Income Taxes

12 Months Ended

Dec. 31, 2013

Income Taxes

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 2013, 2012, and 2011 for Entergy Corporation and Subsidiaries consist of the following:

	2013			2012			2011
	(In Thousands)
Current:
Federal		$88,291			($47,851	)		$452,713
Foreign	101			143			130
State	20,584			(41,516		)	152,711
Total	108,976			(89,224		)	605,554
Deferred and non-current - net	126,935			131,130			(311,708		)
Investment tax credit
adjustments - net	(9,930		)	(11,051		)	(7,583		)
Income tax expense from
continuing operations		$225,981			$30,855			$286,263

Income taxes for 2013, 2012, and 2011 for Entergy’s Registrant Subsidiaries consist of the following:

2013	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi		Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Current:
Federal		($13,574	)		$12,176			($30,973	)		$2,498		$15,017			$37,199			($6,199	)
State	6,122			(9,939		)	(5,692		)	4,849		(1,221		)	(843		)	15,845
Total	(7,452		)	2,237			(36,665		)	7,347		13,796			36,356			9,646
Deferred and non-current - net	101,253			57,620			121,416			41,150		(11,952		)	(4,639		)	60,614
Investment tax credit
adjustments - net	(2,014		)	(3,038		)	(2,874		)	1,260		(225		)	(1,609		)	(1,407		)
Income taxes		$91,787			$56,819			$81,877			$49,757		$1,619			$30,108			$68,853

2012	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System 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

2011	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System 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

Total income taxes for Entergy Corporation and Subsidiaries differ from the amounts computed by applying the statutory income tax rate to income before income taxes.  The reasons for the differences for the years 2013, 2012, and 2011 are:

	2013			2012			2011
	(In Thousands)
Net income attributable to Entergy Corporation		$711,902			$846,673			$1,346,439
Preferred dividend requirements of subsidiaries	18,670			21,690			20,933
Consolidated net income	730,572			868,363			1,367,372
Income taxes	225,981			30,855			286,263
Income before income taxes		$956,553			$899,218			$1,653,635
Computed at statutory rate (35%)		$334,794			$314,726			$578,772
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	13,599			40,699			93,940
Regulatory differences - utility plant items	32,324			35,527			39,970
Equity component of AFUDC	(22,356		)	(30,838		)	(30,184		)
Amortization of investment tax credits	(13,535		)	(14,000		)	(14,962		)
Flow-through / permanent differences	(301		)	(14,801		)	(17,848		)
Net-of-tax regulatory liability (a)	(2,899		)	(4,356		)	65,357
Deferred tax reversal on PPA settlement (a)	—			—			(421,819		)
Deferred tax asset on additional depreciation (b)	—			(155,300		)	—
Termination of business reorganization	(27,192		)	—			—
Write-off of regulatory asset for income taxes	—			42,159			—
Capital losses	—			(20,188		)	—
Provision for uncertain tax positions (c)	(59,249		)	(159,957		)	2,698
Valuation allowance	(31,573		)
Other - net	2,369			(2,816		)	(9,661		)
Total income taxes as reported		$225,981			$30,855			$286,263
Effective Income Tax Rate	23.6		%	3.4		%	17.3		%

(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 items in 2013 and 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 2013, 2012, and 2011 are:

2013	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Net income		$161,948			$161,662			$252,464			$82,159			$11,683			$57,881			$113,664
Income taxes	91,787			56,819			81,877			49,757			1,619			30,108			68,853
Pretax income		$253,735			$218,481			$334,341			$131,916			$13,302			$87,989			$182,517
Computed at statutory rate (35%)		$88,807			$76,468			$117,019			$46,171			$4,656			$30,796			$63,881
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	10,954			7,719			11,365			4,564			1,012			(897		)	5,900
Regulatory differences - utility plant items	7,938			4,865			2,140			2,603			453			3,256			11,070
Equity component of AFUDC	(3,820		)	(2,822		)	(10,278		)	(764		)	(322		)	(1,626		)	(2,724		)
Amortization of investment tax credits	(1,989		)	(3,018		)	(2,846		)	(260		)	(216		)	(1,596		)	(3,476		)
Flow-through / permanent differences	2,540			2,377			1,269			1,702			(4,402		)	2,467			(491		)
Net-of-tax regulatory liability (a)	—			—			(2,899		)	—			—			—			—
Termination of business reorganization	(6,753		)	(3,619		)	(3,834		)	(4,177		)	(501		)	(3,542		)	(13		)
Non-taxable dividend income	—			(9,612		)	(27,341		)	—			—			—			—
Provision for uncertain tax positions	(6,527		)	(15,557		)	(3,088		)	(326		)	795			1,027			(5,353		)
Other - net	637			18			370			244			144			223			59
Total income taxes		$91,787			$56,819			$81,877			$49,757			$1,619			$30,108			$68,853
Effective Income Tax Rate	36.2		%	26.0		%	24.5		%	37.7		%	12.2		%	34.2		%	37.7		%

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

2012	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System 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		)
Flow-through / permanent differences	3,427			(7,646		)	1,397			1,961			(4,385		)	1,585			(357		)
Net-of-tax regulatory liability (a)	—			—			(4,356		)	—			—			—			—
Non-taxable dividend income	—			(9,836		)	(27,336		)	—			—			—			—
Expense (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.

2011	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System 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		)	—			—			—			—
Expense (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.

Significant components of accumulated deferred income taxes and taxes accrued for Entergy Corporation and Subsidiaries as of December 31, 2013 and 2012 are as follows:

	2013			2012
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($7,941,319	)		($8,240,342	)
Regulatory assets	(922,312		)	(898,143		)
Nuclear decommissioning trusts	(1,100,439		)	(848,918		)
Pension, net funding	(299,951		)	(305,676		)
Combined unitary state taxes	(183,934		)	(233,210		)
Power purchase agreements	(8,096		)	—
Other	(404,749		)	(485,550		)
Total	(10,860,800		)	(11,011,839		)
Deferred tax assets:
Nuclear decommissioning liabilities	754,828			733,103
Regulatory liabilities	403,370			404,852
Pension and other post-employment benefits	469,190			664,569
Sale and leaseback	176,119			195,074
Compensation	125,552			53,388
Accumulated deferred investment tax credit	106,777			110,690
Provision for allowances and contingencies	66,026			61,576
Power purchase agreements	—			43,717
Net operating loss carryforwards	548,756			960,235
Capital losses and miscellaneous tax credits	13,140			23,114
Valuation allowance	(28,146		)	(86,881		)
Other	109,606			78,721
Total	2,745,218			3,242,158
Noncurrent accrued taxes (including unrecognized
tax benefits)	(400,276		)	(210,534		)
Accumulated deferred income taxes and taxes accrued		($8,515,858	)		($7,980,215	)

Entergy’s estimated tax attributes carryovers and their expiration dates as of December 31, 2013 are as follows:

Carryover Description	Carryover Amount	Year(s) of expiration
Federal net operating losses	$12.8 billion	2023-2033
State net operating losses	$10.9 billion	2014-2032
State capital losses	$1.9 million	2015-2016
Miscellaneous federal and state credits	$86.7 million	2014-2032

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 loss carryovers will not be utilized, a valuation allowance of $23.5 million has been provided on the deferred tax assets relating to these state net operating loss carryovers.

In the third quarter 2013, Entergy reduced a valuation allowance by $44 million ($28 million net of the federal income tax effect) that had been provided on a state net operating loss carryover due to the prospective utilization of such loss carryover.

Significant components of accumulated deferred income taxes and taxes accrued for the Registrant Subsidiaries as of December 31, 2013 and 2012 are as follows:

2013	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($1,613,195	)		($1,259,173	)		($1,347,534	)		($727,545	)		($196,726	)		($759,263	)		($698,151	)
Regulatory assets	(212,339		)	(102,362		)	(255,068		)	(33,277		)	—			(205,402		)	(113,849		)
Nuclear decommissioning trusts	(110,004		)	(32,574		)	(50,248		)	—			—			—			(58,308		)
Pension, net funding	(79,589		)	(45,342		)	(50,630		)	(24,392		)	(11,606		)	(23,598		)	(21,187		)
Deferred fuel	(26,946		)	(4,361		)	(512		)	(21,823		)	63			(470		)	(129		)
Power purchase agreements	(7,053		)	(20,234		)	—			—			13			1,269			—
Other	(62,046		)	(25,694		)	(69,194		)	(10,732		)	(13,446		)	(58,963		)	(8,969		)
Total		($2,111,172	)		($1,489,740	)		($1,773,186	)		($817,769	)		($221,702	)		($1,046,427	)		($900,593	)
Deferred tax assets:
Regulatory liabilities	120,966			60,176			94,019			8,357			35,764			7,952			76,135
Nuclear decommissioning liabilities	(64,571		)	49,439			92,206			—			—			—			(71,898		)
Pension and other post-employment benefits	(12,132		)	73,136			62,999			(1,345		)	1,532			(13,417		)	(2,073		)
Sale and leaseback	—			—			52,054			—			—			—			124,065
Accumulated deferred investment tax credit	15,281			35,297			25,913			3,263			416			5,651			20,956
Provision for allowances and contingencies	12,313			14,784			3,347			13,066			8,535			5,980			—
Unbilled/deferred revenues	37,825			(22,340		)	3,026			6,791			4,226			10,655			—
Compensation	7,131			4,701			3,470			1,778			1,696			6,774			822
Net operating loss carryforwards	85,875			—			230,592			19,400			—			—			—
Capital losses and miscellaneous tax credits	—			—			—			6,173			—			—			—
Other	3,682			4,939			4,148			4,224			2,930			3,807			2,001
Total	206,370			220,132			571,774			61,707			55,099			27,402			150,008
Noncurrent accrued taxes (including unrecognized tax benefits)	22,565			(279,269		)	25,512			(6,290		)	(5,015		)	(37,777		)	10,302
Accumulated deferred income taxes and taxes accrued		($1,882,237	)		($1,548,877	)		($1,175,900	)		($762,352	)		($171,618	)		($1,056,802	)		($740,283	)

2012	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System 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		)
Pension, net funding	(76,989		)	(50,790		)	(53,256		)	(24,226		)	(12,420		)	(24,335		)	(21,372		)
Deferred fuel	(50,068		)	(1,618		)	(11,815		)	(11,332		)	(976		)	3,932			(445		)
Other	(55,000		)	(27,501		)	(92,433		)	(12,641		)	(10,577		)	(23,681		)	(6,592		)
Total		($1,987,985	)		($1,474,123	)		($1,980,304	)		($802,718	)		($231,259	)		($1,034,585	)		($935,323	)
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	1,711			98,259			87,539			2,086			1,606			(16,054		)	2,212
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 allowances and 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
Capital losses and miscellaneous tax credits	—			—			—			3,737			—			—			—
Other	5,565			6,106			5,513			5,021			4,472			6,707			2,000
Total	178,043			288,349			944,984			85,836			54,356			5,379			229,526
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	)

The Registrant Subsidiaries’ estimated tax attributes carryovers and their expiration dates as of December 31, 2013 are as follows:

	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
Federal net operating losses		$1.2	billion		$280	million		$2	billion		$82	million		$56	million	—				$583	million
Year(s) of expiration	2029-2031			2029-2032			2028-2033			2029-2032			2030-2032			N/A			2029-2032
State net operating losses		$109	million		$685	million		$2.8	billion	—				$23	million	—			—
Year(s) of expiration	2024-2026			2025-2027			2024-2027			N/A			2026-2027			N/A			N/A
Misc. federal credits		$2	million		$1	million		$3	million		$1	million		$1	million	—				$2	million
Year(s) of expiration	2024-2032			2024-2032			2026-2032			2024-2032			2024-2032			N/A			2024-2032
State credits	—			—			—				$12.4	million	—				$3.9	million		$18.8	million
Year(s) of expiration	N/A			N/A			N/A			2014-2018			N/A			2014-2027			2015-2018

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:

	2013			2012			2011
	(In Thousands)
Gross balance at January 1		$4,170,403			$4,387,780			$4,949,788
Additions based on tax positions related to the current year	162,338			163,612			211,966
Additions for tax positions of prior years	410,108			1,517,797			332,744
Reductions for tax positions of prior years	(103,360		)	(476,873		)	(259,895		)
Settlements	(43,620		)	(1,421,913		)	(841,528		)
Lapse of statute of limitations	(2,645		)	—			(5,295		)
Gross balance at December 31	4,593,224			4,170,403			4,387,780
Offsets to gross unrecognized tax benefits:
Credit and loss carryovers	(4,400,498		)	(4,022,535		)	(3,212,397		)
Cash paid to taxing authorities	—			—			(363,266		)
Unrecognized tax benefits net of unused tax attributes and payments (a)		$192,726			$147,868			$812,117

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

The balances of unrecognized tax benefits include $176 million, $203 million, and $521 million as of December 31, 2013, 2012, and 2011, 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 $4.417 billion, $3.968 billion, and $3.867 billion as of December 31, 2013, 2012, and 2011, 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.  Entergy's practice is to make additional deposits when necessary as the cash tax benefits of uncertain tax positions are realized on tax returns. 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, 2013, 2012, and 2011 accrued balance for the possible payment of interest is approximately $96.4 million, $146.3 million, and $99 million, respectively.

A reconciliation of the Registrant Subsidiaries’ beginning and ending amount of unrecognized tax benefits for 2013, 2012, and 2011 is as follows:

2013	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Gross balance at January 1, 2013		$344,669			$465,721			$536,673			$16,841			$52,018			$13,954			$260,346
Additions based on tax positions related to the current year	6,427			7,276			10,611			957			583			2,170			4,170
Additions for tax positions of prior years	1,228			7,189			118,025			401			3,506			587			8,391
Reductions for tax positions of prior years	(3,943		)	(15,045		)	(38,428		)	(1,941		)	(962		)	(4,186		)	(967		)
Settlements	(668		)	(66		)	(15,276		)	(72		)	(3,466		)	492			(6,755		)
Gross balance at December 31, 2013	347,713			465,075			611,605			16,186			51,679			13,017			265,185
Offsets to gross unrecognized tax benefits:
Loss carryovers	(345,674		)	(136,151		)	(611,605		)	(16,186		)	(22,078		)	(266		)	(225,286		)
Unrecognized tax benefits net of unused tax attributes and payments		$2,039			$328,924			$—			$—			$29,601			$12,751			$39,899

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		)
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		)	—			(7,556		)	(1,174		)	(1,376		)	(41,878		)
Unrecognized tax benefits net of used tax attributes and payments		$113,087			$318,606			$229,467			($2,434	)		$53,667			$7,204			$228,553

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

	December 31, 2013		December 31, 2012		December 31, 2011
	(In Millions)
Entergy Arkansas		$0.6		$0.6		$—
Entergy Gulf States Louisiana		$44.0		$44.0		$107.9
Entergy Louisiana		$87.9		$92.4		$281.3
Entergy Mississippi		$3.9		$3.9		$3.8
Entergy New Orleans		$—		$—		$—
Entergy Texas		$10.1		$8.6		$7.3
System Energy		$3.3		$3.5		$—

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, 2013		December 31, 2012		December 31, 2011
	(In Millions)
Entergy Arkansas		$15.2		$21.8		$11.4
Entergy Gulf States Louisiana		$17.0		$33.1		$14.4
Entergy Louisiana		$1.0		$0.9		$0.8
Entergy Mississippi		$2.1		$2.4		$1.7
Entergy New Orleans		$0.9		$0.1		$2.4
Entergy Texas		$0.8		$0.7		$0.1
System Energy		$19.0		$33.2		$18.5

Income Tax Litigation

1997-1998 Tax Years

In October 2010 the U.S. Tax Court entered a decision in favor of Entergy regarding the ability to credit the U.K. Windfall Tax against U.S. income tax as a foreign tax credit for tax years 1997 and 1998.  The U.K. Windfall Tax relates to Entergy’s former investment in London Electricity.

The IRS filed an appeal of the U.K. Windfall Tax decision 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 was held pending the disposition of the PPL case.  

On May 20, 2013, the Supreme Court issued a unanimous decision in PPL’s favor, holding that the U.K. Windfall Tax is a creditable tax for U.S. federal income tax purposes. On May 28, 2013, the Supreme Court denied the petition for certiorari filed by the Commissioner of Internal Revenue in Entergy’s U.K. Windfall Tax case, allowing the decision in Entergy’s favor from the United States Court of Appeals for the Fifth Circuit to become final.

2000 Tax Year

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 is effectively settled in Entergy’s favor as determined by the U.S. Supreme Court’s unanimous decision in the PPL proceeding in May 2013 as discussed above.

Income Tax Audits

Entergy and its subsidiaries file U.S. federal and various state and foreign income tax returns.  IRS examinations are substantially completed for years before 2009. All state taxing authorities’ examinations are completed for years before 2005.

2004-2005 IRS Audit

In June 2009, Entergy filed a formal protest with the IRS Appeals Division indicating disagreement with certain issues contained in the 2004-2005 Revenue Agent’s Report (RAR).  The most significant issue disputed was the 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 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 storm restoration, which resulted in an increase to 2008 taxable income of $129 million for Entergy Louisiana and $104 million for Entergy Gulf States Louisiana and a reduction of income tax expense of $172 million, including $143 million for Entergy Louisiana and $20 million for Entergy Gulf States Louisiana. 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.  

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

In the fourth quarter 2012 the IRS disallowed the reduction to 2009 taxable income related to the 2009 CAM.  In the third quarter 2013, the Internal Revenue Service issued its RAR for the tax years 2008-2009. As a result of the issuance of this RAR, Entergy and the IRS resolved all of the 2008-2009 issues described above except for the 2009 CAM. Entergy disagrees with the IRS’s disallowance of the 2009 CAM and filed a protest with the IRS Appeals Division on October 24, 2013. The issuance of the RAR by the IRS effectively settles all other issues, which resulted in an adjustment to the provision for uncertain tax positions.

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 2011 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.

In September 2013 the IRS issued final regulations that provide guidance on the deductibility and capitalization of costs incurred associated with tangible property. Although Entergy continues to analyze these regulations, which contain numerous complex provisions, Entergy currently estimates that the effect of the regulations would result in a $348 million reduction of Entergy’s 2014 repairs and maintenance tax deduction, including decreases in the deduction of $114 million for Entergy Arkansas, $34 million for Entergy Gulf States Louisiana, $22 million for Entergy Louisiana, $43 million for Entergy Mississippi, $137 million for Entergy Texas, and an increase of $2 million for Entergy New Orleans.

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.

In March 2013, Entergy Louisiana distributed to its parent, Entergy Louisiana Holdings, Inc., Louisiana income tax credits of $20.6 million which resulted in a decrease in Entergy Louisiana’s member’s equity account.

