CenterPoint Energy 2008 Annual Report Download - page 116

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94
Changes in the Texas State Franchise Tax Law (Texas margin tax) resulted in classifying Texas margin tax of
approximately $8 million, net of federal income tax effect, as income tax expense in 2008 for CenterPoint Houston.
The 2007 state income tax benefit of $10 million includes a benefit of approximately $30 million, net of federal
income tax effect, as a result of the Texas margin tax and a Texas state tax examination for the tax years 2002
through 2004.
The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities
were as follows:
December 31,
2007
2008
(In millions)
Deferred tax assets:
Current:
Allowance for doubtful accounts ................................................................................................
$ 17
$ 15
Deferred gas costs ................................................................................................
26
13
Other ................................................................................................................................
—
1
Total current deferred tax assets ................................................................
43
29
Non-current:
Loss and credit carryforwards ................................................................................................
52
36
Employee benefits ................................................................................................
173
360
Other ................................................................................................................................
6
57
Total non-current deferred tax assets before valuation allowance ................................
231
453
Valuation allowance ................................................................................................
(18)
(5)
Total non-current deferred tax assets ................................................................
213
448
Total deferred tax assets, net ................................................................................................
256
477
Deferred tax liabilities:
Current:
Unrealized gain on indexed debt securities ................................................................
294
373
Unrealized gain on TW Common ................................................................................................
77
28
Other ................................................................................................................................
22
—
Total current deferred tax liabilities ................................................................
393
401
Non-current:
Depreciation ................................................................................................................................
1,359
1,679
Regulatory assets, net ................................................................................................
1,039
1,319
Other ................................................................................................................................
50
59
Total non-current deferred tax liabilities ................................................................
2,448
3,057
Total deferred tax liabilities ................................................................................................
2,841
3,458
Accumulated deferred income taxes, net ................................................................
$ 2,585
$ 2,981
Tax Attribute Carryforwards and Valuation Allowance. At December 31, 2008, the Company has approximately
$138 million of state net operating loss carryforwards which expire in various years between 2009 and 2028. A
valuation allowance has been established for approximately $60 million of the state net operating loss carryforwards
that may not be realized. The Company has a state tax credit carryforward of approximately $44 million which
expires in 2026. At December 31, 2008, the Company has approximately $244 million of state capital loss
carryforwards which expire in 2017 for which a valuation allowance has been established.