Exelon 2014 Annual Report Download - page 226

Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)
would accelerate the payment of cash to, or defer the receipt of the cash tax benefit from, the taxing authority to an earlier or later
period respectively.
Unrecognized tax benefits that if recognized would affect the effective tax rate
Exelon and Generation have $701 million and $672 million, respectively, of unrecognized tax benefits at December 31, 2014 that, if
recognized, would decrease the effective tax rate. Exelon and Generation had $788 million and $768 million, respectively, of
unrecognized tax benefits at December 31, 2013 that, if recognized, would decrease the effective tax rate.
Reasonably possible that total amount of unrecognized tax benefits could significantly increase or decrease within 12
months after the reporting date
Nuclear Decommissioning Liabilities
AmerGen filed income tax refund claims taking the position that nuclear decommissioning liabilities assumed as part of its acquisition
of nuclear power plants are taken into account in determining the tax basis in the assets it acquired. The additional basis results
primarily in reduced capital gains or increased capital losses on the sale of assets in nonqualified decommissioning funds and
increased tax depreciation and amortization deductions. The IRS disagrees with this position and has disallowed the claims. In
November 2008, Generation received a final determination from the Appeals division of the IRS (IRS Appeals) disallowing
AmerGen’s refund claims. Generation filed a complaint in the United States Court of Federal Claims on February 20, 2009 to contest
this determination. During the first and second quarters of 2013, AmerGen and the DOJ completed and filed cross motions for
summary judgment. On September 17, 2013, the Court granted the government’s motion denying AmerGen’s claims for refund. In
the first quarter of 2014, Exelon filed an appeal of the decision to the United States Court of Appeals for the Federal Circuit and oral
arguments were heard in January of 2015.
Due to the possibility of final resolution through an appellate decision, Generation continues to believe that it is reasonably possible
that the $661 million of total unrecognized tax benefits will significantly decrease in the next twelve months.
Settlement of Income Tax Audits and Litigation
As of December 31, 2014, Exelon and Generation have approximately $188 million of state unrecognized tax benefits that could
significantly increase or decrease within the 12 months after the reporting date as a result of completing audits and expected statute
of limitation expirations that if recognized would decrease the effective tax rate.
See Other Tax Matters—Like Kind Exchange section below for information regarding the amount of unrecognized tax benefits
associated with this matter that could change significantly within the next 12 months.
Total amounts of interest and penalties recognized
The following table represents the net interest receivable (payable), including interest related to tax positions reflected in the
Registrants’ Consolidated Balance Sheets.
Net interest receivable (payable) as of Exelon Generation ComEd PECO BGE
December 31, 2014 ....................................................... $(310) $ 40 $(203) $3 $ (1)
December 31, 2013 ....................................................... (349) (37) (174) 3 —
The following table sets forth the net interest expense, including interest related to tax positions, recognized in interest expense
(income) in other income and deductions in the Registrants’ Consolidated Statements of Operations and Comprehensive Income.
The Registrants have not accrued any material penalties with respect to uncertain tax positions.
Net interest expense (income) for the years ended Exelon Generation ComEd PECO BGE
December 31, 2014 ....................................................... $(36) $(50) $ 6 $— $ 1
December 31, 2013 ....................................................... 391 17 281 (1) —
December 31, 2012 ....................................................... (1) 11 (20) (1) 9
222