Entergy Arkansas [Member]

Income Taxes

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 2013, 2012, and 2011 for Entergy Corporation and Subsidiaries consist of the following:

	2013			2012			2011
	(In Thousands)
Current:
Federal		$88,291			($47,851	)		$452,713
Foreign	101			143			130
State	20,584			(41,516		)	152,711
Total	108,976			(89,224		)	605,554
Deferred and non-current - net	126,935			131,130			(311,708		)
Investment tax credit
adjustments - net	(9,930		)	(11,051		)	(7,583		)
Income tax expense from
continuing operations		$225,981			$30,855			$286,263

Income taxes for 2013, 2012, and 2011 for Entergy’s Registrant Subsidiaries consist of the following:

2013	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi		Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Current:
Federal		($13,574	)		$12,176			($30,973	)		$2,498		$15,017			$37,199			($6,199	)
State	6,122			(9,939		)	(5,692		)	4,849		(1,221		)	(843		)	15,845
Total	(7,452		)	2,237			(36,665		)	7,347		13,796			36,356			9,646
Deferred and non-current - net	101,253			57,620			121,416			41,150		(11,952		)	(4,639		)	60,614
Investment tax credit
adjustments - net	(2,014		)	(3,038		)	(2,874		)	1,260		(225		)	(1,609		)	(1,407		)
Income taxes		$91,787			$56,819			$81,877			$49,757		$1,619			$30,108			$68,853

2012	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System 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

2011	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System 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

Total income taxes for Entergy Corporation and Subsidiaries differ from the amounts computed by applying the statutory income tax rate to income before income taxes.  The reasons for the differences for the years 2013, 2012, and 2011 are:

	2013			2012			2011
	(In Thousands)
Net income attributable to Entergy Corporation		$711,902			$846,673			$1,346,439
Preferred dividend requirements of subsidiaries	18,670			21,690			20,933
Consolidated net income	730,572			868,363			1,367,372
Income taxes	225,981			30,855			286,263
Income before income taxes		$956,553			$899,218			$1,653,635
Computed at statutory rate (35%)		$334,794			$314,726			$578,772
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	13,599			40,699			93,940
Regulatory differences - utility plant items	32,324			35,527			39,970
Equity component of AFUDC	(22,356		)	(30,838		)	(30,184		)
Amortization of investment tax credits	(13,535		)	(14,000		)	(14,962		)
Flow-through / permanent differences	(301		)	(14,801		)	(17,848		)
Net-of-tax regulatory liability (a)	(2,899		)	(4,356		)	65,357
Deferred tax reversal on PPA settlement (a)	—			—			(421,819		)
Deferred tax asset on additional depreciation (b)	—			(155,300		)	—
Termination of business reorganization	(27,192		)	—			—
Write-off of regulatory asset for income taxes	—			42,159			—
Capital losses	—			(20,188		)	—
Provision for uncertain tax positions (c)	(59,249		)	(159,957		)	2,698
Valuation allowance	(31,573		)
Other - net	2,369			(2,816		)	(9,661		)
Total income taxes as reported		$225,981			$30,855			$286,263
Effective Income Tax Rate	23.6		%	3.4		%	17.3		%

(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 items in 2013 and 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 2013, 2012, and 2011 are:

2013	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Net income		$161,948			$161,662			$252,464			$82,159			$11,683			$57,881			$113,664
Income taxes	91,787			56,819			81,877			49,757			1,619			30,108			68,853
Pretax income		$253,735			$218,481			$334,341			$131,916			$13,302			$87,989			$182,517
Computed at statutory rate (35%)		$88,807			$76,468			$117,019			$46,171			$4,656			$30,796			$63,881
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	10,954			7,719			11,365			4,564			1,012			(897		)	5,900
Regulatory differences - utility plant items	7,938			4,865			2,140			2,603			453			3,256			11,070
Equity component of AFUDC	(3,820		)	(2,822		)	(10,278		)	(764		)	(322		)	(1,626		)	(2,724		)
Amortization of investment tax credits	(1,989		)	(3,018		)	(2,846		)	(260		)	(216		)	(1,596		)	(3,476		)
Flow-through / permanent differences	2,540			2,377			1,269			1,702			(4,402		)	2,467			(491		)
Net-of-tax regulatory liability (a)	—			—			(2,899		)	—			—			—			—
Termination of business reorganization	(6,753		)	(3,619		)	(3,834		)	(4,177		)	(501		)	(3,542		)	(13		)
Non-taxable dividend income	—			(9,612		)	(27,341		)	—			—			—			—
Provision for uncertain tax positions	(6,527		)	(15,557		)	(3,088		)	(326		)	795			1,027			(5,353		)
Other - net	637			18			370			244			144			223			59
Total income taxes		$91,787			$56,819			$81,877			$49,757			$1,619			$30,108			$68,853
Effective Income Tax Rate	36.2		%	26.0		%	24.5		%	37.7		%	12.2		%	34.2		%	37.7		%

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

2012	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System 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		)
Flow-through / permanent differences	3,427			(7,646		)	1,397			1,961			(4,385		)	1,585			(357		)
Net-of-tax regulatory liability (a)	—			—			(4,356		)	—			—			—			—
Non-taxable dividend income	—			(9,836		)	(27,336		)	—			—			—			—
Expense (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.

2011	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System 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		)	—			—			—			—
Expense (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.

Significant components of accumulated deferred income taxes and taxes accrued for Entergy Corporation and Subsidiaries as of December 31, 2013 and 2012 are as follows:

	2013			2012
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($7,941,319	)		($8,240,342	)
Regulatory assets	(922,312		)	(898,143		)
Nuclear decommissioning trusts	(1,100,439		)	(848,918		)
Pension, net funding	(299,951		)	(305,676		)
Combined unitary state taxes	(183,934		)	(233,210		)
Power purchase agreements	(8,096		)	—
Other	(404,749		)	(485,550		)
Total	(10,860,800		)	(11,011,839		)
Deferred tax assets:
Nuclear decommissioning liabilities	754,828			733,103
Regulatory liabilities	403,370			404,852
Pension and other post-employment benefits	469,190			664,569
Sale and leaseback	176,119			195,074
Compensation	125,552			53,388
Accumulated deferred investment tax credit	106,777			110,690
Provision for allowances and contingencies	66,026			61,576
Power purchase agreements	—			43,717
Net operating loss carryforwards	548,756			960,235
Capital losses and miscellaneous tax credits	13,140			23,114
Valuation allowance	(28,146		)	(86,881		)
Other	109,606			78,721
Total	2,745,218			3,242,158
Noncurrent accrued taxes (including unrecognized
tax benefits)	(400,276		)	(210,534		)
Accumulated deferred income taxes and taxes accrued		($8,515,858	)		($7,980,215	)

Entergy’s estimated tax attributes carryovers and their expiration dates as of December 31, 2013 are as follows:

Carryover Description	Carryover Amount	Year(s) of expiration
Federal net operating losses	$12.8 billion	2023-2033
State net operating losses	$10.9 billion	2014-2032
State capital losses	$1.9 million	2015-2016
Miscellaneous federal and state credits	$86.7 million	2014-2032

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 loss carryovers will not be utilized, a valuation allowance of $23.5 million has been provided on the deferred tax assets relating to these state net operating loss carryovers.

In the third quarter 2013, Entergy reduced a valuation allowance by $44 million ($28 million net of the federal income tax effect) that had been provided on a state net operating loss carryover due to the prospective utilization of such loss carryover.

Significant components of accumulated deferred income taxes and taxes accrued for the Registrant Subsidiaries as of December 31, 2013 and 2012 are as follows:

2013	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($1,613,195	)		($1,259,173	)		($1,347,534	)		($727,545	)		($196,726	)		($759,263	)		($698,151	)
Regulatory assets	(212,339		)	(102,362		)	(255,068		)	(33,277		)	—			(205,402		)	(113,849		)
Nuclear decommissioning trusts	(110,004		)	(32,574		)	(50,248		)	—			—			—			(58,308		)
Pension, net funding	(79,589		)	(45,342		)	(50,630		)	(24,392		)	(11,606		)	(23,598		)	(21,187		)
Deferred fuel	(26,946		)	(4,361		)	(512		)	(21,823		)	63			(470		)	(129		)
Power purchase agreements	(7,053		)	(20,234		)	—			—			13			1,269			—
Other	(62,046		)	(25,694		)	(69,194		)	(10,732		)	(13,446		)	(58,963		)	(8,969		)
Total		($2,111,172	)		($1,489,740	)		($1,773,186	)		($817,769	)		($221,702	)		($1,046,427	)		($900,593	)
Deferred tax assets:
Regulatory liabilities	120,966			60,176			94,019			8,357			35,764			7,952			76,135
Nuclear decommissioning liabilities	(64,571		)	49,439			92,206			—			—			—			(71,898		)
Pension and other post-employment benefits	(12,132		)	73,136			62,999			(1,345		)	1,532			(13,417		)	(2,073		)
Sale and leaseback	—			—			52,054			—			—			—			124,065
Accumulated deferred investment tax credit	15,281			35,297			25,913			3,263			416			5,651			20,956
Provision for allowances and contingencies	12,313			14,784			3,347			13,066			8,535			5,980			—
Unbilled/deferred revenues	37,825			(22,340		)	3,026			6,791			4,226			10,655			—
Compensation	7,131			4,701			3,470			1,778			1,696			6,774			822
Net operating loss carryforwards	85,875			—			230,592			19,400			—			—			—
Capital losses and miscellaneous tax credits	—			—			—			6,173			—			—			—
Other	3,682			4,939			4,148			4,224			2,930			3,807			2,001
Total	206,370			220,132			571,774			61,707			55,099			27,402			150,008
Noncurrent accrued taxes (including unrecognized tax benefits)	22,565			(279,269		)	25,512			(6,290		)	(5,015		)	(37,777		)	10,302
Accumulated deferred income taxes and taxes accrued		($1,882,237	)		($1,548,877	)		($1,175,900	)		($762,352	)		($171,618	)		($1,056,802	)		($740,283	)

2012	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System 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		)
Pension, net funding	(76,989		)	(50,790		)	(53,256		)	(24,226		)	(12,420		)	(24,335		)	(21,372		)
Deferred fuel	(50,068		)	(1,618		)	(11,815		)	(11,332		)	(976		)	3,932			(445		)
Other	(55,000		)	(27,501		)	(92,433		)	(12,641		)	(10,577		)	(23,681		)	(6,592		)
Total		($1,987,985	)		($1,474,123	)		($1,980,304	)		($802,718	)		($231,259	)		($1,034,585	)		($935,323	)
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	1,711			98,259			87,539			2,086			1,606			(16,054		)	2,212
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 allowances and 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
Capital losses and miscellaneous tax credits	—			—			—			3,737			—			—			—
Other	5,565			6,106			5,513			5,021			4,472			6,707			2,000
Total	178,043			288,349			944,984			85,836			54,356			5,379			229,526
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	)

The Registrant Subsidiaries’ estimated tax attributes carryovers and their expiration dates as of December 31, 2013 are as follows:

	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
Federal net operating losses		$1.2	billion		$280	million		$2	billion		$82	million		$56	million	—				$583	million
Year(s) of expiration	2029-2031			2029-2032			2028-2033			2029-2032			2030-2032			N/A			2029-2032
State net operating losses		$109	million		$685	million		$2.8	billion	—				$23	million	—			—
Year(s) of expiration	2024-2026			2025-2027			2024-2027			N/A			2026-2027			N/A			N/A
Misc. federal credits		$2	million		$1	million		$3	million		$1	million		$1	million	—				$2	million
Year(s) of expiration	2024-2032			2024-2032			2026-2032			2024-2032			2024-2032			N/A			2024-2032
State credits	—			—			—				$12.4	million	—				$3.9	million		$18.8	million
Year(s) of expiration	N/A			N/A			N/A			2014-2018			N/A			2014-2027			2015-2018

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:

	2013			2012			2011
	(In Thousands)
Gross balance at January 1		$4,170,403			$4,387,780			$4,949,788
Additions based on tax positions related to the current year	162,338			163,612			211,966
Additions for tax positions of prior years	410,108			1,517,797			332,744
Reductions for tax positions of prior years	(103,360		)	(476,873		)	(259,895		)
Settlements	(43,620		)	(1,421,913		)	(841,528		)
Lapse of statute of limitations	(2,645		)	—			(5,295		)
Gross balance at December 31	4,593,224			4,170,403			4,387,780
Offsets to gross unrecognized tax benefits:
Credit and loss carryovers	(4,400,498		)	(4,022,535		)	(3,212,397		)
Cash paid to taxing authorities	—			—			(363,266		)
Unrecognized tax benefits net of unused tax attributes and payments (a)		$192,726			$147,868			$812,117

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

The balances of unrecognized tax benefits include $176 million, $203 million, and $521 million as of December 31, 2013, 2012, and 2011, 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 $4.417 billion, $3.968 billion, and $3.867 billion as of December 31, 2013, 2012, and 2011, 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.  Entergy's practice is to make additional deposits when necessary as the cash tax benefits of uncertain tax positions are realized on tax returns. 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, 2013, 2012, and 2011 accrued balance for the possible payment of interest is approximately $96.4 million, $146.3 million, and $99 million, respectively.

A reconciliation of the Registrant Subsidiaries’ beginning and ending amount of unrecognized tax benefits for 2013, 2012, and 2011 is as follows:

2013	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Gross balance at January 1, 2013		$344,669			$465,721			$536,673			$16,841			$52,018			$13,954			$260,346
Additions based on tax positions related to the current year	6,427			7,276			10,611			957			583			2,170			4,170
Additions for tax positions of prior years	1,228			7,189			118,025			401			3,506			587			8,391
Reductions for tax positions of prior years	(3,943		)	(15,045		)	(38,428		)	(1,941		)	(962		)	(4,186		)	(967		)
Settlements	(668		)	(66		)	(15,276		)	(72		)	(3,466		)	492			(6,755		)
Gross balance at December 31, 2013	347,713			465,075			611,605			16,186			51,679			13,017			265,185
Offsets to gross unrecognized tax benefits:
Loss carryovers	(345,674		)	(136,151		)	(611,605		)	(16,186		)	(22,078		)	(266		)	(225,286		)
Unrecognized tax benefits net of unused tax attributes and payments		$2,039			$328,924			$—			$—			$29,601			$12,751			$39,899

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		)
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		)	—			(7,556		)	(1,174		)	(1,376		)	(41,878		)
Unrecognized tax benefits net of used tax attributes and payments		$113,087			$318,606			$229,467			($2,434	)		$53,667			$7,204			$228,553

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

	December 31, 2013		December 31, 2012		December 31, 2011
	(In Millions)
Entergy Arkansas		$0.6		$0.6		$—
Entergy Gulf States Louisiana		$44.0		$44.0		$107.9
Entergy Louisiana		$87.9		$92.4		$281.3
Entergy Mississippi		$3.9		$3.9		$3.8
Entergy New Orleans		$—		$—		$—
Entergy Texas		$10.1		$8.6		$7.3
System Energy		$3.3		$3.5		$—

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, 2013		December 31, 2012		December 31, 2011
	(In Millions)
Entergy Arkansas		$15.2		$21.8		$11.4
Entergy Gulf States Louisiana		$17.0		$33.1		$14.4
Entergy Louisiana		$1.0		$0.9		$0.8
Entergy Mississippi		$2.1		$2.4		$1.7
Entergy New Orleans		$0.9		$0.1		$2.4
Entergy Texas		$0.8		$0.7		$0.1
System Energy		$19.0		$33.2		$18.5

Income Tax Litigation

1997-1998 Tax Years

In October 2010 the U.S. Tax Court entered a decision in favor of Entergy regarding the ability to credit the U.K. Windfall Tax against U.S. income tax as a foreign tax credit for tax years 1997 and 1998.  The U.K. Windfall Tax relates to Entergy’s former investment in London Electricity.

The IRS filed an appeal of the U.K. Windfall Tax decision 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 was held pending the disposition of the PPL case.  

On May 20, 2013, the Supreme Court issued a unanimous decision in PPL’s favor, holding that the U.K. Windfall Tax is a creditable tax for U.S. federal income tax purposes. On May 28, 2013, the Supreme Court denied the petition for certiorari filed by the Commissioner of Internal Revenue in Entergy’s U.K. Windfall Tax case, allowing the decision in Entergy’s favor from the United States Court of Appeals for the Fifth Circuit to become final.

2000 Tax Year

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 is effectively settled in Entergy’s favor as determined by the U.S. Supreme Court’s unanimous decision in the PPL proceeding in May 2013 as discussed above.

Income Tax Audits

Entergy and its subsidiaries file U.S. federal and various state and foreign income tax returns.  IRS examinations are substantially completed for years before 2009. All state taxing authorities’ examinations are completed for years before 2005.

2004-2005 IRS Audit

In June 2009, Entergy filed a formal protest with the IRS Appeals Division indicating disagreement with certain issues contained in the 2004-2005 Revenue Agent’s Report (RAR).  The most significant issue disputed was the 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 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 storm restoration, which resulted in an increase to 2008 taxable income of $129 million for Entergy Louisiana and $104 million for Entergy Gulf States Louisiana and a reduction of income tax expense of $172 million, including $143 million for Entergy Louisiana and $20 million for Entergy Gulf States Louisiana. 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.  

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

In the fourth quarter 2012 the IRS disallowed the reduction to 2009 taxable income related to the 2009 CAM.  In the third quarter 2013, the Internal Revenue Service issued its RAR for the tax years 2008-2009. As a result of the issuance of this RAR, Entergy and the IRS resolved all of the 2008-2009 issues described above except for the 2009 CAM. Entergy disagrees with the IRS’s disallowance of the 2009 CAM and filed a protest with the IRS Appeals Division on October 24, 2013. The issuance of the RAR by the IRS effectively settles all other issues, which resulted in an adjustment to the provision for uncertain tax positions.

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 2011 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.

In September 2013 the IRS issued final regulations that provide guidance on the deductibility and capitalization of costs incurred associated with tangible property. Although Entergy continues to analyze these regulations, which contain numerous complex provisions, Entergy currently estimates that the effect of the regulations would result in a $348 million reduction of Entergy’s 2014 repairs and maintenance tax deduction, including decreases in the deduction of $114 million for Entergy Arkansas, $34 million for Entergy Gulf States Louisiana, $22 million for Entergy Louisiana, $43 million for Entergy Mississippi, $137 million for Entergy Texas, and an increase of $2 million for Entergy New Orleans.

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.

In March 2013, Entergy Louisiana distributed to its parent, Entergy Louisiana Holdings, Inc., Louisiana income tax credits of $20.6 million which resulted in a decrease in Entergy Louisiana’s member’s equity account.

