1.0.0.3 false Income Taxes, Unrecognized Tax Benefits false 1 $ false false shares Standard http://www.xbrl.org/2003/instance shares xbrli 0 usd Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 usdPerShare Divide http://www.xbrl.org/2003/iso4217 USD iso4217 http://www.xbrl.org/2003/instance shares xbrli 0 2 NOTES TO FINANCIAL STATEMENTS 0 ceg_NotesToFinancialStatementsAbstract ceg false na duration string Notes To Financial Statements [Abstract] false false false false false true false false false 1 false false 0 0 false false Notes To Financial Statements [Abstract] false 3 Income Taxes, Unrecognized Tax Benefits 1 us-gaap_IncomeTaxDisclosureTextBlock us-gaap true na duration string No definition available. false false false false false false false false false 1 false false 0 0 <!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN"> <HTML><HEAD> <META http-equiv=Content-Type content="text/html; charset=utf-8"> <META content="MSHTML 6.00.6000.16825" name=GENERATOR></HEAD> <BODY> Income Taxes We compute the income tax (benefit) expense for each quarter based on the estimated annual effective tax rate for the year. The effective tax rate was 78.3% and 60.4% for the quarter and six months ended June 30, 2009, respectively, compared to 38.0% and 36.1% for the same periods of 2008. The higher effective tax rate for the quarter and six months ended June 30, 2009 reflects the impact of unfavorable nondeductible adjustments (primarily related to nondeductible dividends on the Series B Preferred Stock and the write-off of the unamortized debt discount on the Senior Notes) in relation to the lower estimated 2009 taxable income (primarily attributable to losses on the divestiture of a majority of our international commodities and our Houston-based gas trading operations).         The BGE effective tax rate was 39.8% and 39.6% for the quarter and six months ended June 30, 2009, respectively, compared to 33.1% and 36.7% for the same periods of 2008. This reflects the impact of the lower 2008 taxable income related to the Maryland settlement agreement, which increased the relative impact of favorable permanent tax adjustments on BGE's 2008 effective tax rate. Unrecognized Tax Benefits The following table summarizes the change in unrecognized tax benefits during 2009 and our total unrecognized tax benefits at June 30, 2009:  <DIV align=center> <TABLE cellSpacing=0 cellPadding=0 border=0> <TBODY> <TR> <TD style="FONT-FAMILY: times" align=left width=167></TD> <TD style="FONT-FAMILY: times" width=12></TD> <TD style="FONT-FAMILY: times" align=right width=4></TD> <TD style="FONT-FAMILY: times" width=41></TD> <TD style="FONT-FAMILY: times" width=3></TD></TR> <TR vAlign=bottom> <TH style="BORDER-BOTTOM: #000000 1pt solid; FONT-FAMILY: times" align=left colSpan=4>At June 30, 2009 </TH> <TH style="FONT-FAMILY: times"> </TH></TR> <TR vAlign=bottom> <TH style="FONT-FAMILY: times" align=left>  </TH> <TH style="FONT-FAMILY: times"> </TH> <TH style="FONT-FAMILY: times" align=middle colSpan=2>(In millions) </TH> <TH style="FONT-FAMILY: times"> </TH></TR> <TR vAlign=bottom bgColor=#cceeff> <TD style="FONT-FAMILY: times"> Total unrecognized tax benefits, January 1, 2009</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>$</TD> <TD style="FONT-FAMILY: times" align=right>189.7</TD> <TD style="FONT-FAMILY: times"> </TD></TR> <TR vAlign=bottom bgColor=white> <TD style="FONT-FAMILY: times"> Increases in tax positions related to the current year</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>3.0</TD> <TD style="FONT-FAMILY: times"> </TD></TR> <TR vAlign=bottom bgColor=#cceeff> <TD style="FONT-FAMILY: times"> Reductions in tax positions related to prior years</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>(7.8</TD> <TD style="FONT-FAMILY: times">)</TD></TR> <TR vAlign=bottom bgColor=white> <TD style="FONT-FAMILY: times"> Reductions in tax positions as a result of a lapse of the applicable statute of limitations</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>(0.8</TD> <TD style="FONT-FAMILY: times">)</TD></TR> <TR style="FONT-SIZE: 1.5pt" vAlign=top> <TD style="BORDER-BOTTOM: #000000 1pt solid; FONT-FAMILY: times" colSpan=4> </TD> <TD style="FONT-FAMILY: times"> </TD></TR> <TR vAlign=bottom bgColor=#cceeff> <TD style="FONT-FAMILY: times"> Total unrecognized tax benefits, June 30, 20091</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>$</TD> <TD style="FONT-FAMILY: times" align=right>184.1</TD> <TD style="FONT-FAMILY: times"> </TD></TR> <TR style="FONT-SIZE: 1.5pt" vAlign=top> <TD style="BORDER-BOTTOM: #000000 2.25pt double; FONT-FAMILY: times" colSpan=4> </TD> <TD style="FONT-FAMILY: times"> </TD></TR></TBODY></TABLE></DIV> 1 BGE's portion of our total unrecognized tax benefits at June 30, 2009 was $3.9 million.         