Income Taxes

The components of income taxes are as follows:



	NEE								FPL
	Years Ended December 31,								Years Ended December 31,
	2011			2010		2009			2011			2010		2009
	(millions)
Federal:
Current^(a)	$	(35	)	$	11	$	(18	)	$	(64	)	$	113	$	63
Deferred	572			434		290			622			385		342
Total federal	537			445		272			558			498		405
State:
Current^(a)	11			11		77			43			49		57
Deferred	(19		)	76		(22		)	53			33		11
Total state	(8		)	87		55			96			82		68
Total income taxes	$	529		$	532	$	327		$	654		$	580	$	473

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(a)	Includes provision for unrecognized tax benefits.

A reconciliation between the effective income tax rates and the applicable statutory rates is as follows:



	NEE						FPL
	Years Ended December 31,						Years Ended December 31,
	2011		2010		2009		2011		2010		2009
Statutory federal income tax rate	35.0	%	35.0	%	35.0	%	35.0	%	35.0	%	35.0	%
Increases (reductions) resulting from:
State income taxes - net of federal income tax benefit	(0.2	)	2.4		1.9		3.6		3.5		3.4
PTCs and ITCs - NEER	(11.1	)	(12.2	)	(13.1	)	—		—		—
Convertible ITCs - NEER	(0.1	)	(2.5	)	(4.3	)	—		—		—
Other - net	(2.0	)	(1.3	)	(2.6	)	(0.6	)	(0.5	)	(2.1	)
Effective income tax rate	21.6	%	21.4	%	16.9	%	38.0	%	38.0	%	36.3	%

The income tax effects of temporary differences giving rise to consolidated deferred income tax liabilities and assets are as follows:



	NEE						FPL
	December 31,						December 31,
	2011			2010			2011		2010
	(millions)
Deferred tax liabilities:
Property-related	$	8,727		$	7,795		$	5,260	$	4,532
Pension	394			485			420		399
Storm reserve deficiency	235			258			235		258
Nuclear decommissioning trusts	117			146			—		—
Net unrealized gains on derivatives	209			226			—		—
Deferred fuel costs	40			101			40		101
Other	573			638			151		187
Total deferred tax liabilities	10,295			9,649			6,106		5,477
Deferred tax assets and valuation allowance:
Decommissioning reserves	406			393			336		323
Postretirement benefits	170			175			118		130
Net operating loss carryforwards	557			663			—		—
Tax credit carryforwards	2,111			1,819			—		—
ARO and accrued asset removal costs	884			895			788		802
Other	830			790			261		309
Valuation allowance^(a)	(228		)	(246		)	—		—
Net deferred tax assets	4,730			4,489			1,503		1,564
Net accumulated deferred income taxes	$	5,565		$	5,160		$	4,603	$	3,913

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(a)	Amount relates to deferred state tax credits and state operating loss carryforwards.

Deferred tax assets and liabilities are included on the consolidated balance sheets as follows:



	NEE						FPL
	December 31,						December 31,
	2011			2010			2011			2010
				(millions)
Other current assets	$	10		$	17		$	—		$	—
Other assets	153			106			—			—
Other current liabilities	(47		)	(174		)	(10		)	(78		)
Accumulated deferred income taxes	(5,681		)	(5,109		)	(4,593		)	(3,835		)
Net accumulated deferred income taxes	$	(5,565	)	$	(5,160	)	$	(4,603	)	$	(3,913	)

The components of NEE's deferred tax assets relating to net operating loss carryforwards and tax credit carryforwards at December 31, 2011 are as follows:



	Amount		Expiration Dates
	(millions)
Net operating loss carryforwards:
Federal	$	433	2026-2031
State	110		2014-2031
Foreign	14		2021-2031
Net operating loss carryforwards	$	557
Tax credit carryforwards:
Federal	$	1,813	2022-2031
State	298		2012-2035
Net tax credit carryforwards	$	2,111

Unrecognized Tax Benefits - The majority of the liabilities for unrecognized tax benefits represent tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. A disallowance of the shorter deductibility period for these tax positions would not affect the annual effective income tax rate. Amounts included in the liabilities for unrecognized tax benefits at December 31, 2011, 2010 and 2009 at NEE and FPL that, if disallowed, could impact the annual effective income tax rate were not significant.

At December 31, 2010 and 2009, NEE's liabilities for unrecognized tax benefits totaled $264 million and $279 million ($215 million and $247 million for FPL), respectively. During 2011, NEE settled the majority of the uncertainties giving rise to the unrecognized tax benefits with the Internal Revenue Service (IRS). As part of the settlement, NEE received a cash refund of approximately $278 million, including interest of approximately $131 million, related to the 1988 through 2005 tax years and finalized the examination of the 2006 through 2008 tax years (collectively, IRS settlement). The IRS settlement primarily related to the timing of certain NEE and FPL deductions for repairs, casualty losses and indirect service costs. At December 31, 2011, NEE's and FPL's liabilities for unrecognized tax benefits were not material.

NEE and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various states, the most significant of which is Florida, and certain foreign jurisdictions. With the exception of a few states, NEE and FPL are effectively no longer subject to U.S. federal, state and foreign examinations by taxing authorities for years before 2009. Income tax returns for 2009 and 2010 are under examination by the IRS. The amounts of unrecognized tax benefits and related interest accruals may change within the next 12 months; however, NEE and FPL do not expect these changes to have a significant impact on NEE’s or FPL’s financial statements.