Entergy Gulf States Louisiana [Member]

Income Taxes

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 2013, 2012, and 2011 for Entergy Corporation and Subsidiaries consist of the following:

	2013			2012			2011
	(In Thousands)
Current:
Federal		$88,291			($47,851	)		$452,713
Foreign	101			143			130
State	20,584			(41,516		)	152,711
Total	108,976			(89,224		)	605,554
Deferred and non-current - net	126,935			131,130			(311,708		)
Investment tax credit
adjustments - net	(9,930		)	(11,051		)	(7,583		)
Income tax expense from
continuing operations		$225,981			$30,855			$286,263

Income taxes for 2013, 2012, and 2011 for Entergy’s Registrant Subsidiaries consist of the following:

2013	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi		Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Current:
Federal		($13,574	)		$12,176			($30,973	)		$2,498		$15,017			$37,199			($6,199	)
State	6,122			(9,939		)	(5,692		)	4,849		(1,221		)	(843		)	15,845
Total	(7,452		)	2,237			(36,665		)	7,347		13,796			36,356			9,646
Deferred and non-current - net	101,253			57,620			121,416			41,150		(11,952		)	(4,639		)	60,614
Investment tax credit
adjustments - net	(2,014		)	(3,038		)	(2,874		)	1,260		(225		)	(1,609		)	(1,407		)
Income taxes		$91,787			$56,819			$81,877			$49,757		$1,619			$30,108			$68,853

2012	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System 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

2011	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System 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

Total income taxes for Entergy Corporation and Subsidiaries differ from the amounts computed by applying the statutory income tax rate to income before income taxes.  The reasons for the differences for the years 2013, 2012, and 2011 are:

	2013			2012			2011
	(In Thousands)
Net income attributable to Entergy Corporation		$711,902			$846,673			$1,346,439
Preferred dividend requirements of subsidiaries	18,670			21,690			20,933
Consolidated net income	730,572			868,363			1,367,372
Income taxes	225,981			30,855			286,263
Income before income taxes		$956,553			$899,218			$1,653,635
Computed at statutory rate (35%)		$334,794			$314,726			$578,772
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	13,599			40,699			93,940
Regulatory differences - utility plant items	32,324			35,527			39,970
Equity component of AFUDC	(22,356		)	(30,838		)	(30,184		)
Amortization of investment tax credits	(13,535		)	(14,000		)	(14,962		)
Flow-through / permanent differences	(301		)	(14,801		)	(17,848		)
Net-of-tax regulatory liability (a)	(2,899		)	(4,356		)	65,357
Deferred tax reversal on PPA settlement (a)	—			—			(421,819		)
Deferred tax asset on additional depreciation (b)	—			(155,300		)	—
Termination of business reorganization	(27,192		)	—			—
Write-off of regulatory asset for income taxes	—			42,159			—
Capital losses	—			(20,188		)	—
Provision for uncertain tax positions (c)	(59,249		)	(159,957		)	2,698
Valuation allowance	(31,573		)
Other - net	2,369			(2,816		)	(9,661		)
Total income taxes as reported		$225,981			$30,855			$286,263
Effective Income Tax Rate	23.6		%	3.4		%	17.3		%

(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 items in 2013 and 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 2013, 2012, and 2011 are:

2013	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Net income		$161,948			$161,662			$252,464			$82,159			$11,683			$57,881			$113,664
Income taxes	91,787			56,819			81,877			49,757			1,619			30,108			68,853
Pretax income		$253,735			$218,481			$334,341			$131,916			$13,302			$87,989			$182,517
Computed at statutory rate (35%)		$88,807			$76,468			$117,019			$46,171			$4,656			$30,796			$63,881
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	10,954			7,719			11,365			4,564			1,012			(897		)	5,900
Regulatory differences - utility plant items	7,938			4,865			2,140			2,603			453			3,256			11,070
Equity component of AFUDC	(3,820		)	(2,822		)	(10,278		)	(764		)	(322		)	(1,626		)	(2,724		)
Amortization of investment tax credits	(1,989		)	(3,018		)	(2,846		)	(260		)	(216		)	(1,596		)	(3,476		)
Flow-through / permanent differences	2,540			2,377			1,269			1,702			(4,402		)	2,467			(491		)
Net-of-tax regulatory liability (a)	—			—			(2,899		)	—			—			—			—
Termination of business reorganization	(6,753		)	(3,619		)	(3,834		)	(4,177		)	(501		)	(3,542		)	(13		)
Non-taxable dividend income	—			(9,612		)	(27,341		)	—			—			—			—
Provision for uncertain tax positions	(6,527		)	(15,557		)	(3,088		)	(326		)	795			1,027			(5,353		)
Other - net	637			18			370			244			144			223			59
Total income taxes		$91,787			$56,819			$81,877			$49,757			$1,619			$30,108			$68,853
Effective Income Tax Rate	36.2		%	26.0		%	24.5		%	37.7		%	12.2		%	34.2		%	37.7		%

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

2012	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System 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		)
Flow-through / permanent differences	3,427			(7,646		)	1,397			1,961			(4,385		)	1,585			(357		)
Net-of-tax regulatory liability (a)	—			—			(4,356		)	—			—			—			—
Non-taxable dividend income	—			(9,836		)	(27,336		)	—			—			—			—
Expense (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.

2011	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System 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		)	—			—			—			—
Expense (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.

Significant components of accumulated deferred income taxes and taxes accrued for Entergy Corporation and Subsidiaries as of December 31, 2013 and 2012 are as follows:

	2013			2012
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($7,941,319	)		($8,240,342	)
Regulatory assets	(922,312		)	(898,143		)
Nuclear decommissioning trusts	(1,100,439		)	(848,918		)
Pension, net funding	(299,951		)	(305,676		)
Combined unitary state taxes	(183,934		)	(233,210		)
Power purchase agreements	(8,096		)	—
Other	(404,749		)	(485,550		)
Total	(10,860,800		)	(11,011,839		)
Deferred tax assets:
Nuclear decommissioning liabilities	754,828			733,103
Regulatory liabilities	403,370			404,852
Pension and other post-employment benefits	469,190			664,569
Sale and leaseback	176,119			195,074
Compensation	125,552			53,388
Accumulated deferred investment tax credit	106,777			110,690
Provision for allowances and contingencies	66,026			61,576
Power purchase agreements	—			43,717
Net operating loss carryforwards	548,756			960,235
Capital losses and miscellaneous tax credits	13,140			23,114
Valuation allowance	(28,146		)	(86,881		)
Other	109,606			78,721
Total	2,745,218			3,242,158
Noncurrent accrued taxes (including unrecognized
tax benefits)	(400,276		)	(210,534		)
Accumulated deferred income taxes and taxes accrued		($8,515,858	)		($7,980,215	)

Entergy’s estimated tax attributes carryovers and their expiration dates as of December 31, 2013 are as follows:

Carryover Description	Carryover Amount	Year(s) of expiration
Federal net operating losses	$12.8 billion	2023-2033
State net operating losses	$10.9 billion	2014-2032
State capital losses	$1.9 million	2015-2016
Miscellaneous federal and state credits	$86.7 million	2014-2032

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 loss carryovers will not be utilized, a valuation allowance of $23.5 million has been provided on the deferred tax assets relating to these state net operating loss carryovers.

In the third quarter 2013, Entergy reduced a valuation allowance by $44 million ($28 million net of the federal income tax effect) that had been provided on a state net operating loss carryover due to the prospective utilization of such loss carryover.

Significant components of accumulated deferred income taxes and taxes accrued for the Registrant Subsidiaries as of December 31, 2013 and 2012 are as follows:

2013	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($1,613,195	)		($1,259,173	)		($1,347,534	)		($727,545	)		($196,726	)		($759,263	)		($698,151	)
Regulatory assets	(212,339		)	(102,362		)	(255,068		)	(33,277		)	—			(205,402		)	(113,849		)
Nuclear decommissioning trusts	(110,004		)	(32,574		)	(50,248		)	—			—			—			(58,308		)
Pension, net funding	(79,589		)	(45,342		)	(50,630		)	(24,392		)	(11,606		)	(23,598		)	(21,187		)
Deferred fuel	(26,946		)	(4,361		)	(512		)	(21,823		)	63			(470		)	(129		)
Power purchase agreements	(7,053		)	(20,234		)	—			—			13			1,269			—
Other	(62,046		)	(25,694		)	(69,194		)	(10,732		)	(13,446		)	(58,963		)	(8,969		)
Total		($2,111,172	)		($1,489,740	)		($1,773,186	)		($817,769	)		($221,702	)		($1,046,427	)		($900,593	)
Deferred tax assets:
Regulatory liabilities	120,966			60,176			94,019			8,357			35,764			7,952			76,135
Nuclear decommissioning liabilities	(64,571		)	49,439			92,206			—			—			—			(71,898		)
Pension and other post-employment benefits	(12,132		)	73,136			62,999			(1,345		)	1,532			(13,417		)	(2,073		)
Sale and leaseback	—			—			52,054			—			—			—			124,065
Accumulated deferred investment tax credit	15,281			35,297			25,913			3,263			416			5,651			20,956
Provision for allowances and contingencies	12,313			14,784			3,347			13,066			8,535			5,980			—
Unbilled/deferred revenues	37,825			(22,340		)	3,026			6,791			4,226			10,655			—
Compensation	7,131			4,701			3,470			1,778			1,696			6,774			822
Net operating loss carryforwards	85,875			—			230,592			19,400			—			—			—
Capital losses and miscellaneous tax credits	—			—			—			6,173			—			—			—
Other	3,682			4,939			4,148			4,224			2,930			3,807			2,001
Total	206,370			220,132			571,774			61,707			55,099			27,402			150,008
Noncurrent accrued taxes (including unrecognized tax benefits)	22,565			(279,269		)	25,512			(6,290		)	(5,015		)	(37,777		)	10,302
Accumulated deferred income taxes and taxes accrued		($1,882,237	)		($1,548,877	)		($1,175,900	)		($762,352	)		($171,618	)		($1,056,802	)		($740,283	)

2012	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System 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		)
Pension, net funding	(76,989		)	(50,790		)	(53,256		)	(24,226		)	(12,420		)	(24,335		)	(21,372		)
Deferred fuel	(50,068		)	(1,618		)	(11,815		)	(11,332		)	(976		)	3,932			(445		)
Other	(55,000		)	(27,501		)	(92,433		)	(12,641		)	(10,577		)	(23,681		)	(6,592		)
Total		($1,987,985	)		($1,474,123	)		($1,980,304	)		($802,718	)		($231,259	)		($1,034,585	)		($935,323	)
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	1,711			98,259			87,539			2,086			1,606			(16,054		)	2,212
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 allowances and 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
Capital losses and miscellaneous tax credits	—			—			—			3,737			—			—			—
Other	5,565			6,106			5,513			5,021			4,472			6,707			2,000
Total	178,043			288,349			944,984			85,836			54,356			5,379			229,526
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	)

The Registrant Subsidiaries’ estimated tax attributes carryovers and their expiration dates as of December 31, 2013 are as follows:

	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
Federal net operating losses		$1.2	billion		$280	million		$2	billion		$82	million		$56	million	—				$583	million
Year(s) of expiration	2029-2031			2029-2032			2028-2033			2029-2032			2030-2032			N/A			2029-2032
State net operating losses		$109	million		$685	million		$2.8	billion	—				$23	million	—			—
Year(s) of expiration	2024-2026			2025-2027			2024-2027			N/A			2026-2027			N/A			N/A
Misc. federal credits		$2	million		$1	million		$3	million		$1	million		$1	million	—				$2	million
Year(s) of expiration	2024-2032			2024-2032			2026-2032			2024-2032			2024-2032			N/A			2024-2032
State credits	—			—			—				$12.4	million	—				$3.9	million		$18.8	million
Year(s) of expiration	N/A			N/A			N/A			2014-2018			N/A			2014-2027			2015-2018

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:

	2013			2012			2011
	(In Thousands)
Gross balance at January 1		$4,170,403			$4,387,780			$4,949,788
Additions based on tax positions related to the current year	162,338			163,612			211,966
Additions for tax positions of prior years	410,108			1,517,797			332,744
Reductions for tax positions of prior years	(103,360		)	(476,873		)	(259,895		)
Settlements	(43,620		)	(1,421,913		)	(841,528		)
Lapse of statute of limitations	(2,645		)	—			(5,295		)
Gross balance at December 31	4,593,224			4,170,403			4,387,780
Offsets to gross unrecognized tax benefits:
Credit and loss carryovers	(4,400,498		)	(4,022,535		)	(3,212,397		)
Cash paid to taxing authorities	—			—			(363,266		)
Unrecognized tax benefits net of unused tax attributes and payments (a)		$192,726			$147,868			$812,117

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

The balances of unrecognized tax benefits include $176 million, $203 million, and $521 million as of December 31, 2013, 2012, and 2011, 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 $4.417 billion, $3.968 billion, and $3.867 billion as of December 31, 2013, 2012, and 2011, 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.  Entergy's practice is to make additional deposits when necessary as the cash tax benefits of uncertain tax positions are realized on tax returns. 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, 2013, 2012, and 2011 accrued balance for the possible payment of interest is approximately $96.4 million, $146.3 million, and $99 million, respectively.

A reconciliation of the Registrant Subsidiaries’ beginning and ending amount of unrecognized tax benefits for 2013, 2012, and 2011 is as follows:

2013	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Gross balance at January 1, 2013		$344,669			$465,721			$536,673			$16,841			$52,018			$13,954			$260,346
Additions based on tax positions related to the current year	6,427			7,276			10,611			957			583			2,170			4,170
Additions for tax positions of prior years	1,228			7,189			118,025			401			3,506			587			8,391
Reductions for tax positions of prior years	(3,943		)	(15,045		)	(38,428		)	(1,941		)	(962		)	(4,186		)	(967		)
Settlements	(668		)	(66		)	(15,276		)	(72		)	(3,466		)	492			(6,755		)
Gross balance at December 31, 2013	347,713			465,075			611,605			16,186			51,679			13,017			265,185
Offsets to gross unrecognized tax benefits:
Loss carryovers	(345,674		)	(136,151		)	(611,605		)	(16,186		)	(22,078		)	(266		)	(225,286		)
Unrecognized tax benefits net of unused tax attributes and payments		$2,039			$328,924			$—			$—			$29,601			$12,751			$39,899

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		)
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		)	—			(7,556		)	(1,174		)	(1,376		)	(41,878		)
Unrecognized tax benefits net of used tax attributes and payments		$113,087			$318,606			$229,467			($2,434	)		$53,667			$7,204			$228,553

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

	December 31, 2013		December 31, 2012		December 31, 2011
	(In Millions)
Entergy Arkansas		$0.6		$0.6		$—
Entergy Gulf States Louisiana		$44.0		$44.0		$107.9
Entergy Louisiana		$87.9		$92.4		$281.3
Entergy Mississippi		$3.9		$3.9		$3.8
Entergy New Orleans		$—		$—		$—
Entergy Texas		$10.1		$8.6		$7.3
System Energy		$3.3		$3.5		$—

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, 2013		December 31, 2012		December 31, 2011
	(In Millions)
Entergy Arkansas		$15.2		$21.8		$11.4
Entergy Gulf States Louisiana		$17.0		$33.1		$14.4
Entergy Louisiana		$1.0		$0.9		$0.8
Entergy Mississippi		$2.1		$2.4		$1.7
Entergy New Orleans		$0.9		$0.1		$2.4
Entergy Texas		$0.8		$0.7		$0.1
System Energy		$19.0		$33.2		$18.5

Income Tax Litigation

1997-1998 Tax Years

In October 2010 the U.S. Tax Court entered a decision in favor of Entergy regarding the ability to credit the U.K. Windfall Tax against U.S. income tax as a foreign tax credit for tax years 1997 and 1998.  The U.K. Windfall Tax relates to Entergy’s former investment in London Electricity.

The IRS filed an appeal of the U.K. Windfall Tax decision 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 was held pending the disposition of the PPL case.  

On May 20, 2013, the Supreme Court issued a unanimous decision in PPL’s favor, holding that the U.K. Windfall Tax is a creditable tax for U.S. federal income tax purposes. On May 28, 2013, the Supreme Court denied the petition for certiorari filed by the Commissioner of Internal Revenue in Entergy’s U.K. Windfall Tax case, allowing the decision in Entergy’s favor from the United States Court of Appeals for the Fifth Circuit to become final.

2000 Tax Year

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 is effectively settled in Entergy’s favor as determined by the U.S. Supreme Court’s unanimous decision in the PPL proceeding in May 2013 as discussed above.

Income Tax Audits

Entergy and its subsidiaries file U.S. federal and various state and foreign income tax returns.  IRS examinations are substantially completed for years before 2009. All state taxing authorities’ examinations are completed for years before 2005.

2004-2005 IRS Audit

In June 2009, Entergy filed a formal protest with the IRS Appeals Division indicating disagreement with certain issues contained in the 2004-2005 Revenue Agent’s Report (RAR).  The most significant issue disputed was the 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 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 storm restoration, which resulted in an increase to 2008 taxable income of $129 million for Entergy Louisiana and $104 million for Entergy Gulf States Louisiana and a reduction of income tax expense of $172 million, including $143 million for Entergy Louisiana and $20 million for Entergy Gulf States Louisiana. 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.  

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

In the fourth quarter 2012 the IRS disallowed the reduction to 2009 taxable income related to the 2009 CAM.  In the third quarter 2013, the Internal Revenue Service issued its RAR for the tax years 2008-2009. As a result of the issuance of this RAR, Entergy and the IRS resolved all of the 2008-2009 issues described above except for the 2009 CAM. Entergy disagrees with the IRS’s disallowance of the 2009 CAM and filed a protest with the IRS Appeals Division on October 24, 2013. The issuance of the RAR by the IRS effectively settles all other issues, which resulted in an adjustment to the provision for uncertain tax positions.

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 2011 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.

In September 2013 the IRS issued final regulations that provide guidance on the deductibility and capitalization of costs incurred associated with tangible property. Although Entergy continues to analyze these regulations, which contain numerous complex provisions, Entergy currently estimates that the effect of the regulations would result in a $348 million reduction of Entergy’s 2014 repairs and maintenance tax deduction, including decreases in the deduction of $114 million for Entergy Arkansas, $34 million for Entergy Gulf States Louisiana, $22 million for Entergy Louisiana, $43 million for Entergy Mississippi, $137 million for Entergy Texas, and an increase of $2 million for Entergy New Orleans.

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.

In March 2013, Entergy Louisiana distributed to its parent, Entergy Louisiana Holdings, Inc., Louisiana income tax credits of $20.6 million which resulted in a decrease in Entergy Louisiana’s member’s equity account.

