Chesapeake Energy 2014 Annual Report Download - page 106
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CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
98
6. Income Taxes
The components of the income tax provision (benefit) for each of the periods presented below are as follows:
Years Ended December 31,
2014 2013 2012
($ in millions)
Current
Federal $ — $ — $ —
State 47 22 47
Current Income Taxes 47 22 47
Deferred
Federal 1,115 502 (358)
State (18) 24 (69)
Deferred Income Taxes 1,097 526 (427)
Total $ 1,144 $ 548 $ (380)
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,
2014 2013 2012
($ in millions)
Income tax expense (benefit) at the federal statutory rate (35%) $ 1,120 $ 505 $ (341)
State income taxes (net of federal income tax benefit) 68 88 (38)
Remeasurement of state deferred tax liabilities (114) (38) (19)
Change in valuation allowance 74 (12) —
Other (4) 5 18
Total $ 1,144 $ 548 $ (380)
During the 2014 fourth quarter, Chesapeake simplified its organizational structure which impacts how income
(loss) is allocated and apportioned to various states. This change resulted in a $114 million tax benefit due to the
remeasurement of state deferred tax liabilities. Additionally, we reassessed the realizability of our deferred tax assets
given the decline in commodity prices. We recorded a $74 million tax expense for the increase in our valuation allowance.