Xcel Energy 2010 Annual Report Download - page 111

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A reconciliation of the amount of unrecognized tax benefit is as follows:
(Millions of Dollars) Dec. 31,
2010 Dec. 31,
2009
Unrecognized tax benefit - Permanent tax positions . ........................ .. .......... .... ........ $ 5.9 $ 10.6
Unrecognized tax benefit - Temporary tax positions . .................................. ............. 34.6 19.7
Unrecognized tax benefit balance . .. .. .......... .. .............. .......... .. ...................... $ 40.5 $ 30.3
A reconciliation of the beginning and ending amount of unrecognized tax benefit is as follows:
(Millions of Dollars) 2010 2009 2008
Balance at Jan. 1 ..................................................................... $ 30.3 $ 42.1 $ 30.6
Additions based on tax positions related to the current year - continuing operations......... 13.4 12.6 9.7
Reductions based on tax positions related to the current year - continuing operations ....... (0.6) (1.8) (1.0)
Additions for tax positions of prior years - continuing operations......................... 5.5 6.8 7.6
Reductions for tax positions of prior years - continuing operations........................ (1.8) (2.3) (0.3)
Additions for tax positions of prior years - discontinued operations.......................
—
—
2.3
Reductions for tax positions of prior years - discontinued operations ...................... (6.3)
—
—
Settlements with taxing authorities - continuing operations ...............................
—
(27.1) (4.0)
Lapse of applicable statutes of limitations - continuing operations........................
—
—
(2.8)
Balance at Dec. 31 .... .. .... .. .................... ....... .. ........................... $ 40.5 $ 30.3 $ 42.1
The unrecognized tax benefit amounts were reduced by the tax benefits associated with NOL and tax credit carryforwards. The
amounts of tax benefits associated with NOL and tax credit carryfowards are as follows:
(Millions of Dollars) Dec. 31,
2010 Dec. 31,
2009
N
OL and tax credit carryforwards .... .. .... .... .. .................................................. $ (38.0) $ (29.3)
The increase in the unrecognized tax benefit balance of $10.2 million in 2010 was due to the addition of similar uncertain tax
positions related to current and prior years’ activity, partially offset by a decrease due to a clarification of tax law in a court ruling
issued to an unrelated taxpayer, coupled with the completion of the state of Minnesota review of tax years 2002 through 2007.
Xcel Energy’ s amount of unrecognized tax benefits could significantly change in the next 12 months as the IRS audit progresses
and 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 carryforwards. A reconciliation of the beginning and ending amount of the payable for interest related to unrecognized tax
benefits reported is as follows:
(Millions of Dollars) 2010 2009 2008
Payable for interest related to unrecognized tax benefits at Jan. 1 ......................... $ (0.2) $ (0.4) $ (5.3)
Interest income (expense) related to unrecognized tax benefits - continuing operations...... (0.6) 1.5 3.9
Interest income (expense) related to unrecognized tax benefits - discontinued operations.... 0.5 (1.3) 1.0
Payable for interest related to unrecognized tax benefits at Dec. 31........................ $ (0.3) $ (0.2) $ (0.4)
No amounts were accrued for penalties related to unrecognized tax benefits as of Dec. 31, 2010, 2009 or 2008. During 2008, a
$1.0 million liability for penalties accrued as of Dec. 31, 2007 was reversed.
Other Income Tax Matters — NOL amounts represent the amount of the tax loss that is carried forward and tax credits represent
the deferred tax asset. NOL and tax credit carryforwards as of Dec. 31 were as follows:
(Millions of Dollars) 2010 2009
Federal NOL carryforward .. ................... .. ............... ................................. $ 989 $ 523
Federal tax credit carryforwards . .. .. .. .......... ........ .. ....................................... 205 183
State NOL carryforwards .. .. .. .. ..... .. .... ......... ............................................. 1,363 1,244
Valuation allowances for state NOL carryforwards . ................................................ (32) (76)
State tax credit carryforwards, net of federal detriment......................... .... .......... .. ..... 21 19
Valuation allowances for state tax credit carryforwards, net of federal benefit.........................
—
(5)