Entergy Louisiana [Member]

Income Taxes

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 2013, 2012, and 2011 for Entergy Corporation and Subsidiaries consist of the following:

	2013			2012			2011
	(In Thousands)
Current:
Federal		$88,291			($47,851	)		$452,713
Foreign	101			143			130
State	20,584			(41,516		)	152,711
Total	108,976			(89,224		)	605,554
Deferred and non-current - net	126,935			131,130			(311,708		)
Investment tax credit
adjustments - net	(9,930		)	(11,051		)	(7,583		)
Income tax expense from
continuing operations		$225,981			$30,855			$286,263

Income taxes for 2013, 2012, and 2011 for Entergy’s Registrant Subsidiaries consist of the following:

2013	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi		Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Current:
Federal		($13,574	)		$12,176			($30,973	)		$2,498		$15,017			$37,199			($6,199	)
State	6,122			(9,939		)	(5,692		)	4,849		(1,221		)	(843		)	15,845
Total	(7,452		)	2,237			(36,665		)	7,347		13,796			36,356			9,646
Deferred and non-current - net	101,253			57,620			121,416			41,150		(11,952		)	(4,639		)	60,614
Investment tax credit
adjustments - net	(2,014		)	(3,038		)	(2,874		)	1,260		(225		)	(1,609		)	(1,407		)
Income taxes		$91,787			$56,819			$81,877			$49,757		$1,619			$30,108			$68,853

2012	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System 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

2011	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System 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

Total income taxes for Entergy Corporation and Subsidiaries differ from the amounts computed by applying the statutory income tax rate to income before income taxes.  The reasons for the differences for the years 2013, 2012, and 2011 are:

	2013			2012			2011
	(In Thousands)
Net income attributable to Entergy Corporation		$711,902			$846,673			$1,346,439
Preferred dividend requirements of subsidiaries	18,670			21,690			20,933
Consolidated net income	730,572			868,363			1,367,372
Income taxes	225,981			30,855			286,263
Income before income taxes		$956,553			$899,218			$1,653,635
Computed at statutory rate (35%)		$334,794			$314,726			$578,772
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	13,599			40,699			93,940
Regulatory differences - utility plant items	32,324			35,527			39,970
Equity component of AFUDC	(22,356		)	(30,838		)	(30,184		)
Amortization of investment tax credits	(13,535		)	(14,000		)	(14,962		)
Flow-through / permanent differences	(301		)	(14,801		)	(17,848		)
Net-of-tax regulatory liability (a)	(2,899		)	(4,356		)	65,357
Deferred tax reversal on PPA settlement (a)	—			—			(421,819		)
Deferred tax asset on additional depreciation (b)	—			(155,300		)	—
Termination of business reorganization	(27,192		)	—			—
Write-off of regulatory asset for income taxes	—			42,159			—
Capital losses	—			(20,188		)	—
Provision for uncertain tax positions (c)	(59,249		)	(159,957		)	2,698
Valuation allowance	(31,573		)
Other - net	2,369			(2,816		)	(9,661		)
Total income taxes as reported		$225,981			$30,855			$286,263
Effective Income Tax Rate	23.6		%	3.4		%	17.3		%

(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 items in 2013 and 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 2013, 2012, and 2011 are:

2013	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Net income		$161,948			$161,662			$252,464			$82,159			$11,683			$57,881			$113,664
Income taxes	91,787			56,819			81,877			49,757			1,619			30,108			68,853
Pretax income		$253,735			$218,481			$334,341			$131,916			$13,302			$87,989			$182,517
Computed at statutory rate (35%)		$88,807			$76,468			$117,019			$46,171			$4,656			$30,796			$63,881
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	10,954			7,719			11,365			4,564			1,012			(897		)	5,900
Regulatory differences - utility plant items	7,938			4,865			2,140			2,603			453			3,256			11,070
Equity component of AFUDC	(3,820		)	(2,822		)	(10,278		)	(764		)	(322		)	(1,626		)	(2,724		)
Amortization of investment tax credits	(1,989		)	(3,018		)	(2,846		)	(260		)	(216		)	(1,596		)	(3,476		)
Flow-through / permanent differences	2,540			2,377			1,269			1,702			(4,402		)	2,467			(491		)
Net-of-tax regulatory liability (a)	—			—			(2,899		)	—			—			—			—
Termination of business reorganization	(6,753		)	(3,619		)	(3,834		)	(4,177		)	(501		)	(3,542		)	(13		)
Non-taxable dividend income	—			(9,612		)	(27,341		)	—			—			—			—
Provision for uncertain tax positions	(6,527		)	(15,557		)	(3,088		)	(326		)	795			1,027			(5,353		)
Other - net	637			18			370			244			144			223			59
Total income taxes		$91,787			$56,819			$81,877			$49,757			$1,619			$30,108			$68,853
Effective Income Tax Rate	36.2		%	26.0		%	24.5		%	37.7		%	12.2		%	34.2		%	37.7		%

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

2012	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System 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		)
Flow-through / permanent differences	3,427			(7,646		)	1,397			1,961			(4,385		)	1,585			(357		)
Net-of-tax regulatory liability (a)	—			—			(4,356		)	—			—			—			—
Non-taxable dividend income	—			(9,836		)	(27,336		)	—			—			—			—
Expense (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.

2011	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System 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		)	—			—			—			—
Expense (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.

Significant components of accumulated deferred income taxes and taxes accrued for Entergy Corporation and Subsidiaries as of December 31, 2013 and 2012 are as follows:

	2013			2012
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($7,941,319	)		($8,240,342	)
Regulatory assets	(922,312		)	(898,143		)
Nuclear decommissioning trusts	(1,100,439		)	(848,918		)
Pension, net funding	(299,951		)	(305,676		)
Combined unitary state taxes	(183,934		)	(233,210		)
Power purchase agreements	(8,096		)	—
Other	(404,749		)	(485,550		)
Total	(10,860,800		)	(11,011,839		)
Deferred tax assets:
Nuclear decommissioning liabilities	754,828			733,103
Regulatory liabilities	403,370			404,852
Pension and other post-employment benefits	469,190			664,569
Sale and leaseback	176,119			195,074
Compensation	125,552			53,388
Accumulated deferred investment tax credit	106,777			110,690
Provision for allowances and contingencies	66,026			61,576
Power purchase agreements	—			43,717
Net operating loss carryforwards	548,756			960,235
Capital losses and miscellaneous tax credits	13,140			23,114
Valuation allowance	(28,146		)	(86,881		)
Other	109,606			78,721
Total	2,745,218			3,242,158
Noncurrent accrued taxes (including unrecognized
tax benefits)	(400,276		)	(210,534		)
Accumulated deferred income taxes and taxes accrued		($8,515,858	)		($7,980,215	)

Entergy’s estimated tax attributes carryovers and their expiration dates as of December 31, 2013 are as follows:

Carryover Description	Carryover Amount	Year(s) of expiration
Federal net operating losses	$12.8 billion	2023-2033
State net operating losses	$10.9 billion	2014-2032
State capital losses	$1.9 million	2015-2016
Miscellaneous federal and state credits	$86.7 million	2014-2032

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 loss carryovers will not be utilized, a valuation allowance of $23.5 million has been provided on the deferred tax assets relating to these state net operating loss carryovers.

In the third quarter 2013, Entergy reduced a valuation allowance by $44 million ($28 million net of the federal income tax effect) that had been provided on a state net operating loss carryover due to the prospective utilization of such loss carryover.

Significant components of accumulated deferred income taxes and taxes accrued for the Registrant Subsidiaries as of December 31, 2013 and 2012 are as follows:

2013	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($1,613,195	)		($1,259,173	)		($1,347,534	)		($727,545	)		($196,726	)		($759,263	)		($698,151	)
Regulatory assets	(212,339		)	(102,362		)	(255,068		)	(33,277		)	—			(205,402		)	(113,849		)
Nuclear decommissioning trusts	(110,004		)	(32,574		)	(50,248		)	—			—			—			(58,308		)
Pension, net funding	(79,589		)	(45,342		)	(50,630		)	(24,392		)	(11,606		)	(23,598		)	(21,187		)
Deferred fuel	(26,946		)	(4,361		)	(512		)	(21,823		)	63			(470		)	(129		)
Power purchase agreements	(7,053		)	(20,234		)	—			—			13			1,269			—
Other	(62,046		)	(25,694		)	(69,194		)	(10,732		)	(13,446		)	(58,963		)	(8,969		)
Total		($2,111,172	)		($1,489,740	)		($1,773,186	)		($817,769	)		($221,702	)		($1,046,427	)		($900,593	)
Deferred tax assets:
Regulatory liabilities	120,966			60,176			94,019			8,357			35,764			7,952			76,135
Nuclear decommissioning liabilities	(64,571		)	49,439			92,206			—			—			—			(71,898		)
Pension and other post-employment benefits	(12,132		)	73,136			62,999			(1,345		)	1,532			(13,417		)	(2,073		)
Sale and leaseback	—			—			52,054			—			—			—			124,065
Accumulated deferred investment tax credit	15,281			35,297			25,913			3,263			416			5,651			20,956
Provision for allowances and contingencies	12,313			14,784			3,347			13,066			8,535			5,980			—
Unbilled/deferred revenues	37,825			(22,340		)	3,026			6,791			4,226			10,655			—
Compensation	7,131			4,701			3,470			1,778			1,696			6,774			822
Net operating loss carryforwards	85,875			—			230,592			19,400			—			—			—
Capital losses and miscellaneous tax credits	—			—			—			6,173			—			—			—
Other	3,682			4,939			4,148			4,224			2,930			3,807			2,001
Total	206,370			220,132			571,774			61,707			55,099			27,402			150,008
Noncurrent accrued taxes (including unrecognized tax benefits)	22,565			(279,269		)	25,512			(6,290		)	(5,015		)	(37,777		)	10,302
Accumulated deferred income taxes and taxes accrued		($1,882,237	)		($1,548,877	)		($1,175,900	)		($762,352	)		($171,618	)		($1,056,802	)		($740,283	)

2012	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System 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		)
Pension, net funding	(76,989		)	(50,790		)	(53,256		)	(24,226		)	(12,420		)	(24,335		)	(21,372		)
Deferred fuel	(50,068		)	(1,618		)	(11,815		)	(11,332		)	(976		)	3,932			(445		)
Other	(55,000		)	(27,501		)	(92,433		)	(12,641		)	(10,577		)	(23,681		)	(6,592		)
Total		($1,987,985	)		($1,474,123	)		($1,980,304	)		($802,718	)		($231,259	)		($1,034,585	)		($935,323	)
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	1,711			98,259			87,539			2,086			1,606			(16,054		)	2,212
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 allowances and 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
Capital losses and miscellaneous tax credits	—			—			—			3,737			—			—			—
Other	5,565			6,106			5,513			5,021			4,472			6,707			2,000
Total	178,043			288,349			944,984			85,836			54,356			5,379			229,526
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	)

The Registrant Subsidiaries’ estimated tax attributes carryovers and their expiration dates as of December 31, 2013 are as follows:

	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
Federal net operating losses		$1.2	billion		$280	million		$2	billion		$82	million		$56	million	—				$583	million
Year(s) of expiration	2029-2031			2029-2032			2028-2033			2029-2032			2030-2032			N/A			2029-2032
State net operating losses		$109	million		$685	million		$2.8	billion	—				$23	million	—			—
Year(s) of expiration	2024-2026			2025-2027			2024-2027			N/A			2026-2027			N/A			N/A
Misc. federal credits		$2	million		$1	million		$3	million		$1	million		$1	million	—				$2	million
Year(s) of expiration	2024-2032			2024-2032			2026-2032			2024-2032			2024-2032			N/A			2024-2032
State credits	—			—			—				$12.4	million	—				$3.9	million		$18.8	million
Year(s) of expiration	N/A			N/A			N/A			2014-2018			N/A			2014-2027			2015-2018

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:

	2013			2012			2011
	(In Thousands)
Gross balance at January 1		$4,170,403			$4,387,780			$4,949,788
Additions based on tax positions related to the current year	162,338			163,612			211,966
Additions for tax positions of prior years	410,108			1,517,797			332,744
Reductions for tax positions of prior years	(103,360		)	(476,873		)	(259,895		)
Settlements	(43,620		)	(1,421,913		)	(841,528		)
Lapse of statute of limitations	(2,645		)	—			(5,295		)
Gross balance at December 31	4,593,224			4,170,403			4,387,780
Offsets to gross unrecognized tax benefits:
Credit and loss carryovers	(4,400,498		)	(4,022,535		)	(3,212,397		)
Cash paid to taxing authorities	—			—			(363,266		)
Unrecognized tax benefits net of unused tax attributes and payments (a)		$192,726			$147,868			$812,117

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

The balances of unrecognized tax benefits include $176 million, $203 million, and $521 million as of December 31, 2013, 2012, and 2011, 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 $4.417 billion, $3.968 billion, and $3.867 billion as of December 31, 2013, 2012, and 2011, 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.  Entergy's practice is to make additional deposits when necessary as the cash tax benefits of uncertain tax positions are realized on tax returns. 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, 2013, 2012, and 2011 accrued balance for the possible payment of interest is approximately $96.4 million, $146.3 million, and $99 million, respectively.

A reconciliation of the Registrant Subsidiaries’ beginning and ending amount of unrecognized tax benefits for 2013, 2012, and 2011 is as follows:

2013	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Gross balance at January 1, 2013		$344,669			$465,721			$536,673			$16,841			$52,018			$13,954			$260,346
Additions based on tax positions related to the current year	6,427			7,276			10,611			957			583			2,170			4,170
Additions for tax positions of prior years	1,228			7,189			118,025			401			3,506			587			8,391
Reductions for tax positions of prior years	(3,943		)	(15,045		)	(38,428		)	(1,941		)	(962		)	(4,186		)	(967		)
Settlements	(668		)	(66		)	(15,276		)	(72		)	(3,466		)	492			(6,755		)
Gross balance at December 31, 2013	347,713			465,075			611,605			16,186			51,679			13,017			265,185
Offsets to gross unrecognized tax benefits:
Loss carryovers	(345,674		)	(136,151		)	(611,605		)	(16,186		)	(22,078		)	(266		)	(225,286		)
Unrecognized tax benefits net of unused tax attributes and payments		$2,039			$328,924			$—			$—			$29,601			$12,751			$39,899

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		)
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		)	—			(7,556		)	(1,174		)	(1,376		)	(41,878		)
Unrecognized tax benefits net of used tax attributes and payments		$113,087			$318,606			$229,467			($2,434	)		$53,667			$7,204			$228,553

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

	December 31, 2013		December 31, 2012		December 31, 2011
	(In Millions)
Entergy Arkansas		$0.6		$0.6		$—
Entergy Gulf States Louisiana		$44.0		$44.0		$107.9
Entergy Louisiana		$87.9		$92.4		$281.3
Entergy Mississippi		$3.9		$3.9		$3.8
Entergy New Orleans		$—		$—		$—
Entergy Texas		$10.1		$8.6		$7.3
System Energy		$3.3		$3.5		$—

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, 2013		December 31, 2012		December 31, 2011
	(In Millions)
Entergy Arkansas		$15.2		$21.8		$11.4
Entergy Gulf States Louisiana		$17.0		$33.1		$14.4
Entergy Louisiana		$1.0		$0.9		$0.8
Entergy Mississippi		$2.1		$2.4		$1.7
Entergy New Orleans		$0.9		$0.1		$2.4
Entergy Texas		$0.8		$0.7		$0.1
System Energy		$19.0		$33.2		$18.5

Income Tax Litigation

1997-1998 Tax Years

In October 2010 the U.S. Tax Court entered a decision in favor of Entergy regarding the ability to credit the U.K. Windfall Tax against U.S. income tax as a foreign tax credit for tax years 1997 and 1998.  The U.K. Windfall Tax relates to Entergy’s former investment in London Electricity.

The IRS filed an appeal of the U.K. Windfall Tax decision 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 was held pending the disposition of the PPL case.  

On May 20, 2013, the Supreme Court issued a unanimous decision in PPL’s favor, holding that the U.K. Windfall Tax is a creditable tax for U.S. federal income tax purposes. On May 28, 2013, the Supreme Court denied the petition for certiorari filed by the Commissioner of Internal Revenue in Entergy’s U.K. Windfall Tax case, allowing the decision in Entergy’s favor from the United States Court of Appeals for the Fifth Circuit to become final.

2000 Tax Year

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 is effectively settled in Entergy’s favor as determined by the U.S. Supreme Court’s unanimous decision in the PPL proceeding in May 2013 as discussed above.

Income Tax Audits

Entergy and its subsidiaries file U.S. federal and various state and foreign income tax returns.  IRS examinations are substantially completed for years before 2009. All state taxing authorities’ examinations are completed for years before 2005.

2004-2005 IRS Audit

In June 2009, Entergy filed a formal protest with the IRS Appeals Division indicating disagreement with certain issues contained in the 2004-2005 Revenue Agent’s Report (RAR).  The most significant issue disputed was the 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 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 storm restoration, which resulted in an increase to 2008 taxable income of $129 million for Entergy Louisiana and $104 million for Entergy Gulf States Louisiana and a reduction of income tax expense of $172 million, including $143 million for Entergy Louisiana and $20 million for Entergy Gulf States Louisiana. 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.  

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

In the fourth quarter 2012 the IRS disallowed the reduction to 2009 taxable income related to the 2009 CAM.  In the third quarter 2013, the Internal Revenue Service issued its RAR for the tax years 2008-2009. As a result of the issuance of this RAR, Entergy and the IRS resolved all of the 2008-2009 issues described above except for the 2009 CAM. Entergy disagrees with the IRS’s disallowance of the 2009 CAM and filed a protest with the IRS Appeals Division on October 24, 2013. The issuance of the RAR by the IRS effectively settles all other issues, which resulted in an adjustment to the provision for uncertain tax positions.

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 2011 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.

In September 2013 the IRS issued final regulations that provide guidance on the deductibility and capitalization of costs incurred associated with tangible property. Although Entergy continues to analyze these regulations, which contain numerous complex provisions, Entergy currently estimates that the effect of the regulations would result in a $348 million reduction of Entergy’s 2014 repairs and maintenance tax deduction, including decreases in the deduction of $114 million for Entergy Arkansas, $34 million for Entergy Gulf States Louisiana, $22 million for Entergy Louisiana, $43 million for Entergy Mississippi, $137 million for Entergy Texas, and an increase of $2 million for Entergy New Orleans.

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.

In March 2013, Entergy Louisiana distributed to its parent, Entergy Louisiana Holdings, Inc., Louisiana income tax credits of $20.6 million which resulted in a decrease in Entergy Louisiana’s member’s equity account.

