Chesapeake Energy 2013 Annual Report Download - page 108

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
100
The effective income tax expense (benefit) differed from the computed "expected" federal income tax expense
on earnings before income taxes for the following reasons:
Years Ended December 31,
2013 2012 2011
($ in millions)
Income tax expense (benefit) at the federal statutory rate (35%) ............ $ 505 $ (341) $ 1,008
State income taxes (net of federal income tax benefit) ............................ 38 (38) 74
Other ........................................................................................................ 5 (1) 41
Total ................................................................................................... $ 548 $ (380) $ 1,123
Deferred income taxes are provided to reflect temporary differences in the basis of net assets for income tax and
financial reporting purposes. The tax-effected temporary differences and tax loss carryforwards which comprise deferred
taxes are as follows:
Years Ended December 31,
2013 2012
($ in millions)
Deferred tax liabilities:
Natural gas and oil properties ................................................................................ $ (2,631) $ (1,999)
Other property and equipment ............................................................................... (371) (436)
Volumetric production payments ........................................................................... (1,216) (1,432)
Contingent convertible debt ................................................................................... (439) (416)
Deferred tax liabilities ...................................................................................... (4,657) (4,283)
Deferred tax assets: .................................................................................................
Net operating loss carryforwards ......................................................................... 535 711
Derivative instruments ......................................................................................... 108 172
Asset retirement obligations ................................................................................ 153 142
Investments ......................................................................................................... 130 106
Deferred stock compensation .............................................................................. 66 47
Accrued liabilities ................................................................................................. 120 90
Noncontrolling interest liabilities .......................................................................... 152 178
Alternative minimum tax credits ........................................................................... 317 225
Other ................................................................................................................... 40 55
Deferred tax assets ......................................................................................... 1,621 1,726
Valuation allowance ............................................................................................. (148) (160)
Net deferred tax assets ................................................................................... 1,473 1,566
Net deferred tax assets (liabilities) .................................................................. $ (3,184) $ (2,717)
Reflected in accompanying balance sheets as:
Current deferred income tax asset ........................................................................ $ 223 $ 90
Non-current deferred income tax liability ............................................................... (3,407) (2,807)
Total ................................................................................................................ $ (3,184) $ (2,717)
As of December 31, 2013 and 2012, we classified $223 million and $90 million, respectively, of deferred tax assets
as current that were attributable to current temporary differences associated with accrued liabilities, derivative liabilities
and other items. As of December 31, 2013 and 2012, non-current deferred tax liabilities on the consolidated balance
sheets that were primarily attributable to temporary differences associated with oil and gas properties and volumetric
production payments were $3.407 billion and $2.807 billion, respectively.
Deferred tax assets relating to tax benefits of employee share-based compensation have been reduced for stock
options exercised and restricted stock that vested in periods in which Chesapeake was in a net operating loss (NOL)
position. Some exercises and vestings result in tax deductions in excess of previously recorded benefits based on the