Xcel Energy 2015 Annual Report Download - page 115
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State Audits — Xcel Energy files consolidated state tax returns based on income in its major operating jurisdictions of Colorado,
Minnesota, Texas, and Wisconsin, and various other state income-based tax returns. As of Dec. 31, 2015, Xcel Energy’s earliest open
tax years that are subject to examination by state taxing authorities in its major operating jurisdictions were as follows:
State Year
Colorado. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2009
Minnesota. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2009
Texas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2009
Wisconsin. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2011
As of Dec. 31, 2015, there were no state income tax audits in progress.
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, 2015 Dec. 31, 2014
Unrecognized tax benefit — Permanent tax positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 25.8 $ 16.2
Unrecognized tax benefit — Temporary tax positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94.9 50.3
Total unrecognized tax benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 120.7 $ 66.5
A reconciliation of the beginning and ending amount of unrecognized tax benefit is as follows:
(Millions of Dollars) 2015 2014 2013
Balance at Jan. 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 66.5 $ 41.2 $ 34.5
Additions based on tax positions related to the current year . . . . . . . . . . . . . . . . . . . . . . . . 27.1 28.7 15.1
Reductions based on tax positions related to the current year. . . . . . . . . . . . . . . . . . . . . . . (4.5)(2.0) (0.4)
Additions for tax positions of prior years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34.8 16.0 21.6
Reductions for tax positions of prior years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2.9)(6.0) (4.8)
Settlements with taxing authorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.3)(9.6) (24.8)
Lapse of applicable statutes of limitations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (1.8) —
Balance at Dec. 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 120.7 $ 66.5 $ 41.2
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, 2015 Dec. 31, 2014
NOL and tax credit carryforwards. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (36.7) $ (28.5)
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 and audit progress and state audits resume. As the IRS Appeals and audit progress, it is reasonably possible that the
amount of unrecognized tax benefit could decrease up to approximately $58 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, 2015, 2014 and 2013 were not
material. No amounts were accrued for penalties related to unrecognized tax benefits as of Dec. 31, 2015, 2014 or 2013.