Increases in current year and reductions in prior year tax positions are primarily due to unrecognized tax benefits for repair and depreciation deductions measured at amounts <A name=page_xxx44501_1_23></A>consistent with prior IRS examination results and state income tax accruals. Statutes of limitations lapsed for 2003 and 2004 tax positions related to Maryland taxes on the gas plant sale that occurred in 2006.         If the total amount of unrecognized tax benefits of $184.1 million were ultimately realized, our income tax expense would decrease by approximately $158 million. However, the $158 million includes state tax refund claims of approximately $48 million that have been disallowed by tax authorities and we believe that there is a remote likelihood of ultimately realizing any benefit from these refund claim amounts. These state refund claims may be resolved by December 31, 2009. For this reason, we believe it is reasonably possible that reductions to our total unrecognized tax benefits in the range of $40 to $50 million may occur by June 30, 2010, although these reductions are not expected to materially impact income tax expense.         Interest and penalties recorded in our Consolidated Statements of Income (Loss) as tax expense relating to liabilities for unrecognized tax benefits were as follows:  <DIV align=center> <TABLE cellSpacing=0 cellPadding=0 border=0> <TBODY> <TR> <TD style="FONT-FAMILY: times" align=left width=60></TD> <TD style="FONT-FAMILY: times" width=12></TD> <TD style="FONT-FAMILY: times" align=right width=4></TD> <TD style="FONT-FAMILY: times" width=26></TD> <TD style="FONT-FAMILY: times" width=13></TD> <TD style="FONT-FAMILY: times" align=right width=4></TD> <TD style="FONT-FAMILY: times" width=26></TD> <TD style="FONT-FAMILY: times" width=13></TD> <TD style="FONT-FAMILY: times" align=right width=4></TD> <TD style="FONT-FAMILY: times" width=26></TD> <TD style="FONT-FAMILY: times" width=13></TD> <TD style="FONT-FAMILY: times" align=right width=4></TD> <TD style="FONT-FAMILY: times" width=26></TD> <TD style="FONT-FAMILY: times" width=3></TD></TR> <TR vAlign=bottom> <TH style="FONT-FAMILY: times" align=left>  </TH> <TH style="FONT-FAMILY: times"> </TH> <TH style="FONT-FAMILY: times" align=middle colSpan=5>Quarter Ended June 30, </TH> <TH style="FONT-FAMILY: times"> </TH> <TH style="FONT-FAMILY: times" align=middle colSpan=5>Six Months Ended June 30, </TH> <TH style="FONT-FAMILY: times"> </TH></TR> <TR vAlign=bottom> <TH style="FONT-FAMILY: times" align=middle>  </TH> <TH style="FONT-FAMILY: times"> </TH> <TH style="FONT-FAMILY: times" align=middle colSpan=2>2009 </TH> <TH style="FONT-FAMILY: times"> </TH> <TH style="FONT-FAMILY: times" align=middle colSpan=2>2008 </TH> <TH style="FONT-FAMILY: times"> </TH> <TH style="FONT-FAMILY: times" align=middle colSpan=2>2009 </TH> <TH style="FONT-FAMILY: times"> </TH> <TH style="FONT-FAMILY: times" align=middle colSpan=2>2008 </TH> <TH style="FONT-FAMILY: times"> </TH></TR> <TR style="FONT-SIZE: 1.5pt" vAlign=bottom> <TH style="BORDER-BOTTOM: #000000 1pt solid; FONT-FAMILY: times" align=middle colSpan=13> </TH> <TH style="FONT-FAMILY: times"> </TH></TR> <TR vAlign=bottom> <TH style="FONT-FAMILY: times" align=left>  </TH> <TH style="FONT-FAMILY: times"> </TH> <TH style="FONT-FAMILY: times" align=middle colSpan=11>(In millions) </TH> <TH style="FONT-FAMILY: times"> </TH></TR> <TR vAlign=bottom bgColor=#cceeff> <TD style="FONT-FAMILY: times"> Interest and penalties recorded as tax expense</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times">$</TD> <TD style="FONT-FAMILY: times" align=right>1.5</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times">$</TD> <TD style="FONT-FAMILY: times" align=right>0.7</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times">$</TD> <TD style="FONT-FAMILY: times" align=right>0.7</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times">$</TD> <TD style="FONT-FAMILY: times" align=right>1.7</TD> <TD style="FONT-FAMILY: times"> </TD></TR> <TR style="FONT-SIZE: 1.5pt" vAlign=top> <TD style="BORDER-BOTTOM: #000000 2.25pt double; FONT-FAMILY: times" colSpan=13> </TD> <TD style="FONT-FAMILY: times"> </TD></TR></TBODY></TABLE></DIV>         Accrued interest and penalties recognized in our Consolidated Balance Sheets were $11.0 million, of which BGE's portion was $0.8 million at June 30, 2009, and $10.3 million, of which BGE's portion was $0.7 million at December 31, 2008. </BODY></HTML> Income Taxes We compute the income tax (benefit) expense for each quarter based on the estimated annual effective tax rate for the year. 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