Entergy Mississippi [Member]

Income Taxes

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 2013, 2012, and 2011 for Entergy Corporation and Subsidiaries consist of the following:

	2013			2012			2011
	(In Thousands)
Current:
Federal		$88,291			($47,851	)		$452,713
Foreign	101			143			130
State	20,584			(41,516		)	152,711
Total	108,976			(89,224		)	605,554
Deferred and non-current - net	126,935			131,130			(311,708		)
Investment tax credit
adjustments - net	(9,930		)	(11,051		)	(7,583		)
Income tax expense from
continuing operations		$225,981			$30,855			$286,263

Income taxes for 2013, 2012, and 2011 for Entergy’s Registrant Subsidiaries consist of the following:

2013	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi		Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Current:
Federal		($13,574	)		$12,176			($30,973	)		$2,498		$15,017			$37,199			($6,199	)
State	6,122			(9,939		)	(5,692		)	4,849		(1,221		)	(843		)	15,845
Total	(7,452		)	2,237			(36,665		)	7,347		13,796			36,356			9,646
Deferred and non-current - net	101,253			57,620			121,416			41,150		(11,952		)	(4,639		)	60,614
Investment tax credit
adjustments - net	(2,014		)	(3,038		)	(2,874		)	1,260		(225		)	(1,609		)	(1,407		)
Income taxes		$91,787			$56,819			$81,877			$49,757		$1,619			$30,108			$68,853

2012	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System 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

2011	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System 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

Total income taxes for Entergy Corporation and Subsidiaries differ from the amounts computed by applying the statutory income tax rate to income before income taxes.  The reasons for the differences for the years 2013, 2012, and 2011 are:

	2013			2012			2011
	(In Thousands)
Net income attributable to Entergy Corporation		$711,902			$846,673			$1,346,439
Preferred dividend requirements of subsidiaries	18,670			21,690			20,933
Consolidated net income	730,572			868,363			1,367,372
Income taxes	225,981			30,855			286,263
Income before income taxes		$956,553			$899,218			$1,653,635
Computed at statutory rate (35%)		$334,794			$314,726			$578,772
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	13,599			40,699			93,940
Regulatory differences - utility plant items	32,324			35,527			39,970
Equity component of AFUDC	(22,356		)	(30,838		)	(30,184		)
Amortization of investment tax credits	(13,535		)	(14,000		)	(14,962		)
Flow-through / permanent differences	(301		)	(14,801		)	(17,848		)
Net-of-tax regulatory liability (a)	(2,899		)	(4,356		)	65,357
Deferred tax reversal on PPA settlement (a)	—			—			(421,819		)
Deferred tax asset on additional depreciation (b)	—			(155,300		)	—
Termination of business reorganization	(27,192		)	—			—
Write-off of regulatory asset for income taxes	—			42,159			—
Capital losses	—			(20,188		)	—
Provision for uncertain tax positions (c)	(59,249		)	(159,957		)	2,698
Valuation allowance	(31,573		)
Other - net	2,369			(2,816		)	(9,661		)
Total income taxes as reported		$225,981			$30,855			$286,263
Effective Income Tax Rate	23.6		%	3.4		%	17.3		%

(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 items in 2013 and 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 2013, 2012, and 2011 are:

2013	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Net income		$161,948			$161,662			$252,464			$82,159			$11,683			$57,881			$113,664
Income taxes	91,787			56,819			81,877			49,757			1,619			30,108			68,853
Pretax income		$253,735			$218,481			$334,341			$131,916			$13,302			$87,989			$182,517
Computed at statutory rate (35%)		$88,807			$76,468			$117,019			$46,171			$4,656			$30,796			$63,881
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	10,954			7,719			11,365			4,564			1,012			(897		)	5,900
Regulatory differences - utility plant items	7,938			4,865			2,140			2,603			453			3,256			11,070
Equity component of AFUDC	(3,820		)	(2,822		)	(10,278		)	(764		)	(322		)	(1,626		)	(2,724		)
Amortization of investment tax credits	(1,989		)	(3,018		)	(2,846		)	(260		)	(216		)	(1,596		)	(3,476		)
Flow-through / permanent differences	2,540			2,377			1,269			1,702			(4,402		)	2,467			(491		)
Net-of-tax regulatory liability (a)	—			—			(2,899		)	—			—			—			—
Termination of business reorganization	(6,753		)	(3,619		)	(3,834		)	(4,177		)	(501		)	(3,542		)	(13		)
Non-taxable dividend income	—			(9,612		)	(27,341		)	—			—			—			—
Provision for uncertain tax positions	(6,527		)	(15,557		)	(3,088		)	(326		)	795			1,027			(5,353		)
Other - net	637			18			370			244			144			223			59
Total income taxes		$91,787			$56,819			$81,877			$49,757			$1,619			$30,108			$68,853
Effective Income Tax Rate	36.2		%	26.0		%	24.5		%	37.7		%	12.2		%	34.2		%	37.7		%

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

2012	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System 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		)
Flow-through / permanent differences	3,427			(7,646		)	1,397			1,961			(4,385		)	1,585			(357		)
Net-of-tax regulatory liability (a)	—			—			(4,356		)	—			—			—			—
Non-taxable dividend income	—			(9,836		)	(27,336		)	—			—			—			—
Expense (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.

2011	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System 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		)	—			—			—			—
Expense (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.

Significant components of accumulated deferred income taxes and taxes accrued for Entergy Corporation and Subsidiaries as of December 31, 2013 and 2012 are as follows:

	2013			2012
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($7,941,319	)		($8,240,342	)
Regulatory assets	(922,312		)	(898,143		)
Nuclear decommissioning trusts	(1,100,439		)	(848,918		)
Pension, net funding	(299,951		)	(305,676		)
Combined unitary state taxes	(183,934		)	(233,210		)
Power purchase agreements	(8,096		)	—
Other	(404,749		)	(485,550		)
Total	(10,860,800		)	(11,011,839		)
Deferred tax assets:
Nuclear decommissioning liabilities	754,828			733,103
Regulatory liabilities	403,370			404,852
Pension and other post-employment benefits	469,190			664,569
Sale and leaseback	176,119			195,074
Compensation	125,552			53,388
Accumulated deferred investment tax credit	106,777			110,690
Provision for allowances and contingencies	66,026			61,576
Power purchase agreements	—			43,717
Net operating loss carryforwards	548,756			960,235
Capital losses and miscellaneous tax credits	13,140			23,114
Valuation allowance	(28,146		)	(86,881		)
Other	109,606			78,721
Total	2,745,218			3,242,158
Noncurrent accrued taxes (including unrecognized
tax benefits)	(400,276		)	(210,534		)
Accumulated deferred income taxes and taxes accrued		($8,515,858	)		($7,980,215	)

Entergy’s estimated tax attributes carryovers and their expiration dates as of December 31, 2013 are as follows:

Carryover Description	Carryover Amount	Year(s) of expiration
Federal net operating losses	$12.8 billion	2023-2033
State net operating losses	$10.9 billion	2014-2032
State capital losses	$1.9 million	2015-2016
Miscellaneous federal and state credits	$86.7 million	2014-2032

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 loss carryovers will not be utilized, a valuation allowance of $23.5 million has been provided on the deferred tax assets relating to these state net operating loss carryovers.

In the third quarter 2013, Entergy reduced a valuation allowance by $44 million ($28 million net of the federal income tax effect) that had been provided on a state net operating loss carryover due to the prospective utilization of such loss carryover.

Significant components of accumulated deferred income taxes and taxes accrued for the Registrant Subsidiaries as of December 31, 2013 and 2012 are as follows:

2013	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($1,613,195	)		($1,259,173	)		($1,347,534	)		($727,545	)		($196,726	)		($759,263	)		($698,151	)
Regulatory assets	(212,339		)	(102,362		)	(255,068		)	(33,277		)	—			(205,402		)	(113,849		)
Nuclear decommissioning trusts	(110,004		)	(32,574		)	(50,248		)	—			—			—			(58,308		)
Pension, net funding	(79,589		)	(45,342		)	(50,630		)	(24,392		)	(11,606		)	(23,598		)	(21,187		)
Deferred fuel	(26,946		)	(4,361		)	(512		)	(21,823		)	63			(470		)	(129		)
Power purchase agreements	(7,053		)	(20,234		)	—			—			13			1,269			—
Other	(62,046		)	(25,694		)	(69,194		)	(10,732		)	(13,446		)	(58,963		)	(8,969		)
Total		($2,111,172	)		($1,489,740	)		($1,773,186	)		($817,769	)		($221,702	)		($1,046,427	)		($900,593	)
Deferred tax assets:
Regulatory liabilities	120,966			60,176			94,019			8,357			35,764			7,952			76,135
Nuclear decommissioning liabilities	(64,571		)	49,439			92,206			—			—			—			(71,898		)
Pension and other post-employment benefits	(12,132		)	73,136			62,999			(1,345		)	1,532			(13,417		)	(2,073		)
Sale and leaseback	—			—			52,054			—			—			—			124,065
Accumulated deferred investment tax credit	15,281			35,297			25,913			3,263			416			5,651			20,956
Provision for allowances and contingencies	12,313			14,784			3,347			13,066			8,535			5,980			—
Unbilled/deferred revenues	37,825			(22,340		)	3,026			6,791			4,226			10,655			—
Compensation	7,131			4,701			3,470			1,778			1,696			6,774			822
Net operating loss carryforwards	85,875			—			230,592			19,400			—			—			—
Capital losses and miscellaneous tax credits	—			—			—			6,173			—			—			—
Other	3,682			4,939			4,148			4,224			2,930			3,807			2,001
Total	206,370			220,132			571,774			61,707			55,099			27,402			150,008
Noncurrent accrued taxes (including unrecognized tax benefits)	22,565			(279,269		)	25,512			(6,290		)	(5,015		)	(37,777		)	10,302
Accumulated deferred income taxes and taxes accrued		($1,882,237	)		($1,548,877	)		($1,175,900	)		($762,352	)		($171,618	)		($1,056,802	)		($740,283	)

2012	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System 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		)
Pension, net funding	(76,989		)	(50,790		)	(53,256		)	(24,226		)	(12,420		)	(24,335		)	(21,372		)
Deferred fuel	(50,068		)	(1,618		)	(11,815		)	(11,332		)	(976		)	3,932			(445		)
Other	(55,000		)	(27,501		)	(92,433		)	(12,641		)	(10,577		)	(23,681		)	(6,592		)
Total		($1,987,985	)		($1,474,123	)		($1,980,304	)		($802,718	)		($231,259	)		($1,034,585	)		($935,323	)
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	1,711			98,259			87,539			2,086			1,606			(16,054		)	2,212
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 allowances and 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
Capital losses and miscellaneous tax credits	—			—			—			3,737			—			—			—
Other	5,565			6,106			5,513			5,021			4,472			6,707			2,000
Total	178,043			288,349			944,984			85,836			54,356			5,379			229,526
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	)

The Registrant Subsidiaries’ estimated tax attributes carryovers and their expiration dates as of December 31, 2013 are as follows:

	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
Federal net operating losses		$1.2	billion		$280	million		$2	billion		$82	million		$56	million	—				$583	million
Year(s) of expiration	2029-2031			2029-2032			2028-2033			2029-2032			2030-2032			N/A			2029-2032
State net operating losses		$109	million		$685	million		$2.8	billion	—				$23	million	—			—
Year(s) of expiration	2024-2026			2025-2027			2024-2027			N/A			2026-2027			N/A			N/A
Misc. federal credits		$2	million		$1	million		$3	million		$1	million		$1	million	—				$2	million
Year(s) of expiration	2024-2032			2024-2032			2026-2032			2024-2032			2024-2032			N/A			2024-2032
State credits	—			—			—				$12.4	million	—				$3.9	million		$18.8	million
Year(s) of expiration	N/A			N/A			N/A			2014-2018			N/A			2014-2027			2015-2018

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:

	2013			2012			2011
	(In Thousands)
Gross balance at January 1		$4,170,403			$4,387,780			$4,949,788
Additions based on tax positions related to the current year	162,338			163,612			211,966
Additions for tax positions of prior years	410,108			1,517,797			332,744
Reductions for tax positions of prior years	(103,360		)	(476,873		)	(259,895		)
Settlements	(43,620		)	(1,421,913		)	(841,528		)
Lapse of statute of limitations	(2,645		)	—			(5,295		)
Gross balance at December 31	4,593,224			4,170,403			4,387,780
Offsets to gross unrecognized tax benefits:
Credit and loss carryovers	(4,400,498		)	(4,022,535		)	(3,212,397		)
Cash paid to taxing authorities	—			—			(363,266		)
Unrecognized tax benefits net of unused tax attributes and payments (a)		$192,726			$147,868			$812,117

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

The balances of unrecognized tax benefits include $176 million, $203 million, and $521 million as of December 31, 2013, 2012, and 2011, 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 $4.417 billion, $3.968 billion, and $3.867 billion as of December 31, 2013, 2012, and 2011, 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.  Entergy's practice is to make additional deposits when necessary as the cash tax benefits of uncertain tax positions are realized on tax returns. 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, 2013, 2012, and 2011 accrued balance for the possible payment of interest is approximately $96.4 million, $146.3 million, and $99 million, respectively.

A reconciliation of the Registrant Subsidiaries’ beginning and ending amount of unrecognized tax benefits for 2013, 2012, and 2011 is as follows:

2013	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Gross balance at January 1, 2013		$344,669			$465,721			$536,673			$16,841			$52,018			$13,954			$260,346
Additions based on tax positions related to the current year	6,427			7,276			10,611			957			583			2,170			4,170
Additions for tax positions of prior years	1,228			7,189			118,025			401			3,506			587			8,391
Reductions for tax positions of prior years	(3,943		)	(15,045		)	(38,428		)	(1,941		)	(962		)	(4,186		)	(967		)
Settlements	(668		)	(66		)	(15,276		)	(72		)	(3,466		)	492			(6,755		)
Gross balance at December 31, 2013	347,713			465,075			611,605			16,186			51,679			13,017			265,185
Offsets to gross unrecognized tax benefits:
Loss carryovers	(345,674		)	(136,151		)	(611,605		)	(16,186		)	(22,078		)	(266		)	(225,286		)
Unrecognized tax benefits net of unused tax attributes and payments		$2,039			$328,924			$—			$—			$29,601			$12,751			$39,899

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		)
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		)	—			(7,556		)	(1,174		)	(1,376		)	(41,878		)
Unrecognized tax benefits net of used tax attributes and payments		$113,087			$318,606			$229,467			($2,434	)		$53,667			$7,204			$228,553

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

	December 31, 2013		December 31, 2012		December 31, 2011
	(In Millions)
Entergy Arkansas		$0.6		$0.6		$—
Entergy Gulf States Louisiana		$44.0		$44.0		$107.9
Entergy Louisiana		$87.9		$92.4		$281.3
Entergy Mississippi		$3.9		$3.9		$3.8
Entergy New Orleans		$—		$—		$—
Entergy Texas		$10.1		$8.6		$7.3
System Energy		$3.3		$3.5		$—

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, 2013		December 31, 2012		December 31, 2011
	(In Millions)
Entergy Arkansas		$15.2		$21.8		$11.4
Entergy Gulf States Louisiana		$17.0		$33.1		$14.4
Entergy Louisiana		$1.0		$0.9		$0.8
Entergy Mississippi		$2.1		$2.4		$1.7
Entergy New Orleans		$0.9		$0.1		$2.4
Entergy Texas		$0.8		$0.7		$0.1
System Energy		$19.0		$33.2		$18.5

Income Tax Litigation

1997-1998 Tax Years

In October 2010 the U.S. Tax Court entered a decision in favor of Entergy regarding the ability to credit the U.K. Windfall Tax against U.S. income tax as a foreign tax credit for tax years 1997 and 1998.  The U.K. Windfall Tax relates to Entergy’s former investment in London Electricity.

The IRS filed an appeal of the U.K. Windfall Tax decision 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 was held pending the disposition of the PPL case.  

On May 20, 2013, the Supreme Court issued a unanimous decision in PPL’s favor, holding that the U.K. Windfall Tax is a creditable tax for U.S. federal income tax purposes. On May 28, 2013, the Supreme Court denied the petition for certiorari filed by the Commissioner of Internal Revenue in Entergy’s U.K. Windfall Tax case, allowing the decision in Entergy’s favor from the United States Court of Appeals for the Fifth Circuit to become final.

2000 Tax Year

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 is effectively settled in Entergy’s favor as determined by the U.S. Supreme Court’s unanimous decision in the PPL proceeding in May 2013 as discussed above.

Income Tax Audits

Entergy and its subsidiaries file U.S. federal and various state and foreign income tax returns.  IRS examinations are substantially completed for years before 2009. All state taxing authorities’ examinations are completed for years before 2005.

2004-2005 IRS Audit

In June 2009, Entergy filed a formal protest with the IRS Appeals Division indicating disagreement with certain issues contained in the 2004-2005 Revenue Agent’s Report (RAR).  The most significant issue disputed was the 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 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 storm restoration, which resulted in an increase to 2008 taxable income of $129 million for Entergy Louisiana and $104 million for Entergy Gulf States Louisiana and a reduction of income tax expense of $172 million, including $143 million for Entergy Louisiana and $20 million for Entergy Gulf States Louisiana. 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.  

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

In the fourth quarter 2012 the IRS disallowed the reduction to 2009 taxable income related to the 2009 CAM.  In the third quarter 2013, the Internal Revenue Service issued its RAR for the tax years 2008-2009. As a result of the issuance of this RAR, Entergy and the IRS resolved all of the 2008-2009 issues described above except for the 2009 CAM. Entergy disagrees with the IRS’s disallowance of the 2009 CAM and filed a protest with the IRS Appeals Division on October 24, 2013. The issuance of the RAR by the IRS effectively settles all other issues, which resulted in an adjustment to the provision for uncertain tax positions.

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 2011 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.

In September 2013 the IRS issued final regulations that provide guidance on the deductibility and capitalization of costs incurred associated with tangible property. Although Entergy continues to analyze these regulations, which contain numerous complex provisions, Entergy currently estimates that the effect of the regulations would result in a $348 million reduction of Entergy’s 2014 repairs and maintenance tax deduction, including decreases in the deduction of $114 million for Entergy Arkansas, $34 million for Entergy Gulf States Louisiana, $22 million for Entergy Louisiana, $43 million for Entergy Mississippi, $137 million for Entergy Texas, and an increase of $2 million for Entergy New Orleans.

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.

In March 2013, Entergy Louisiana distributed to its parent, Entergy Louisiana Holdings, Inc., Louisiana income tax credits of $20.6 million which resulted in a decrease in Entergy Louisiana’s member’s equity account.

