Allegheny Power 2013 Annual Report Download - page 108
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93
PROVISION FOR INCOME TAXES FirstEnergy FES
(In millions)
2013
Currently payable (receivable)-
Federal $ (118) $ (300)
State 70 (3)
(48) (303)
Deferred, net-
Federal 305 317
State (54) (4)
251 313
Investment tax credit amortization (8) (4)
Total provision for income taxes $ 195 $ 6
2012
Currently payable (receivable)-
Federal $ (130) $ (128)
State 28 17
(102) (111)
Deferred, net-
Federal 580 209
State 78 9
658 218
Investment tax credit amortization (11) (4)
Total provision for income taxes $ 545 $ 103
2011
Currently payable (receivable)-
Federal $ (251) $ (224)
State 19 9
(232) (215)
Deferred, net-
Federal 785 205
State 24 (2)
809 203
Investment tax credit amortization (11) (4)
Total provision for income taxes $ 566 $ (16)
As discussed in Note 11, on July 8, 2013, officers of FirstEnergy and AE Supply committed to deactivating two coal-fired generating
plants. As a result of the decision, FirstEnergy determined that it is more likely than not that certain state and local NOL carryforwards
will not be realized through future operations or through the reversal of existing temporary differences. As a result, FirstEnergy
recorded a valuation reserve of approximately $20 million against carryforwards in 2013.
On July 9, 2013, Pennsylvania House Bill 465 (HB 465) was enacted, adopting new market-based sourcing rules for certain items
of income as well as increasing the Pennsylvania NOL deduction credit for tax years beginning after December 31, 2013 and 2014
to the greater of 25% or $4 million of taxable income and 30% or $5 million of taxable income, respectively. Based on income
projections, Pennsylvania NOL valuation reserves were reduced by approximately $8 million in 2013.
During 2013, FirstEnergy made changes to state apportionment factors in certain jurisdictions based on sales sourcing rules for
electricity, which reduced deferred tax liabilities by approximately $9 million. Furthermore, based on an assessment of business
operations, FirstEnergy determined that income from certain subsidiaries should not be apportioned to certain tax jurisdictions due
to the absence of business nexus. This assessment resulted in a reduction to deferred tax liabilities of approximately $22 million.
In 2012, a $50 million valuation allowance was established for two unregulated subsidiaries of FirstEnergy based on current judgment
as to the realization of certain state deferred tax assets, as impacted by changes in the business and the applicability of certain