trial on the depreciation issue was held in Washington, D.C.  In February 2011 a joint stipulation of settled issues was filed under which the IRS conceded its position with respect to the depreciation issue.  The outcome of the foreign tax credit matter for the year 2000 will also be determined consistent with the U.S. Supreme Court's decision in the PPL proceeding.

Income Tax Audits

Entergy and its subsidiaries file U.S. federal and various state and foreign income tax returns.Other than the matters discussed in the Income Tax Litigation section above, the IRS's and substantially all state taxing authorities' examinations are completed for years before 2005.

2002-2003 IRS Audit

In September 2009, Entergy entered into a partial agreement with the IRS for the years 2002 and 2003. In the partial agreement, Entergy did not agree to the IRS's disallowance of foreign tax credits for the U.K. Windfall Tax and the street lighting depreciation issues. As discussed above, the IRS did not appeal the Tax Court ruling on the street lighting depreciation. The U.K. Windfall tax credit issue will be governed by the U.S. Supreme Court's decision in the PPL Corp. proceeding as explained in "Income Tax Litigation", above.

2004-2005 IRS Audit

            The IRS issued its 2004-2005 Revenue Agent's Report (RAR) in May 2009.

            In June 2009, Entergy filed a formal protest with the IRS Appeals Division indicating disagreement with certain issues contained in the 2004-2005 RAR.  The major issues in dispute are:

• Depreciation of street lighting assets (because the IRS did not appeal the Tax Court's 2010 decision on this issue, it will be fully allowed in the final Appeals Division calculations for this audit).
• Inclusion of nuclear decommissioning liabilities in cost of goods sold for the nuclear power plants owned by the Utility resulting from an Application for Change in Accounting Method for tax purposes (the "2004 CAM").

During the fourth quarter 2012, Entergy settled the position relating to the 2004 CAM.   Under the settlement Entergy conceded its tax position, resulting in an increase in taxable income of approximately $2.97 billion for the tax years 2004 - 2007.  The settlement provides that Entergy Louisiana is entitled to additional tax depreciation of approximately $547 million for years 2006 and beyond.  The deferred tax asset net of interest charges associated with the settlement is $155 million for Entergy.  There was a related increase to Entergy Louisiana's member's equity account.

2006-2007 IRS Audit

            The IRS issued its 2006-2007 RAR in October 2011.  In connection with the 2006-2007 IRS audit and resulting RAR, Entergy resolved the significant issues discussed below. 

In August 2011, Entergy entered into a settlement agreement with the IRS relating to the mark-to-market income tax treatment of various wholesale electric power purchase and sale agreements, including Entergy Louisiana's contract to purchase electricity from the Vidalia hydroelectric facility.  See Note 8 to the financial statements for further details regarding this contract and a previous LPSC-approved settlement regarding the tax treatment of the contract.

With respect to income tax accounting for wholesale electric power purchase agreements, Entergy recognized income for tax purposes of approximately $1.5 billion, which represents a reversal of previously deducted temporary differences on which deferred taxes had been provided.  Also in connection with this settlement, Entergy recognized a gain for income tax purposes of approximately $1.03 billion on the formation of a wholly-owned subsidiary in 2005 with a corresponding step-up in the tax basis of depreciable assets resulting in additional tax depreciation at Entergy Louisiana.  Because Entergy Louisiana is entitled to deduct additional tax depreciation of $1.03 billion in the future, Entergy Louisiana recorded a deferred tax asset for this additional tax basis. The tax expense associated with the gain is offset by recording the deferred tax asset and by utilization of net operating losses. With the recording of the deferred tax asset, there was a corresponding increase to Entergy Louisiana's member's equity account. The agreement with the IRS effectively settled the tax treatment of various wholesale electric power purchase and sale agreements, resulting in the reversal in third quarter 2011 of approximately $422 million of deferred tax liabilities and liabilities for uncertain tax positions at Entergy Louisiana, with a corresponding reduction in income tax expense. Under the terms of an LPSC-approved final settlement, Entergy Louisiana recorded a $199 million regulatory charge and a corresponding net-of-tax regulatory liability.

After consideration of the taxable income recognition and the additional depreciation deductions provided for in the settlement, Entergy's net operating loss carryover was reduced by approximately $2.5 billion.

2008-2009 IRS Audit

In the third quarter 2008, Entergy Louisiana and Entergy Gulf States Louisiana received $679 million and $274.7 million, respectively, from the Louisiana Utilities Restoration Corporation ("LURC"). These receipts from LURC were from the proceeds of a Louisiana Act 55 financing of the costs incurred to restore service following Hurricane Katrina and Hurricane Rita. See Note 2 to the financial statements for further details regarding the financings.

In June 2012, Entergy effectively settled the tax treatment of the receipt of these funds, which resulted in an increase to 2008 taxable income of $129 million and $104 million for Entergy Louisiana and Entergy Gulf States Louisiana, respectively. As a result of the settlement, Entergy recorded an income tax benefit of $172 million, including $143 million for Entergy Louisiana and $20 million for Entergy Gulf States Louisiana, resulting from the reversal of liabilities for uncertain tax positions. Under the terms of an LPSC-approved settlement related to the Louisiana Act 55 financings, Entergy Louisiana and Entergy Gulf States Louisiana recorded, respectively, a $137 million ($84 million net-of-tax) and a $28 million ($17 million net-of-tax) regulatory charge and a corresponding regulatory liability to reflect their obligations to customers with respect to the settlement. See Note 8 to the financial statements for further discussion of the LPSC settlement.

              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. Entergy has disagreed with this disallowance and will file a protest with IRS Appeals at the conclusion of the 2008-09 examination.

Other Tax Matters

            Entergy regularly negotiates with the IRS to achieve settlements.  The results of all pending litigations and audit issues could result in significant changes to the amounts of unrecognized tax benefits, as discussed above.

In March 2010, Entergy filed an Application for Change in Accounting Method with the IRS. In the application, Entergy proposed to change the definition of unit of property for its generation assets to determine the appropriate characterization of costs associated with such units as capital or repair under the Internal Revenue Code and related Treasury Regulations. The effect of this change was an approximate $1.3 billion reduction in 2010 taxable income for Entergy, including reductions of $292 million for Entergy Arkansas, $132 million for Entergy Gulf States Louisiana, $185 million for Entergy Louisiana, $48 million for Entergy Mississippi, $45 million for Entergy Texas, $13 million for Entergy New Orleans, and $180 million for System Energy.

During the second quarter 2011, Entergy filed an Application for Change in Accounting Method with the IRS related to the allocation of overhead costs between production and non-production activities. The accounting method affects the amount of overhead that will be capitalized or deducted for tax purposes. The accounting method is expected to be implemented for the 2014 tax year.