PG&E 2015 Annual Report Download - page 97
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89
PART II
ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
NOTE 8: Income Taxes
PG&E Corporation and the Utility use the liability method
of accounting for income taxes. The income tax provision
includes current and deferred income taxes resulting from
operations during the year. PG&E Corporation and the
Utility estimate current period tax expense in addition
to calculating deferred tax assets and liabilities. Deferred
tax assets and liabilities result from temporary tax and
accounting timing dierences, such as those arising from
depreciation expense.
PG&E Corporation and the Utility recognize a tax benefit
if it is more likely than not that a tax position taken or
expected to be taken in a tax return will be sustained upon
examination by taxing authorities based on the merits of
the position. The tax benefit recognized in the financial
statements is measured based on the largest amount of
benefit that is greater than 50% likely of being realized
upon settlement. As such, the dierence between a tax
position taken or expected to be taken in a tax return in
future periods and the benefit recognized and measured
pursuant to this guidance in the financial statements
represents an unrecognized tax benefit.
Investment tax credits are deferred and amortized
to income over time. PG&E Corporation amortizes its
investment tax credits over the projected investment
recovery period. The Utility amortizes its investment tax
credits over the life of the related property in accordance
with regulatory treatment.
PG&E Corporation files a consolidated U.S. federal
income tax return that includes the Utility and domestic
subsidiaries in which its ownership is 80% or more. PG&E
Corporation files a combined state income tax return in
California. PG&E Corporation and the Utility are parties to a
tax-sharing agreement under which the Utility determines
its income tax provision (benefit) on a stand-alone basis.
The significant components of income tax provision (benefit) by taxing jurisdiction were as follows:
PG&ECorporation Utility
YearEndedDecember
(inmillions)
Current
Federal () () () () () ()
State () () () ()
Deferred
Federal
State () () () ()
Taxcredits () () () () () ()
Incometaxprovision () ()
The following table describes net deferred income tax liabilities:
PG&ECorporation Utility
YearEndedDecember
(inmillions)
Deferredincometaxassets
Customeradvancesforconstruction
Environmentalreserve
Compensationandbenefits
Taxcarryforwards
Greenhousegasallowances
Other
Total deferred income tax assets