Entergy New Orleans [Member]

Income Taxes

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 2013, 2012, and 2011 for Entergy Corporation and Subsidiaries consist of the following:

	2013			2012			2011
	(In Thousands)
Current:
Federal		$88,291			($47,851	)		$452,713
Foreign	101			143			130
State	20,584			(41,516		)	152,711
Total	108,976			(89,224		)	605,554
Deferred and non-current - net	126,935			131,130			(311,708		)
Investment tax credit
adjustments - net	(9,930		)	(11,051		)	(7,583		)
Income tax expense from
continuing operations		$225,981			$30,855			$286,263

Income taxes for 2013, 2012, and 2011 for Entergy’s Registrant Subsidiaries consist of the following:

2013	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi		Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Current:
Federal		($13,574	)		$12,176			($30,973	)		$2,498		$15,017			$37,199			($6,199	)
State	6,122			(9,939		)	(5,692		)	4,849		(1,221		)	(843		)	15,845
Total	(7,452		)	2,237			(36,665		)	7,347		13,796			36,356			9,646
Deferred and non-current - net	101,253			57,620			121,416			41,150		(11,952		)	(4,639		)	60,614
Investment tax credit
adjustments - net	(2,014		)	(3,038		)	(2,874		)	1,260		(225		)	(1,609		)	(1,407		)
Income taxes		$91,787			$56,819			$81,877			$49,757		$1,619			$30,108			$68,853

2012	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System 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

2011	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System 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

Total income taxes for Entergy Corporation and Subsidiaries differ from the amounts computed by applying the statutory income tax rate to income before income taxes.  The reasons for the differences for the years 2013, 2012, and 2011 are:

	2013			2012			2011
	(In Thousands)
Net income attributable to Entergy Corporation		$711,902			$846,673			$1,346,439
Preferred dividend requirements of subsidiaries	18,670			21,690			20,933
Consolidated net income	730,572			868,363			1,367,372
Income taxes	225,981			30,855			286,263
Income before income taxes		$956,553			$899,218			$1,653,635
Computed at statutory rate (35%)		$334,794			$314,726			$578,772
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	13,599			40,699			93,940
Regulatory differences - utility plant items	32,324			35,527			39,970
Equity component of AFUDC	(22,356		)	(30,838		)	(30,184		)
Amortization of investment tax credits	(13,535		)	(14,000		)	(14,962		)
Flow-through / permanent differences	(301		)	(14,801		)	(17,848		)
Net-of-tax regulatory liability (a)	(2,899		)	(4,356		)	65,357
Deferred tax reversal on PPA settlement (a)	—			—			(421,819		)
Deferred tax asset on additional depreciation (b)	—			(155,300		)	—
Termination of business reorganization	(27,192		)	—			—
Write-off of regulatory asset for income taxes	—			42,159			—
Capital losses	—			(20,188		)	—
Provision for uncertain tax positions (c)	(59,249		)	(159,957		)	2,698
Valuation allowance	(31,573		)
Other - net	2,369			(2,816		)	(9,661		)
Total income taxes as reported		$225,981			$30,855			$286,263
Effective Income Tax Rate	23.6		%	3.4		%	17.3		%

(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 items in 2013 and 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 2013, 2012, and 2011 are:

2013	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Net income		$161,948			$161,662			$252,464			$82,159			$11,683			$57,881			$113,664
Income taxes	91,787			56,819			81,877			49,757			1,619			30,108			68,853
Pretax income		$253,735			$218,481			$334,341			$131,916			$13,302			$87,989			$182,517
Computed at statutory rate (35%)		$88,807			$76,468			$117,019			$46,171			$4,656			$30,796			$63,881
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	10,954			7,719			11,365			4,564			1,012			(897		)	5,900
Regulatory differences - utility plant items	7,938			4,865			2,140			2,603			453			3,256			11,070
Equity component of AFUDC	(3,820		)	(2,822		)	(10,278		)	(764		)	(322		)	(1,626		)	(2,724		)
Amortization of investment tax credits	(1,989		)	(3,018		)	(2,846		)	(260		)	(216		)	(1,596		)	(3,476		)
Flow-through / permanent differences	2,540			2,377			1,269			1,702			(4,402		)	2,467			(491		)
Net-of-tax regulatory liability (a)	—			—			(2,899		)	—			—			—			—
Termination of business reorganization	(6,753		)	(3,619		)	(3,834		)	(4,177		)	(501		)	(3,542		)	(13		)
Non-taxable dividend income	—			(9,612		)	(27,341		)	—			—			—			—
Provision for uncertain tax positions	(6,527		)	(15,557		)	(3,088		)	(326		)	795			1,027			(5,353		)
Other - net	637			18			370			244			144			223			59
Total income taxes		$91,787			$56,819			$81,877			$49,757			$1,619			$30,108			$68,853
Effective Income Tax Rate	36.2		%	26.0		%	24.5		%	37.7		%	12.2		%	34.2		%	37.7		%

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

2012	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System 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		)
Flow-through / permanent differences	3,427			(7,646		)	1,397			1,961			(4,385		)	1,585			(357		)
Net-of-tax regulatory liability (a)	—			—			(4,356		)	—			—			—			—
Non-taxable dividend income	—			(9,836		)	(27,336		)	—			—			—			—
Expense (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.

2011	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System 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		)	—			—			—			—
Expense (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.

Significant components of accumulated deferred income taxes and taxes accrued for Entergy Corporation and Subsidiaries as of December 31, 2013 and 2012 are as follows:

	2013			2012
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($7,941,319	)		($8,240,342	)
Regulatory assets	(922,312		)	(898,143		)
Nuclear decommissioning trusts	(1,100,439		)	(848,918		)
Pension, net funding	(299,951		)	(305,676		)
Combined unitary state taxes	(183,934		)	(233,210		)
Power purchase agreements	(8,096		)	—
Other	(404,749		)	(485,550		)
Total	(10,860,800		)	(11,011,839		)
Deferred tax assets:
Nuclear decommissioning liabilities	754,828			733,103
Regulatory liabilities	403,370			404,852
Pension and other post-employment benefits	469,190			664,569
Sale and leaseback	176,119			195,074
Compensation	125,552			53,388
Accumulated deferred investment tax credit	106,777			110,690
Provision for allowances and contingencies	66,026			61,576
Power purchase agreements	—			43,717
Net operating loss carryforwards	548,756			960,235
Capital losses and miscellaneous tax credits	13,140			23,114
Valuation allowance	(28,146		)	(86,881		)
Other	109,606			78,721
Total	2,745,218			3,242,158
Noncurrent accrued taxes (including unrecognized
tax benefits)	(400,276		)	(210,534		)
Accumulated deferred income taxes and taxes accrued		($8,515,858	)		($7,980,215	)

Entergy’s estimated tax attributes carryovers and their expiration dates as of December 31, 2013 are as follows:

Carryover Description	Carryover Amount	Year(s) of expiration
Federal net operating losses	$12.8 billion	2023-2033
State net operating losses	$10.9 billion	2014-2032
State capital losses	$1.9 million	2015-2016
Miscellaneous federal and state credits	$86.7 million	2014-2032

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 loss carryovers will not be utilized, a valuation allowance of $23.5 million has been provided on the deferred tax assets relating to these state net operating loss carryovers.

In the third quarter 2013, Entergy reduced a valuation allowance by $44 million ($28 million net of the federal income tax effect) that had been provided on a state net operating loss carryover due to the prospective utilization of such loss carryover.

Significant components of accumulated deferred income taxes and taxes accrued for the Registrant Subsidiaries as of December 31, 2013 and 2012 are as follows:

2013	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($1,613,195	)		($1,259,173	)		($1,347,534	)		($727,545	)		($196,726	)		($759,263	)		($698,151	)
Regulatory assets	(212,339		)	(102,362		)	(255,068		)	(33,277		)	—			(205,402		)	(113,849		)
Nuclear decommissioning trusts	(110,004		)	(32,574		)	(50,248		)	—			—			—			(58,308		)
Pension, net funding	(79,589		)	(45,342		)	(50,630		)	(24,392		)	(11,606		)	(23,598		)	(21,187		)
Deferred fuel	(26,946		)	(4,361		)	(512		)	(21,823		)	63			(470		)	(129		)
Power purchase agreements	(7,053		)	(20,234		)	—			—			13			1,269			—
Other	(62,046		)	(25,694		)	(69,194		)	(10,732		)	(13,446		)	(58,963		)	(8,969		)
Total		($2,111,172	)		($1,489,740	)		($1,773,186	)		($817,769	)		($221,702	)		($1,046,427	)		($900,593	)
Deferred tax assets:
Regulatory liabilities	120,966			60,176			94,019			8,357			35,764			7,952			76,135
Nuclear decommissioning liabilities	(64,571		)	49,439			92,206			—			—			—			(71,898		)
Pension and other post-employment benefits	(12,132		)	73,136			62,999			(1,345		)	1,532			(13,417		)	(2,073		)
Sale and leaseback	—			—			52,054			—			—			—			124,065
Accumulated deferred investment tax credit	15,281			35,297			25,913			3,263			416			5,651			20,956
Provision for allowances and contingencies	12,313			14,784			3,347			13,066			8,535			5,980			—
Unbilled/deferred revenues	37,825			(22,340		)	3,026			6,791			4,226			10,655			—
Compensation	7,131			4,701			3,470			1,778			1,696			6,774			822
Net operating loss carryforwards	85,875			—			230,592			19,400			—			—			—
Capital losses and miscellaneous tax credits	—			—			—			6,173			—			—			—
Other	3,682			4,939			4,148			4,224			2,930			3,807			2,001
Total	206,370			220,132			571,774			61,707			55,099			27,402			150,008
Noncurrent accrued taxes (including unrecognized tax benefits)	22,565			(279,269		)	25,512			(6,290		)	(5,015		)	(37,777		)	10,302
Accumulated deferred income taxes and taxes accrued		($1,882,237	)		($1,548,877	)		($1,175,900	)		($762,352	)		($171,618	)		($1,056,802	)		($740,283	)

2012	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System 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		)
Pension, net funding	(76,989		)	(50,790		)	(53,256		)	(24,226		)	(12,420		)	(24,335		)	(21,372		)
Deferred fuel	(50,068		)	(1,618		)	(11,815		)	(11,332		)	(976		)	3,932			(445		)
Other	(55,000		)	(27,501		)	(92,433		)	(12,641		)	(10,577		)	(23,681		)	(6,592		)
Total		($1,987,985	)		($1,474,123	)		($1,980,304	)		($802,718	)		($231,259	)		($1,034,585	)		($935,323	)
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	1,711			98,259			87,539			2,086			1,606			(16,054		)	2,212
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 allowances and 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
Capital losses and miscellaneous tax credits	—			—			—			3,737			—			—			—
Other	5,565			6,106			5,513			5,021			4,472			6,707			2,000
Total	178,043			288,349			944,984			85,836			54,356			5,379			229,526
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	)

The Registrant Subsidiaries’ estimated tax attributes carryovers and their expiration dates as of December 31, 2013 are as follows:

	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
Federal net operating losses		$1.2	billion		$280	million		$2	billion		$82	million		$56	million	—				$583	million
Year(s) of expiration	2029-2031			2029-2032			2028-2033			2029-2032			2030-2032			N/A			2029-2032
State net operating losses		$109	million		$685	million		$2.8	billion	—				$23	million	—			—
Year(s) of expiration	2024-2026			2025-2027			2024-2027			N/A			2026-2027			N/A			N/A
Misc. federal credits		$2	million		$1	million		$3	million		$1	million		$1	million	—				$2	million
Year(s) of expiration	2024-2032			2024-2032			2026-2032			2024-2032			2024-2032			N/A			2024-2032
State credits	—			—			—				$12.4	million	—				$3.9	million		$18.8	million
Year(s) of expiration	N/A			N/A			N/A			2014-2018			N/A			2014-2027			2015-2018

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:

	2013			2012			2011
	(In Thousands)
Gross balance at January 1		$4,170,403			$4,387,780			$4,949,788
Additions based on tax positions related to the current year	162,338			163,612			211,966
Additions for tax positions of prior years	410,108			1,517,797			332,744
Reductions for tax positions of prior years	(103,360		)	(476,873		)	(259,895		)
Settlements	(43,620		)	(1,421,913		)	(841,528		)
Lapse of statute of limitations	(2,645		)	—			(5,295		)
Gross balance at December 31	4,593,224			4,170,403			4,387,780
Offsets to gross unrecognized tax benefits:
Credit and loss carryovers	(4,400,498		)	(4,022,535		)	(3,212,397		)
Cash paid to taxing authorities	—			—			(363,266		)
Unrecognized tax benefits net of unused tax attributes and payments (a)		$192,726			$147,868			$812,117

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

The balances of unrecognized tax benefits include $176 million, $203 million, and $521 million as of December 31, 2013, 2012, and 2011, 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 $4.417 billion, $3.968 billion, and $3.867 billion as of December 31, 2013, 2012, and 2011, 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.  Entergy's practice is to make additional deposits when necessary as the cash tax benefits of uncertain tax positions are realized on tax returns. 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, 2013, 2012, and 2011 accrued balance for the possible payment of interest is approximately $96.4 million, $146.3 million, and $99 million, respectively.

A reconciliation of the Registrant Subsidiaries’ beginning and ending amount of unrecognized tax benefits for 2013, 2012, and 2011 is as follows:

2013	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Gross balance at January 1, 2013		$344,669			$465,721			$536,673			$16,841			$52,018			$13,954			$260,346
Additions based on tax positions related to the current year	6,427			7,276			10,611			957			583			2,170			4,170
Additions for tax positions of prior years	1,228			7,189			118,025			401			3,506			587			8,391
Reductions for tax positions of prior years	(3,943		)	(15,045		)	(38,428		)	(1,941		)	(962		)	(4,186		)	(967		)
Settlements	(668		)	(66		)	(15,276		)	(72		)	(3,466		)	492			(6,755		)
Gross balance at December 31, 2013	347,713			465,075			611,605			16,186			51,679			13,017			265,185
Offsets to gross unrecognized tax benefits:
Loss carryovers	(345,674		)	(136,151		)	(611,605		)	(16,186		)	(22,078		)	(266		)	(225,286		)
Unrecognized tax benefits net of unused tax attributes and payments		$2,039			$328,924			$—			$—			$29,601			$12,751			$39,899

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		)
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		)	—			(7,556		)	(1,174		)	(1,376		)	(41,878		)
Unrecognized tax benefits net of used tax attributes and payments		$113,087			$318,606			$229,467			($2,434	)		$53,667			$7,204			$228,553

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

	December 31, 2013		December 31, 2012		December 31, 2011
	(In Millions)
Entergy Arkansas		$0.6		$0.6		$—
Entergy Gulf States Louisiana		$44.0		$44.0		$107.9
Entergy Louisiana		$87.9		$92.4		$281.3
Entergy Mississippi		$3.9		$3.9		$3.8
Entergy New Orleans		$—		$—		$—
Entergy Texas		$10.1		$8.6		$7.3
System Energy		$3.3		$3.5		$—

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, 2013		December 31, 2012		December 31, 2011
	(In Millions)
Entergy Arkansas		$15.2		$21.8		$11.4
Entergy Gulf States Louisiana		$17.0		$33.1		$14.4
Entergy Louisiana		$1.0		$0.9		$0.8
Entergy Mississippi		$2.1		$2.4		$1.7
Entergy New Orleans		$0.9		$0.1		$2.4
Entergy Texas		$0.8		$0.7		$0.1
System Energy		$19.0		$33.2		$18.5

Income Tax Litigation

1997-1998 Tax Years

In October 2010 the U.S. Tax Court entered a decision in favor of Entergy regarding the ability to credit the U.K. Windfall Tax against U.S. income tax as a foreign tax credit for tax years 1997 and 1998.  The U.K. Windfall Tax relates to Entergy’s former investment in London Electricity.

The IRS filed an appeal of the U.K. Windfall Tax decision 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 was held pending the disposition of the PPL case.  

On May 20, 2013, the Supreme Court issued a unanimous decision in PPL’s favor, holding that the U.K. Windfall Tax is a creditable tax for U.S. federal income tax purposes. On May 28, 2013, the Supreme Court denied the petition for certiorari filed by the Commissioner of Internal Revenue in Entergy’s U.K. Windfall Tax case, allowing the decision in Entergy’s favor from the United States Court of Appeals for the Fifth Circuit to become final.

2000 Tax Year

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 is effectively settled in Entergy’s favor as determined by the U.S. Supreme Court’s unanimous decision in the PPL proceeding in May 2013 as discussed above.

Income Tax Audits

Entergy and its subsidiaries file U.S. federal and various state and foreign income tax returns.  IRS examinations are substantially completed for years before 2009. All state taxing authorities’ examinations are completed for years before 2005.

2004-2005 IRS Audit

In June 2009, Entergy filed a formal protest with the IRS Appeals Division indicating disagreement with certain issues contained in the 2004-2005 Revenue Agent’s Report (RAR).  The most significant issue disputed was the 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 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 storm restoration, which resulted in an increase to 2008 taxable income of $129 million for Entergy Louisiana and $104 million for Entergy Gulf States Louisiana and a reduction of income tax expense of $172 million, including $143 million for Entergy Louisiana and $20 million for Entergy Gulf States Louisiana. 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.  

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

In the fourth quarter 2012 the IRS disallowed the reduction to 2009 taxable income related to the 2009 CAM.  In the third quarter 2013, the Internal Revenue Service issued its RAR for the tax years 2008-2009. As a result of the issuance of this RAR, Entergy and the IRS resolved all of the 2008-2009 issues described above except for the 2009 CAM. Entergy disagrees with the IRS’s disallowance of the 2009 CAM and filed a protest with the IRS Appeals Division on October 24, 2013. The issuance of the RAR by the IRS effectively settles all other issues, which resulted in an adjustment to the provision for uncertain tax positions.

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 2011 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.

In September 2013 the IRS issued final regulations that provide guidance on the deductibility and capitalization of costs incurred associated with tangible property. Although Entergy continues to analyze these regulations, which contain numerous complex provisions, Entergy currently estimates that the effect of the regulations would result in a $348 million reduction of Entergy’s 2014 repairs and maintenance tax deduction, including decreases in the deduction of $114 million for Entergy Arkansas, $34 million for Entergy Gulf States Louisiana, $22 million for Entergy Louisiana, $43 million for Entergy Mississippi, $137 million for Entergy Texas, and an increase of $2 million for Entergy New Orleans.

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.

In March 2013, Entergy Louisiana distributed to its parent, Entergy Louisiana Holdings, Inc., Louisiana income tax credits of $20.6 million which resulted in a decrease in Entergy Louisiana’s member’s equity account.

