Xcel Energy 2014 Annual Report Download - page 115

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Unrecognized Tax Benefits — The unrecognized tax benefit balance includes permanent tax positions, which if recognized would
affect the annual ETR. In addition, the unrecognized tax benefit balance includes temporary tax positions 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.
A reconciliation of the amount of unrecognized tax benefit is as follows:
(Millions of Dollars) Dec. 31, 2014 Dec. 31, 2013
Unrecognized tax benefit — Permanent tax positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 16.2 $ 12.9
Unrecognized tax benefit — Temporary tax positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50.3 28.3
Total unrecognized tax benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 66.5 $ 41.2
A reconciliation of the beginning and ending amount of unrecognized tax benefit is as follows:
(Millions of Dollars) 2014 2013 2012
Balance at Jan. 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 41.2 $ 34.5 $ 34.7
Additions based on tax positions related to the current year . . . . . . . . . . . . . . . . . . . . . . . . 28.7 15.1 5.2
Reductions based on tax positions related to the current year. . . . . . . . . . . . . . . . . . . . . . . (2.0)(0.4) (5.7)
Additions for tax positions of prior years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.0 21.6 9.6
Reductions for tax positions of prior years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6.0)(4.8) (9.3)
Settlements with taxing authorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9.6)(24.8) —
Lapse of applicable statutes of limitations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1.8) — —
Balance at Dec. 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 66.5 $ 41.2 $ 34.5
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 carryforwards are as follows:
(Millions of Dollars) Dec. 31, 2014 Dec. 31, 2013
NOL and tax credit carryforwards. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (28.5) $ (27.1)
It is reasonably possible that Xcel Energy’s amount of unrecognized tax benefits could significantly change in the next 12 months as
the IRS Appeals process progresses and state audits resume. As the IRS Appeals process moves closer to completion and state audits
resume, it is reasonably possible that the amount of unrecognized tax benefit could decrease up to approximately $10 million.
The payable for interest related to unrecognized tax benefits is partially offset by the interest benefit associated with NOL and tax
credit carryforwards. The payables for interest related to unrecognized tax benefits at Dec. 31, 2014, 2013 and 2012 were not
material. No amounts were accrued for penalties related to unrecognized tax benefits as of Dec. 31, 2014, 2013 or 2012.
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) 2014 2013
Federal NOL carryforward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,349 $ 1,311
Federal tax credit carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 327 294
State NOL carryforwards. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,722 1,706
Valuation allowances for state NOL carryforwards. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (53) (51)
State tax credit carryforwards, net of federal detriment (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 17
(a) State tax credit carryforwards are net of federal detriment of $10 million and $9 million as of Dec. 31, 2014 and 2013.