Xcel Energy 2009 Annual Report Download - page 112

Unrecognized Tax Benefits — The amount of unrecognized tax benefits reported in continuing operations was
$23.7 million on Dec. 31, 2009 and $35.5 million on Dec. 31, 2008. The amount of unrecognized tax benefits
reported in discontinued operations was $6.6 million on both Dec. 31, 2009 and Dec. 31, 2008. A reconciliation of
the beginning and ending amount of unrecognized tax benefit in continuing operations is as follows:
2009 2008
(Millions of Dollars)
Balance at Jan. 1 ............................................ $35.5 $26.3
Additions based on tax positions related to the current year ................. 12.6 9.7
Reductions based on tax positions related to the current year ................ (1.8) (1.0)
Additions for tax positions of prior years ............................. 6.8 7.6
Reductions for tax positions of prior years ............................ (2.3) (0.3)
Settlements with taxing authorities ................................. (27.1) (4.0)
Lapse of applicable statutes of limitations ............................ — (2.8)
Balance at Dec. 31 .......................................... $23.7 $35.5
The unrecognized tax benefit amounts reported in continuing operations were reduced by the tax benefits associated
with NOL and tax credit carryovers of $8.9 million on Dec. 31, 2009 and $13.1 million on Dec. 31, 2008. The
unrecognized tax benefit amounts reported in discontinued operations were reduced by the tax benefits associated with
NOL and tax credit carryovers of $20.4 million on Dec. 31, 2009 and $26.5 million on Dec. 31, 2008.
The unrecognized tax benefit balance reported in continuing operations included $4.0 million and $9.2 million of tax
positions on Dec. 31, 2009 and Dec. 31, 2008, respectively, which if recognized would affect the annual ETR. In
addition, the unrecognized tax benefit balance reported in continuing operations included $19.7 million and
$26.3 million of tax positions on Dec. 31, 2009 and Dec. 31, 2008, respectively, for which the ultimate deductibility is
highly certain but for which there is uncertainty about the timing of such deductibility. A change in the period of
deductibility would not affect the ETR but would accelerate the payment of cash to the taxing authority to an earlier
period.
The decrease in the unrecognized tax benefit balance reported in continuing operations of $11.8 million in 2009 was
due to the resolution of certain federal audit matters, partially offset by an increase due to the addition of similar
uncertain tax positions related to ongoing activity. Xcel Energy’s amount of unrecognized tax benefits for continuing
operations could significantly change in the next 12 months as the Texas audit begins and when the IRS and other
state audits resume. At this time, due to the uncertain nature of the audit process, it is not reasonably possible to
estimate an overall range of possible change.
The payable for interest related to unrecognized tax benefits is partially offset by the interest benefit associated with
NOL and tax credit carryovers. A reconciliation of the beginning and ending amount of the payable for interest related
to unrecognized tax benefits reported in continuing operations is as follows:
2009 2008
(Millions of Dollars)
Payable for interest related to unrecognized tax benefits at Jan. 1 .............. $(1.9) $(5.8)
Interest income related to unrecognized tax benefits ...................... 1.5 3.9
Payable for interest related to unrecognized tax benefits at Dec. 31 ............. $(0.4) $(1.9)
A reconciliation of the beginning and ending amount of the receivable for interest related to unrecognized tax benefits
reported in discontinued operations is as follows:
2009 2008
(Millions of Dollars)
Receivable for interest related to unrecognized tax benefits at Jan. 1 ............ $1.5 $0.5
Interest income (expense) related to unrecognized tax benefits ................ (1.3) 1.0
Receivable for interest related to unrecognized tax benefits at Dec. 31 ........... $0.2 $1.5
No amounts were accrued for penalties related to unrecognized tax benefits as of Dec. 31, 2009 or Dec. 31, 2008.
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