Entergy Texas [Member]

Income Taxes

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 2013, 2012, and 2011 for Entergy Corporation and Subsidiaries consist of the following:

	2013			2012			2011
	(In Thousands)
Current:
Federal		$88,291			($47,851	)		$452,713
Foreign	101			143			130
State	20,584			(41,516		)	152,711
Total	108,976			(89,224		)	605,554
Deferred and non-current - net	126,935			131,130			(311,708		)
Investment tax credit
adjustments - net	(9,930		)	(11,051		)	(7,583		)
Income tax expense from
continuing operations		$225,981			$30,855			$286,263

Income taxes for 2013, 2012, and 2011 for Entergy’s Registrant Subsidiaries consist of the following:

2013	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi		Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Current:
Federal		($13,574	)		$12,176			($30,973	)		$2,498		$15,017			$37,199			($6,199	)
State	6,122			(9,939		)	(5,692		)	4,849		(1,221		)	(843		)	15,845
Total	(7,452		)	2,237			(36,665		)	7,347		13,796			36,356			9,646
Deferred and non-current - net	101,253			57,620			121,416			41,150		(11,952		)	(4,639		)	60,614
Investment tax credit
adjustments - net	(2,014		)	(3,038		)	(2,874		)	1,260		(225		)	(1,609		)	(1,407		)
Income taxes		$91,787			$56,819			$81,877			$49,757		$1,619			$30,108			$68,853

2012	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System 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

2011	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System 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

Total income taxes for Entergy Corporation and Subsidiaries differ from the amounts computed by applying the statutory income tax rate to income before income taxes.  The reasons for the differences for the years 2013, 2012, and 2011 are:

	2013			2012			2011
	(In Thousands)
Net income attributable to Entergy Corporation		$711,902			$846,673			$1,346,439
Preferred dividend requirements of subsidiaries	18,670			21,690			20,933
Consolidated net income	730,572			868,363			1,367,372
Income taxes	225,981			30,855			286,263
Income before income taxes		$956,553			$899,218			$1,653,635
Computed at statutory rate (35%)		$334,794			$314,726			$578,772
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	13,599			40,699			93,940
Regulatory differences - utility plant items	32,324			35,527			39,970
Equity component of AFUDC	(22,356		)	(30,838		)	(30,184		)
Amortization of investment tax credits	(13,535		)	(14,000		)	(14,962		)
Flow-through / permanent differences	(301		)	(14,801		)	(17,848		)
Net-of-tax regulatory liability (a)	(2,899		)	(4,356		)	65,357
Deferred tax reversal on PPA settlement (a)	—			—			(421,819		)
Deferred tax asset on additional depreciation (b)	—			(155,300		)	—
Termination of business reorganization	(27,192		)	—			—
Write-off of regulatory asset for income taxes	—			42,159			—
Capital losses	—			(20,188		)	—
Provision for uncertain tax positions (c)	(59,249		)	(159,957		)	2,698
Valuation allowance	(31,573		)
Other - net	2,369			(2,816		)	(9,661		)
Total income taxes as reported		$225,981			$30,855			$286,263
Effective Income Tax Rate	23.6		%	3.4		%	17.3		%

(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 items in 2013 and 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 2013, 2012, and 2011 are:

2013	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Net income		$161,948			$161,662			$252,464			$82,159			$11,683			$57,881			$113,664
Income taxes	91,787			56,819			81,877			49,757			1,619			30,108			68,853
Pretax income		$253,735			$218,481			$334,341			$131,916			$13,302			$87,989			$182,517
Computed at statutory rate (35%)		$88,807			$76,468			$117,019			$46,171			$4,656			$30,796			$63,881
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	10,954			7,719			11,365			4,564			1,012			(897		)	5,900
Regulatory differences - utility plant items	7,938			4,865			2,140			2,603			453			3,256			11,070
Equity component of AFUDC	(3,820		)	(2,822		)	(10,278		)	(764		)	(322		)	(1,626		)	(2,724		)
Amortization of investment tax credits	(1,989		)	(3,018		)	(2,846		)	(260		)	(216		)	(1,596		)	(3,476		)
Flow-through / permanent differences	2,540			2,377			1,269			1,702			(4,402		)	2,467			(491		)
Net-of-tax regulatory liability (a)	—			—			(2,899		)	—			—			—			—
Termination of business reorganization	(6,753		)	(3,619		)	(3,834		)	(4,177		)	(501		)	(3,542		)	(13		)
Non-taxable dividend income	—			(9,612		)	(27,341		)	—			—			—			—
Provision for uncertain tax positions	(6,527		)	(15,557		)	(3,088		)	(326		)	795			1,027			(5,353		)
Other - net	637			18			370			244			144			223			59
Total income taxes		$91,787			$56,819			$81,877			$49,757			$1,619			$30,108			$68,853
Effective Income Tax Rate	36.2		%	26.0		%	24.5		%	37.7		%	12.2		%	34.2		%	37.7		%

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

2012	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System 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		)
Flow-through / permanent differences	3,427			(7,646		)	1,397			1,961			(4,385		)	1,585			(357		)
Net-of-tax regulatory liability (a)	—			—			(4,356		)	—			—			—			—
Non-taxable dividend income	—			(9,836		)	(27,336		)	—			—			—			—
Expense (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.

2011	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System 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		)	—			—			—			—
Expense (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.

Significant components of accumulated deferred income taxes and taxes accrued for Entergy Corporation and Subsidiaries as of December 31, 2013 and 2012 are as follows:

	2013			2012
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($7,941,319	)		($8,240,342	)
Regulatory assets	(922,312		)	(898,143		)
Nuclear decommissioning trusts	(1,100,439		)	(848,918		)
Pension, net funding	(299,951		)	(305,676		)
Combined unitary state taxes	(183,934		)	(233,210		)
Power purchase agreements	(8,096		)	—
Other	(404,749		)	(485,550		)
Total	(10,860,800		)	(11,011,839		)
Deferred tax assets:
Nuclear decommissioning liabilities	754,828			733,103
Regulatory liabilities	403,370			404,852
Pension and other post-employment benefits	469,190			664,569
Sale and leaseback	176,119			195,074
Compensation	125,552			53,388
Accumulated deferred investment tax credit	106,777			110,690
Provision for allowances and contingencies	66,026			61,576
Power purchase agreements	—			43,717
Net operating loss carryforwards	548,756			960,235
Capital losses and miscellaneous tax credits	13,140			23,114
Valuation allowance	(28,146		)	(86,881		)
Other	109,606			78,721
Total	2,745,218			3,242,158
Noncurrent accrued taxes (including unrecognized
tax benefits)	(400,276		)	(210,534		)
Accumulated deferred income taxes and taxes accrued		($8,515,858	)		($7,980,215	)

Entergy’s estimated tax attributes carryovers and their expiration dates as of December 31, 2013 are as follows:

Carryover Description	Carryover Amount	Year(s) of expiration
Federal net operating losses	$12.8 billion	2023-2033
State net operating losses	$10.9 billion	2014-2032
State capital losses	$1.9 million	2015-2016
Miscellaneous federal and state credits	$86.7 million	2014-2032

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 loss carryovers will not be utilized, a valuation allowance of $23.5 million has been provided on the deferred tax assets relating to these state net operating loss carryovers.

In the third quarter 2013, Entergy reduced a valuation allowance by $44 million ($28 million net of the federal income tax effect) that had been provided on a state net operating loss carryover due to the prospective utilization of such loss carryover.

Significant components of accumulated deferred income taxes and taxes accrued for the Registrant Subsidiaries as of December 31, 2013 and 2012 are as follows:

2013	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($1,613,195	)		($1,259,173	)		($1,347,534	)		($727,545	)		($196,726	)		($759,263	)		($698,151	)
Regulatory assets	(212,339		)	(102,362		)	(255,068		)	(33,277		)	—			(205,402		)	(113,849		)
Nuclear decommissioning trusts	(110,004		)	(32,574		)	(50,248		)	—			—			—			(58,308		)
Pension, net funding	(79,589		)	(45,342		)	(50,630		)	(24,392		)	(11,606		)	(23,598		)	(21,187		)
Deferred fuel	(26,946		)	(4,361		)	(512		)	(21,823		)	63			(470		)	(129		)
Power purchase agreements	(7,053		)	(20,234		)	—			—			13			1,269			—
Other	(62,046		)	(25,694		)	(69,194		)	(10,732		)	(13,446		)	(58,963		)	(8,969		)
Total		($2,111,172	)		($1,489,740	)		($1,773,186	)		($817,769	)		($221,702	)		($1,046,427	)		($900,593	)
Deferred tax assets:
Regulatory liabilities	120,966			60,176			94,019			8,357			35,764			7,952			76,135
Nuclear decommissioning liabilities	(64,571		)	49,439			92,206			—			—			—			(71,898		)
Pension and other post-employment benefits	(12,132		)	73,136			62,999			(1,345		)	1,532			(13,417		)	(2,073		)
Sale and leaseback	—			—			52,054			—			—			—			124,065
Accumulated deferred investment tax credit	15,281			35,297			25,913			3,263			416			5,651			20,956
Provision for allowances and contingencies	12,313			14,784			3,347			13,066			8,535			5,980			—
Unbilled/deferred revenues	37,825			(22,340		)	3,026			6,791			4,226			10,655			—
Compensation	7,131			4,701			3,470			1,778			1,696			6,774			822
Net operating loss carryforwards	85,875			—			230,592			19,400			—			—			—
Capital losses and miscellaneous tax credits	—			—			—			6,173			—			—			—
Other	3,682			4,939			4,148			4,224			2,930			3,807			2,001
Total	206,370			220,132			571,774			61,707			55,099			27,402			150,008
Noncurrent accrued taxes (including unrecognized tax benefits)	22,565			(279,269		)	25,512			(6,290		)	(5,015		)	(37,777		)	10,302
Accumulated deferred income taxes and taxes accrued		($1,882,237	)		($1,548,877	)		($1,175,900	)		($762,352	)		($171,618	)		($1,056,802	)		($740,283	)

2012	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System 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		)
Pension, net funding	(76,989		)	(50,790		)	(53,256		)	(24,226		)	(12,420		)	(24,335		)	(21,372		)
Deferred fuel	(50,068		)	(1,618		)	(11,815		)	(11,332		)	(976		)	3,932			(445		)
Other	(55,000		)	(27,501		)	(92,433		)	(12,641		)	(10,577		)	(23,681		)	(6,592		)
Total		($1,987,985	)		($1,474,123	)		($1,980,304	)		($802,718	)		($231,259	)		($1,034,585	)		($935,323	)
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	1,711			98,259			87,539			2,086			1,606			(16,054		)	2,212
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 allowances and 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
Capital losses and miscellaneous tax credits	—			—			—			3,737			—			—			—
Other	5,565			6,106			5,513			5,021			4,472			6,707			2,000
Total	178,043			288,349			944,984			85,836			54,356			5,379			229,526
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	)

The Registrant Subsidiaries’ estimated tax attributes carryovers and their expiration dates as of December 31, 2013 are as follows:

	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
Federal net operating losses		$1.2	billion		$280	million		$2	billion		$82	million		$56	million	—				$583	million
Year(s) of expiration	2029-2031			2029-2032			2028-2033			2029-2032			2030-2032			N/A			2029-2032
State net operating losses		$109	million		$685	million		$2.8	billion	—				$23	million	—			—
Year(s) of expiration	2024-2026			2025-2027			2024-2027			N/A			2026-2027			N/A			N/A
Misc. federal credits		$2	million		$1	million		$3	million		$1	million		$1	million	—				$2	million
Year(s) of expiration	2024-2032			2024-2032			2026-2032			2024-2032			2024-2032			N/A			2024-2032
State credits	—			—			—				$12.4	million	—				$3.9	million		$18.8	million
Year(s) of expiration	N/A			N/A			N/A			2014-2018			N/A			2014-2027			2015-2018

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:

	2013			2012			2011
	(In Thousands)
Gross balance at January 1		$4,170,403			$4,387,780			$4,949,788
Additions based on tax positions related to the current year	162,338			163,612			211,966
Additions for tax positions of prior years	410,108			1,517,797			332,744
Reductions for tax positions of prior years	(103,360		)	(476,873		)	(259,895		)
Settlements	(43,620		)	(1,421,913		)	(841,528		)
Lapse of statute of limitations	(2,645		)	—			(5,295		)
Gross balance at December 31	4,593,224			4,170,403			4,387,780
Offsets to gross unrecognized tax benefits:
Credit and loss carryovers	(4,400,498		)	(4,022,535		)	(3,212,397		)
Cash paid to taxing authorities	—			—			(363,266		)
Unrecognized tax benefits net of unused tax attributes and payments (a)		$192,726			$147,868			$812,117

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

The balances of unrecognized tax benefits include $176 million, $203 million, and $521 million as of December 31, 2013, 2012, and 2011, 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 $4.417 billion, $3.968 billion, and $3.867 billion as of December 31, 2013, 2012, and 2011, 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.  Entergy's practice is to make additional deposits when necessary as the cash tax benefits of uncertain tax positions are realized on tax returns. 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, 2013, 2012, and 2011 accrued balance for the possible payment of interest is approximately $96.4 million, $146.3 million, and $99 million, respectively.

A reconciliation of the Registrant Subsidiaries’ beginning and ending amount of unrecognized tax benefits for 2013, 2012, and 2011 is as follows:

2013	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Gross balance at January 1, 2013		$344,669			$465,721			$536,673			$16,841			$52,018			$13,954			$260,346
Additions based on tax positions related to the current year	6,427			7,276			10,611			957			583			2,170			4,170
Additions for tax positions of prior years	1,228			7,189			118,025			401			3,506			587			8,391
Reductions for tax positions of prior years	(3,943		)	(15,045		)	(38,428		)	(1,941		)	(962		)	(4,186		)	(967		)
Settlements	(668		)	(66		)	(15,276		)	(72		)	(3,466		)	492			(6,755		)
Gross balance at December 31, 2013	347,713			465,075			611,605			16,186			51,679			13,017			265,185
Offsets to gross unrecognized tax benefits:
Loss carryovers	(345,674		)	(136,151		)	(611,605		)	(16,186		)	(22,078		)	(266		)	(225,286		)
Unrecognized tax benefits net of unused tax attributes and payments		$2,039			$328,924			$—			$—			$29,601			$12,751			$39,899

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		)
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		)	—			(7,556		)	(1,174		)	(1,376		)	(41,878		)
Unrecognized tax benefits net of used tax attributes and payments		$113,087			$318,606			$229,467			($2,434	)		$53,667			$7,204			$228,553

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

	December 31, 2013		December 31, 2012		December 31, 2011
	(In Millions)
Entergy Arkansas		$0.6		$0.6		$—
Entergy Gulf States Louisiana		$44.0		$44.0		$107.9
Entergy Louisiana		$87.9		$92.4		$281.3
Entergy Mississippi		$3.9		$3.9		$3.8
Entergy New Orleans		$—		$—		$—
Entergy Texas		$10.1		$8.6		$7.3
System Energy		$3.3		$3.5		$—

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, 2013		December 31, 2012		December 31, 2011
	(In Millions)
Entergy Arkansas		$15.2		$21.8		$11.4
Entergy Gulf States Louisiana		$17.0		$33.1		$14.4
Entergy Louisiana		$1.0		$0.9		$0.8
Entergy Mississippi		$2.1		$2.4		$1.7
Entergy New Orleans		$0.9		$0.1		$2.4
Entergy Texas		$0.8		$0.7		$0.1
System Energy		$19.0		$33.2		$18.5

Income Tax Litigation

1997-1998 Tax Years

In October 2010 the U.S. Tax Court entered a decision in favor of Entergy regarding the ability to credit the U.K. Windfall Tax against U.S. income tax as a foreign tax credit for tax years 1997 and 1998.  The U.K. Windfall Tax relates to Entergy’s former investment in London Electricity.

The IRS filed an appeal of the U.K. Windfall Tax decision 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 was held pending the disposition of the PPL case.  

On May 20, 2013, the Supreme Court issued a unanimous decision in PPL’s favor, holding that the U.K. Windfall Tax is a creditable tax for U.S. federal income tax purposes. On May 28, 2013, the Supreme Court denied the petition for certiorari filed by the Commissioner of Internal Revenue in Entergy’s U.K. Windfall Tax case, allowing the decision in Entergy’s favor from the United States Court of Appeals for the Fifth Circuit to become final.

2000 Tax Year

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 is effectively settled in Entergy’s favor as determined by the U.S. Supreme Court’s unanimous decision in the PPL proceeding in May 2013 as discussed above.

Income Tax Audits

Entergy and its subsidiaries file U.S. federal and various state and foreign income tax returns.  IRS examinations are substantially completed for years before 2009. All state taxing authorities’ examinations are completed for years before 2005.

2004-2005 IRS Audit

In June 2009, Entergy filed a formal protest with the IRS Appeals Division indicating disagreement with certain issues contained in the 2004-2005 Revenue Agent’s Report (RAR).  The most significant issue disputed was the 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 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 storm restoration, which resulted in an increase to 2008 taxable income of $129 million for Entergy Louisiana and $104 million for Entergy Gulf States Louisiana and a reduction of income tax expense of $172 million, including $143 million for Entergy Louisiana and $20 million for Entergy Gulf States Louisiana. 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.  

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

In the fourth quarter 2012 the IRS disallowed the reduction to 2009 taxable income related to the 2009 CAM.  In the third quarter 2013, the Internal Revenue Service issued its RAR for the tax years 2008-2009. As a result of the issuance of this RAR, Entergy and the IRS resolved all of the 2008-2009 issues described above except for the 2009 CAM. Entergy disagrees with the IRS’s disallowance of the 2009 CAM and filed a protest with the IRS Appeals Division on October 24, 2013. The issuance of the RAR by the IRS effectively settles all other issues, which resulted in an adjustment to the provision for uncertain tax positions.

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 2011 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.

In September 2013 the IRS issued final regulations that provide guidance on the deductibility and capitalization of costs incurred associated with tangible property. Although Entergy continues to analyze these regulations, which contain numerous complex provisions, Entergy currently estimates that the effect of the regulations would result in a $348 million reduction of Entergy’s 2014 repairs and maintenance tax deduction, including decreases in the deduction of $114 million for Entergy Arkansas, $34 million for Entergy Gulf States Louisiana, $22 million for Entergy Louisiana, $43 million for Entergy Mississippi, $137 million for Entergy Texas, and an increase of $2 million for Entergy New Orleans.

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.

In March 2013, Entergy Louisiana distributed to its parent, Entergy Louisiana Holdings, Inc., Louisiana income tax credits of $20.6 million which resulted in a decrease in Entergy Louisiana’s member’s equity account.

