APS 2012 Annual Report Download - page 128

PINNACLE WEST CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
103
We reflect interest and penalties, if any, on unrecognized tax benefits in the Consolidated
Statements of Income as income tax expense. The amount of interest recognized in the Consolidated
Statements of Income related to unrecognized tax benefits was a pre-tax expense of $4 million for 2012,
a pre-tax expense of $3 million for 2011 and a pre-tax benefit of $2 million for 2010.
The total amount of accrued liabilities for interest recognized in the Consolidated Balance
Sheets related to unrecognized tax benefits was $13 million as of December 31, 2012, $9 million as of
December 31, 2011 and $6 million as of December 31, 2010. To the extent that matters are settled
favorably, this amount could reverse and decrease our effective tax rate. Additionally, as of
December 31, 2012, we have recognized $5 million of interest income to be received on the
overpayment of income taxes for certain adjustments that we have filed, or will file, with the IRS.
The components of income tax expense are as follows (dollars in thousands):
Year Ended December 31,
2012
2011
2010
Current:
Federal
$ (3,493)
$ (310)
$ (108,827)
State
8,395
15,140
25,545
Total current
4,902
14,830
(83,282)
Deferred:
Federal
200,322
159,566
260,236
State
28,280
16,626
10,911
Discontinued operations
--
--
(10,736)
Total deferred
228,602
176,192
260,411
Total income tax expense
233,504
191,022
177,129
Less: income tax expense (benefit) on
discontinued operations
(3,813)
7,418
16,260
Income tax expense – continuing operations
$ 237,317
$ 183,604
$ 160,869