Notes to Consolidated Financial Statements
For the Years Ended December 31, 1998, 1997 and 1996 |
 |
6. Income Taxes
| Income Tax Expense |
|
|
|
For the Years Ended December 31, |
|
|
| (In millions) |
|
1998 |
|
|
1997 |
|
|
1996 |
|
|
| Current income taxes |
|
|
|
|
|
|
|
|
|
| Federal |
$ |
673 |
|
$ |
433 |
|
$ |
514 |
|
| State |
|
138 |
|
|
100 |
|
|
109 |
|
|
|
| Total current income taxes |
|
811 |
|
|
533 |
|
|
623 |
|
|
|
| Deferred income taxes, net |
|
|
|
|
|
|
|
|
|
| Federal |
|
(15 |
) |
|
112 |
|
|
73 |
|
| State |
|
(4 |
) |
|
9 |
|
|
13 |
|
|
|
| Total deferred income taxes, net |
|
(19 |
) |
|
121 |
|
|
86 |
|
|
|
| Investment tax credit amortization |
|
(15 |
) |
|
(15 |
) |
|
(11 |
) |
|
|
| Total income tax expense |
$ |
777 |
|
$ |
639 |
|
$ |
698 |
|
 |
|
|
| Income Tax Expense Reconciliation to Statutory Rule |
|
|
For the Years Ended December 31, |
|
|
| (In millions) |
|
1998 |
|
|
1997 |
|
|
1996 |
|
|
| Income tax, computed at the |
|
|
|
|
|
|
|
|
|
| statutory rate of 35% |
$ |
713 |
|
$ |
565 |
|
$ |
626 |
|
| Adjustments resulting from: |
|
|
|
|
|
|
|
|
|
| State income tax, net of federal |
|
|
|
|
|
|
|
|
|
| income tax effect |
|
90 |
|
|
71 |
|
|
79 |
|
| Other items, net |
|
(26 |
) |
|
3 |
|
|
(7 |
) |
|
|
| Total income tax expense |
$ |
777 |
|
$ |
639 |
|
$ |
698 |
|
|
| Effective tax rate |
38.1% |
|
39.6% |
|
39.0% |
|
|
|
|
| Net Deferred Income Tax Liability Components |
|
|
December 31, |
|
|
| (In millions) |
|
1998 |
|
|
1997 |
|
|
| Deferred credits and other liabilities |
$ |
268 |
|
$ |
409 |
|
| Alternative minimum tax credit carryforwarda |
|
30 |
|
|
30 |
|
| Other |
|
36 |
|
|
46 |
|
|
|
| Total deferred income tax assets |
|
334 |
|
|
485 |
|
| Valuation allowance |
|
(52 |
) |
|
(47 |
) |
|
|
| Net deferred income tax assets |
|
282 |
|
|
438 |
|
|
|
| Investments and other assets |
|
(207 |
) |
|
(263 |
) |
| Property, plant and equipment |
|
(2,405 |
) |
|
(2,358 |
) |
| Regulatory assets and deferred debits |
|
(542 |
) |
|
(623 |
) |
Regulatory asset related to restating to
pre-tax basis |
|
(435 |
) |
|
(438 |
) |
| Other |
|
(69 |
) |
|
(99 |
) |
|
|
| Total deferred income tax liabilities |
|
(3,658 |
) |
|
(3,781 |
) |
|
|
State deferred income tax, net of federal
tax effect |
|
(357 |
) |
|
(364 |
) |
|
|
| Net deferred income tax liability |
$ |
(3,733 |
) |
$ |
(3,707 |
) |
|
| a |
The alternative minimum tax credit carryforward can be carried forward indefinitely. |
|
|
In 1990, PanEnergy established a provision for certain tax issues related to the purchase of TEC, which resulted in an increase in goodwill and deferred income tax liability. If tax benefits relating to the valuation allowance for deferred income tax assets and other tax reserves are recognized subsequent to December 31, 1998, approximately $29 million will be allocated as an adjustment to goodwill.
|
|
