Progress Energy 2007 Annual Report Download - page 106

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
104
third-party investment managers who have the right to
sell securities without our authorization. Losses at
December 31, 2007 and 2006 for investments in these
trusts were not material. Other securities are evaluated
on an individual basis to determine if a decline in fair
value below the carrying value is other-than-temporary
(See Note 1D). At December 31, 2007 and 2006, our other
securities had no investments in a continuous loss position
for greater than 12 months.
14. INCOME TAXES
We provide deferred income taxes for temporary
differences. These occur when there are differences
between book and tax carrying amounts of assets and
liabilities. Investment tax credits related to regulated
operations have been deferred and are being amortized
over the estimated service life of the related properties.
To the extent that the establishment of deferred income
taxes under SFAS No. 109 is different from the recovery
of taxes by the Utilities through the ratemaking process,
the differences are deferred pursuant to SFAS No. 71.
A regulatory asset or liability has been recognized for the
impact of tax expenses or benefits that are recovered or
refunded in different periods by the Utilities pursuant to
rate orders. We accrue for uncertain tax positions when it
is determined that it is more likely than not that the benefit
will not be sustained on audit by the taxing authority
based solely on the technical merits of the associated tax
position. If the recognition threshold is met, the tax benefit
recognized is measured at the largest amount that, in our
judgment, is greater than 50 percent likely to be realized.
Accumulated deferred income tax assets (liabilities) at
December 31 were:
The above amounts were classified in the Consolidated
Balance Sheets as follows:
At December 31, 2007, the federal income tax credit carry
forward includes $772 million of alternative minimum
tax credits that do not expire and $64 million of general
business credits that will expire during the period 2020
through 2027.
At December 31, 2007, we had gross state net operating
loss carry forwards of $1.9 billion that will expire during
the period 2008 through 2026.
(in millions) 2007 2006
Deferred income tax assets
Asset retirement obligation liability $146 $141
Compensation accruals 101 86
Deferred revenue –28
Derivative instruments –42
Environmental remediation liability 32 36
Income taxes refundable through future rates 317 216
Investments –28
Pension and other postretirement benefits 306 364
Unbilled revenue 41 36
Other 122 103
Federal income tax credit carry forward 836 851
State net operating loss carry forward
(net of federal expense) 87 54
Valuation allowance (79) (71)
Total deferred income tax assets 1,909 1,914
Deferred income tax liabilities
Accumulated depreciation and property cost
differences (1,482) (1,379)
Deferred fuel recovery (64) (60)
Deferred storm costs (6) (51)
Derivative instruments (59) –
Income taxes recoverable through future rates (384) (436)
Investments (25) –
Prepaid pension costs (18) –
Other (50) (66)
Total deferred income tax liabilities (2,088) (1,992)
Total net deferred income tax liabilities $(179) $(78)
(in millions) 2007 2006
Current deferred income tax assets $27 $142
Noncurrent deferred income tax assets, included in
other assets and deferred debits 65 17
Current deferred income tax liabilities, included in
other current liabilities (5) –
Noncurrent deferred income tax liabilities, included
in noncurrent income tax liabilities (266) (237)
Total net deferred income tax liabilities $(179) $(78)