Income Taxes (Tables)

12 Months Ended

Dec. 31, 2016

Sources of Income (Loss) Before Income Taxes

Edison International's sources of income (loss) before income taxes are:



	Years ended December 31,
(in millions)	2016		2015		2014
Income from continuing operations before income taxes	$	1,590	$	1,568	$	1,979
Income (loss) from discontinued operations before income taxes	1		15		(525		)
Income before income tax	$	1,591	$	1,583	$	1,454

Components of Income Tax Expense (Benefit) by Location of Taxing Jurisdiction

The components of income tax expense (benefit) by location of taxing jurisdiction are:



	Edison International									SCE
	Years ended December 31,
(in millions)	2016			2015			2014			2016			2015		2014
Current:
Federal	$	(46	)	$	18		$	(99	)	$	75		$	72	$	(89	)
State	33			19			20			93			127		101
	(13		)	37			(79		)	168			199		12
Deferred:
Federal	176			340			454			112			298		476
State	14			109			68			(24		)	10		(14		)
	190			449			522			88			308		462
Total continuing operations	177			486			443			256			507		474
Discontinued operations¹	(11		)	(21		)	(710		)	—			—		—
Total	$	166		$	465		$	(267	)	$	256		$	507	$	474


¹	See Note 15 for a discussion of discontinued operations related to EME.

Components of Net Accumulated Deferred Income Tax Liability

The components of net accumulated deferred income tax liability are:



	Edison International				SCE
	December 31,
(in millions)	2016		2015		2016		2015
Deferred tax assets:
Property and software related	$	549	$	675	$	548	$	675
Nuclear decommissioning trust assets in excess of nuclear ARO liability	348		360		348		360
Loss and credit carryforwards	1,418		1,388		—		—
Regulatory balancing accounts	15		21		15		21
Pension and PBOPs	300		337		93		154
Other	419		499		408		411
Sub-total	3,049		3,280		1,412		1,621
Less valuation allowance	24		32		—		—
Total	3,025		3,248		1,412		1,621
Deferred tax liabilities:
Property-related	10,330		9,606		10,330		9,600
Capitalized software costs	237		207		237		207
Regulatory balancing accounts	134		202		134		202
Nuclear decommissioning trust assets	348		360		348		360
PBOPs	13		71		13		71
Other	202		189		148		161
Total	11,264		10,635		11,210		10,601
Accumulated deferred income tax liability, net¹	$	8,239	$	7,387	$	9,798	$	8,980


¹	Included in deferred income taxes and credits.

Summary of Tax Credit Carryforwards

The amounts of net operating loss and tax credit carryforwards (after-tax) are as follows:



	Edison International				SCE
	December 31, 2016
(in millions)	Loss Carryforwards		Credit Carryforwards		Loss Carryforwards		Credit Carryforwards
Expire between 2017 to 2035	$	1,095	$	430	$	20	$	25
No expiration date	—		69		—		37
Total¹	$	1,095	$	499	$	20	$	62


¹	Deferred tax assets for net operating loss and tax credit carryforwards are reduced by unrecognized tax benefits of $176 million and $82 million for Edison International and SCE, respectively.

Reconciliation of Income Tax Expense

The table below provides a reconciliation of income tax expense computed at the federal statutory income tax rate to the income tax provision:



	Edison International									SCE
	Years ended December 31,
(in millions)	2016			2015			2014			2016			2015			2014
Income from continuing operations before income taxes	$	1,590		$	1,568		$	1,979		$	1,755		$	1,618		$	2,039
Provision for income tax at federal statutory rate of 35%	556			549			693			614			566			714
Increase in income tax from:
Items presented with related state income tax, net:
Regulatory asset write-off¹	—			382			—			—			382			—
State tax, net of federal benefit	29			5			56			43			34			55
Property-related²	(362		)	(341		)	(252		)	(362		)	(341		)	(252		)
Change related to uncertain tax positions	(4		)	(67		)	5			(8		)	(94		)	12
San Onofre OII settlement	—			—			(23		)	—			—			(23		)
Share-based compensation³	(28		)	—			—			(13		)	—			—
Other	(14		)	(42		)	(36		)	(18		)	(40		)	(32		)
Total income tax expense from continuing operations	$	177		$	486		$	443		$	256		$	507		$	474
Effective tax rate	11.1		%	31.0		%	22.4		%	14.6		%	31.3		%	23.2		%

¹Includes federal and state.


²	Includes incremental repair benefits. See discussion of repair deductions below.


³	Includes state taxes of $(4) million and $(1) million for Edison International and SCE, respectively. Refer to Note 1 for further information.

Reconciliation of Unrecognized Tax Benefits

The following table provides a reconciliation of unrecognized tax benefits for continuing and discontinued operations:



	Edison International									SCE
	December 31,
(in millions)	2016			2015			2014			2016			2015			2014
Balance at January 1,	$	529		$	576		$	815		$	353		$	441		$	532
Tax positions taken during the current year:
Increases	36			54			65			36			48			57
Tax positions taken during a prior year:
Increases	2			66			1			—			23			—
Decreases¹	(96		)	(165		)	(143		)	(18		)	(159		)	(93		)
Decreases for settlements during the period²	—			(2		)	(162		)	—			—			(55		)
Balance at December 31,	$	471		$	529		$	576		$	371		$	353		$	441

Decreases in prior year tax positions for 2016 relate to state tax receivables on various claims. Due to the tax risks associated with these claims, the tax benefits were fully reserved at the time the asset was recorded. During 2016, the Company has determined that it will not recognize these assets so the tax benefit and related tax reserve were written off. Decreases in tax positions for 2015 relate primarily to re-measurement of uncertain tax positions in connection with receipt of the IRS Revenue Agent Report in June 2015. See discussions in Tax Disputes below.


²	In the fourth quarter of 2014, Edison International has settled all open tax positions with the IRS for taxable years 2003 through 2006.

Schedule of Interest and Penalties Related to Income Tax Liabilities

The total amount of accrued interest and penalties related to income tax liabilities for continuing and discontinued operations are:



	Edison International				SCE
	Years ended December 31,
(in millions)	2016		2015		2016		2015
Accrued interest and penalties	$	128	$	122	$	41	$	40

The net after-tax interest and penalties recognized in income tax expense for continuing and discontinued operations are:



	Edison International						SCE
	December 31,
(in millions)	2016		2015		2014		2016		2015		2014
Net after-tax interest and penalties tax benefit	$	6	$	9	$	41	$	2	$	14	$	16