System Energy [Member]

Income Taxes

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 2013, 2012, and 2011 for Entergy Corporation and Subsidiaries consist of the following:

	2013			2012			2011
	(In Thousands)
Current:
Federal		$88,291			($47,851	)		$452,713
Foreign	101			143			130
State	20,584			(41,516		)	152,711
Total	108,976			(89,224		)	605,554
Deferred and non-current - net	126,935			131,130			(311,708		)
Investment tax credit
adjustments - net	(9,930		)	(11,051		)	(7,583		)
Income tax expense from
continuing operations		$225,981			$30,855			$286,263

Income taxes for 2013, 2012, and 2011 for Entergy’s Registrant Subsidiaries consist of the following:

2013	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi		Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Current:
Federal		($13,574	)		$12,176			($30,973	)		$2,498		$15,017			$37,199			($6,199	)
State	6,122			(9,939		)	(5,692		)	4,849		(1,221		)	(843		)	15,845
Total	(7,452		)	2,237			(36,665		)	7,347		13,796			36,356			9,646
Deferred and non-current - net	101,253			57,620			121,416			41,150		(11,952		)	(4,639		)	60,614
Investment tax credit
adjustments - net	(2,014		)	(3,038		)	(2,874		)	1,260		(225		)	(1,609		)	(1,407		)
Income taxes		$91,787			$56,819			$81,877			$49,757		$1,619			$30,108			$68,853

2012	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System 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

2011	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System 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

Total income taxes for Entergy Corporation and Subsidiaries differ from the amounts computed by applying the statutory income tax rate to income before income taxes.  The reasons for the differences for the years 2013, 2012, and 2011 are:

	2013			2012			2011
	(In Thousands)
Net income attributable to Entergy Corporation		$711,902			$846,673			$1,346,439
Preferred dividend requirements of subsidiaries	18,670			21,690			20,933
Consolidated net income	730,572			868,363			1,367,372
Income taxes	225,981			30,855			286,263
Income before income taxes		$956,553			$899,218			$1,653,635
Computed at statutory rate (35%)		$334,794			$314,726			$578,772
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	13,599			40,699			93,940
Regulatory differences - utility plant items	32,324			35,527			39,970
Equity component of AFUDC	(22,356		)	(30,838		)	(30,184		)
Amortization of investment tax credits	(13,535		)	(14,000		)	(14,962		)
Flow-through / permanent differences	(301		)	(14,801		)	(17,848		)
Net-of-tax regulatory liability (a)	(2,899		)	(4,356		)	65,357
Deferred tax reversal on PPA settlement (a)	—			—			(421,819		)
Deferred tax asset on additional depreciation (b)	—			(155,300		)	—
Termination of business reorganization	(27,192		)	—			—
Write-off of regulatory asset for income taxes	—			42,159			—
Capital losses	—			(20,188		)	—
Provision for uncertain tax positions (c)	(59,249		)	(159,957		)	2,698
Valuation allowance	(31,573		)
Other - net	2,369			(2,816		)	(9,661		)
Total income taxes as reported		$225,981			$30,855			$286,263
Effective Income Tax Rate	23.6		%	3.4		%	17.3		%

(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 items in 2013 and 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 2013, 2012, and 2011 are:

2013	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Net income		$161,948			$161,662			$252,464			$82,159			$11,683			$57,881			$113,664
Income taxes	91,787			56,819			81,877			49,757			1,619			30,108			68,853
Pretax income		$253,735			$218,481			$334,341			$131,916			$13,302			$87,989			$182,517
Computed at statutory rate (35%)		$88,807			$76,468			$117,019			$46,171			$4,656			$30,796			$63,881
Increases (reductions) in tax resulting from:
State income taxes net of federal income tax effect	10,954			7,719			11,365			4,564			1,012			(897		)	5,900
Regulatory differences - utility plant items	7,938			4,865			2,140			2,603			453			3,256			11,070
Equity component of AFUDC	(3,820		)	(2,822		)	(10,278		)	(764		)	(322		)	(1,626		)	(2,724		)
Amortization of investment tax credits	(1,989		)	(3,018		)	(2,846		)	(260		)	(216		)	(1,596		)	(3,476		)
Flow-through / permanent differences	2,540			2,377			1,269			1,702			(4,402		)	2,467			(491		)
Net-of-tax regulatory liability (a)	—			—			(2,899		)	—			—			—			—
Termination of business reorganization	(6,753		)	(3,619		)	(3,834		)	(4,177		)	(501		)	(3,542		)	(13		)
Non-taxable dividend income	—			(9,612		)	(27,341		)	—			—			—			—
Provision for uncertain tax positions	(6,527		)	(15,557		)	(3,088		)	(326		)	795			1,027			(5,353		)
Other - net	637			18			370			244			144			223			59
Total income taxes		$91,787			$56,819			$81,877			$49,757			$1,619			$30,108			$68,853
Effective Income Tax Rate	36.2		%	26.0		%	24.5		%	37.7		%	12.2		%	34.2		%	37.7		%

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

2012	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System 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		)
Flow-through / permanent differences	3,427			(7,646		)	1,397			1,961			(4,385		)	1,585			(357		)
Net-of-tax regulatory liability (a)	—			—			(4,356		)	—			—			—			—
Non-taxable dividend income	—			(9,836		)	(27,336		)	—			—			—			—
Expense (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.

2011	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System 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		)	—			—			—			—
Expense (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.

Significant components of accumulated deferred income taxes and taxes accrued for Entergy Corporation and Subsidiaries as of December 31, 2013 and 2012 are as follows:

	2013			2012
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($7,941,319	)		($8,240,342	)
Regulatory assets	(922,312		)	(898,143		)
Nuclear decommissioning trusts	(1,100,439		)	(848,918		)
Pension, net funding	(299,951		)	(305,676		)
Combined unitary state taxes	(183,934		)	(233,210		)
Power purchase agreements	(8,096		)	—
Other	(404,749		)	(485,550		)
Total	(10,860,800		)	(11,011,839		)
Deferred tax assets:
Nuclear decommissioning liabilities	754,828			733,103
Regulatory liabilities	403,370			404,852
Pension and other post-employment benefits	469,190			664,569
Sale and leaseback	176,119			195,074
Compensation	125,552			53,388
Accumulated deferred investment tax credit	106,777			110,690
Provision for allowances and contingencies	66,026			61,576
Power purchase agreements	—			43,717
Net operating loss carryforwards	548,756			960,235
Capital losses and miscellaneous tax credits	13,140			23,114
Valuation allowance	(28,146		)	(86,881		)
Other	109,606			78,721
Total	2,745,218			3,242,158
Noncurrent accrued taxes (including unrecognized
tax benefits)	(400,276		)	(210,534		)
Accumulated deferred income taxes and taxes accrued		($8,515,858	)		($7,980,215	)

Entergy’s estimated tax attributes carryovers and their expiration dates as of December 31, 2013 are as follows:

Carryover Description	Carryover Amount	Year(s) of expiration
Federal net operating losses	$12.8 billion	2023-2033
State net operating losses	$10.9 billion	2014-2032
State capital losses	$1.9 million	2015-2016
Miscellaneous federal and state credits	$86.7 million	2014-2032

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 loss carryovers will not be utilized, a valuation allowance of $23.5 million has been provided on the deferred tax assets relating to these state net operating loss carryovers.

In the third quarter 2013, Entergy reduced a valuation allowance by $44 million ($28 million net of the federal income tax effect) that had been provided on a state net operating loss carryover due to the prospective utilization of such loss carryover.

Significant components of accumulated deferred income taxes and taxes accrued for the Registrant Subsidiaries as of December 31, 2013 and 2012 are as follows:

2013	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Deferred tax liabilities:
Plant basis differences - net		($1,613,195	)		($1,259,173	)		($1,347,534	)		($727,545	)		($196,726	)		($759,263	)		($698,151	)
Regulatory assets	(212,339		)	(102,362		)	(255,068		)	(33,277		)	—			(205,402		)	(113,849		)
Nuclear decommissioning trusts	(110,004		)	(32,574		)	(50,248		)	—			—			—			(58,308		)
Pension, net funding	(79,589		)	(45,342		)	(50,630		)	(24,392		)	(11,606		)	(23,598		)	(21,187		)
Deferred fuel	(26,946		)	(4,361		)	(512		)	(21,823		)	63			(470		)	(129		)
Power purchase agreements	(7,053		)	(20,234		)	—			—			13			1,269			—
Other	(62,046		)	(25,694		)	(69,194		)	(10,732		)	(13,446		)	(58,963		)	(8,969		)
Total		($2,111,172	)		($1,489,740	)		($1,773,186	)		($817,769	)		($221,702	)		($1,046,427	)		($900,593	)
Deferred tax assets:
Regulatory liabilities	120,966			60,176			94,019			8,357			35,764			7,952			76,135
Nuclear decommissioning liabilities	(64,571		)	49,439			92,206			—			—			—			(71,898		)
Pension and other post-employment benefits	(12,132		)	73,136			62,999			(1,345		)	1,532			(13,417		)	(2,073		)
Sale and leaseback	—			—			52,054			—			—			—			124,065
Accumulated deferred investment tax credit	15,281			35,297			25,913			3,263			416			5,651			20,956
Provision for allowances and contingencies	12,313			14,784			3,347			13,066			8,535			5,980			—
Unbilled/deferred revenues	37,825			(22,340		)	3,026			6,791			4,226			10,655			—
Compensation	7,131			4,701			3,470			1,778			1,696			6,774			822
Net operating loss carryforwards	85,875			—			230,592			19,400			—			—			—
Capital losses and miscellaneous tax credits	—			—			—			6,173			—			—			—
Other	3,682			4,939			4,148			4,224			2,930			3,807			2,001
Total	206,370			220,132			571,774			61,707			55,099			27,402			150,008
Noncurrent accrued taxes (including unrecognized tax benefits)	22,565			(279,269		)	25,512			(6,290		)	(5,015		)	(37,777		)	10,302
Accumulated deferred income taxes and taxes accrued		($1,882,237	)		($1,548,877	)		($1,175,900	)		($762,352	)		($171,618	)		($1,056,802	)		($740,283	)

2012	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System 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		)
Pension, net funding	(76,989		)	(50,790		)	(53,256		)	(24,226		)	(12,420		)	(24,335		)	(21,372		)
Deferred fuel	(50,068		)	(1,618		)	(11,815		)	(11,332		)	(976		)	3,932			(445		)
Other	(55,000		)	(27,501		)	(92,433		)	(12,641		)	(10,577		)	(23,681		)	(6,592		)
Total		($1,987,985	)		($1,474,123	)		($1,980,304	)		($802,718	)		($231,259	)		($1,034,585	)		($935,323	)
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	1,711			98,259			87,539			2,086			1,606			(16,054		)	2,212
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 allowances and 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
Capital losses and miscellaneous tax credits	—			—			—			3,737			—			—			—
Other	5,565			6,106			5,513			5,021			4,472			6,707			2,000
Total	178,043			288,349			944,984			85,836			54,356			5,379			229,526
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	)

The Registrant Subsidiaries’ estimated tax attributes carryovers and their expiration dates as of December 31, 2013 are as follows:

	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
Federal net operating losses		$1.2	billion		$280	million		$2	billion		$82	million		$56	million	—				$583	million
Year(s) of expiration	2029-2031			2029-2032			2028-2033			2029-2032			2030-2032			N/A			2029-2032
State net operating losses		$109	million		$685	million		$2.8	billion	—				$23	million	—			—
Year(s) of expiration	2024-2026			2025-2027			2024-2027			N/A			2026-2027			N/A			N/A
Misc. federal credits		$2	million		$1	million		$3	million		$1	million		$1	million	—				$2	million
Year(s) of expiration	2024-2032			2024-2032			2026-2032			2024-2032			2024-2032			N/A			2024-2032
State credits	—			—			—				$12.4	million	—				$3.9	million		$18.8	million
Year(s) of expiration	N/A			N/A			N/A			2014-2018			N/A			2014-2027			2015-2018

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:

	2013			2012			2011
	(In Thousands)
Gross balance at January 1		$4,170,403			$4,387,780			$4,949,788
Additions based on tax positions related to the current year	162,338			163,612			211,966
Additions for tax positions of prior years	410,108			1,517,797			332,744
Reductions for tax positions of prior years	(103,360		)	(476,873		)	(259,895		)
Settlements	(43,620		)	(1,421,913		)	(841,528		)
Lapse of statute of limitations	(2,645		)	—			(5,295		)
Gross balance at December 31	4,593,224			4,170,403			4,387,780
Offsets to gross unrecognized tax benefits:
Credit and loss carryovers	(4,400,498		)	(4,022,535		)	(3,212,397		)
Cash paid to taxing authorities	—			—			(363,266		)
Unrecognized tax benefits net of unused tax attributes and payments (a)		$192,726			$147,868			$812,117

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

The balances of unrecognized tax benefits include $176 million, $203 million, and $521 million as of December 31, 2013, 2012, and 2011, 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 $4.417 billion, $3.968 billion, and $3.867 billion as of December 31, 2013, 2012, and 2011, 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.  Entergy's practice is to make additional deposits when necessary as the cash tax benefits of uncertain tax positions are realized on tax returns. 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, 2013, 2012, and 2011 accrued balance for the possible payment of interest is approximately $96.4 million, $146.3 million, and $99 million, respectively.

A reconciliation of the Registrant Subsidiaries’ beginning and ending amount of unrecognized tax benefits for 2013, 2012, and 2011 is as follows:

2013	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Gross balance at January 1, 2013		$344,669			$465,721			$536,673			$16,841			$52,018			$13,954			$260,346
Additions based on tax positions related to the current year	6,427			7,276			10,611			957			583			2,170			4,170
Additions for tax positions of prior years	1,228			7,189			118,025			401			3,506			587			8,391
Reductions for tax positions of prior years	(3,943		)	(15,045		)	(38,428		)	(1,941		)	(962		)	(4,186		)	(967		)
Settlements	(668		)	(66		)	(15,276		)	(72		)	(3,466		)	492			(6,755		)
Gross balance at December 31, 2013	347,713			465,075			611,605			16,186			51,679			13,017			265,185
Offsets to gross unrecognized tax benefits:
Loss carryovers	(345,674		)	(136,151		)	(611,605		)	(16,186		)	(22,078		)	(266		)	(225,286		)
Unrecognized tax benefits net of unused tax attributes and payments		$2,039			$328,924			$—			$—			$29,601			$12,751			$39,899

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		)
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		)	—			(7,556		)	(1,174		)	(1,376		)	(41,878		)
Unrecognized tax benefits net of used tax attributes and payments		$113,087			$318,606			$229,467			($2,434	)		$53,667			$7,204			$228,553

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

	December 31, 2013		December 31, 2012		December 31, 2011
	(In Millions)
Entergy Arkansas		$0.6		$0.6		$—
Entergy Gulf States Louisiana		$44.0		$44.0		$107.9
Entergy Louisiana		$87.9		$92.4		$281.3
Entergy Mississippi		$3.9		$3.9		$3.8
Entergy New Orleans		$—		$—		$—
Entergy Texas		$10.1		$8.6		$7.3
System Energy		$3.3		$3.5		$—

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, 2013		December 31, 2012		December 31, 2011
	(In Millions)
Entergy Arkansas		$15.2		$21.8		$11.4
Entergy Gulf States Louisiana		$17.0		$33.1		$14.4
Entergy Louisiana		$1.0		$0.9		$0.8
Entergy Mississippi		$2.1		$2.4		$1.7
Entergy New Orleans		$0.9		$0.1		$2.4
Entergy Texas		$0.8		$0.7		$0.1
System Energy		$19.0		$33.2		$18.5

Income Tax Litigation

1997-1998 Tax Years

In October 2010 the U.S. Tax Court entered a decision in favor of Entergy regarding the ability to credit the U.K. Windfall Tax against U.S. income tax as a foreign tax credit for tax years 1997 and 1998.  The U.K. Windfall Tax relates to Entergy’s former investment in London Electricity.

The IRS filed an appeal of the U.K. Windfall Tax decision 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 was held pending the disposition of the PPL case.  

On May 20, 2013, the Supreme Court issued a unanimous decision in PPL’s favor, holding that the U.K. Windfall Tax is a creditable tax for U.S. federal income tax purposes. On May 28, 2013, the Supreme Court denied the petition for certiorari filed by the Commissioner of Internal Revenue in Entergy’s U.K. Windfall Tax case, allowing the decision in Entergy’s favor from the United States Court of Appeals for the Fifth Circuit to become final.

2000 Tax Year

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 is effectively settled in Entergy’s favor as determined by the U.S. Supreme Court’s unanimous decision in the PPL proceeding in May 2013 as discussed above.

Income Tax Audits

Entergy and its subsidiaries file U.S. federal and various state and foreign income tax returns.  IRS examinations are substantially completed for years before 2009. All state taxing authorities’ examinations are completed for years before 2005.

2004-2005 IRS Audit

In June 2009, Entergy filed a formal protest with the IRS Appeals Division indicating disagreement with certain issues contained in the 2004-2005 Revenue Agent’s Report (RAR).  The most significant issue disputed was the 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 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 storm restoration, which resulted in an increase to 2008 taxable income of $129 million for Entergy Louisiana and $104 million for Entergy Gulf States Louisiana and a reduction of income tax expense of $172 million, including $143 million for Entergy Louisiana and $20 million for Entergy Gulf States Louisiana. 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.  

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

In the fourth quarter 2012 the IRS disallowed the reduction to 2009 taxable income related to the 2009 CAM.  In the third quarter 2013, the Internal Revenue Service issued its RAR for the tax years 2008-2009. As a result of the issuance of this RAR, Entergy and the IRS resolved all of the 2008-2009 issues described above except for the 2009 CAM. Entergy disagrees with the IRS’s disallowance of the 2009 CAM and filed a protest with the IRS Appeals Division on October 24, 2013. The issuance of the RAR by the IRS effectively settles all other issues, which resulted in an adjustment to the provision for uncertain tax positions.

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 2011 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.

In September 2013 the IRS issued final regulations that provide guidance on the deductibility and capitalization of costs incurred associated with tangible property. Although Entergy continues to analyze these regulations, which contain numerous complex provisions, Entergy currently estimates that the effect of the regulations would result in a $348 million reduction of Entergy’s 2014 repairs and maintenance tax deduction, including decreases in the deduction of $114 million for Entergy Arkansas, $34 million for Entergy Gulf States Louisiana, $22 million for Entergy Louisiana, $43 million for Entergy Mississippi, $137 million for Entergy Texas, and an increase of $2 million for Entergy New Orleans.

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.

In March 2013, Entergy Louisiana distributed to its parent, Entergy Louisiana Holdings, Inc., Louisiana income tax credits of $20.6 million which resulted in a decrease in Entergy Louisiana’s member’s equity account.