Sunoco 2012 Annual Report Download - page 80

Intangible Assets
The Partnership has acquired intangible assets such as throughput and deficiency contracts, customer
relationships, historical shipping rights and patents related to butane blending technology. The value assigned to
these intangible assets is amortized on a straight-line basis over their respective economic lives through
depreciation and amortization expense in the consolidated statements of comprehensive income.
Environmental Remediation
The Partnership accrues environmental remediation costs for work at identified sites where an assessment
has indicated that cleanup costs are probable and reasonably estimable. Such accruals are undiscounted and are
based on currently available information, estimated timing of remedial actions and related inflation assumptions,
existing technology and presently enacted laws and regulations. If a range of probable environmental cleanup
costs exists for an identified site, the minimum of the range is accrued unless some other point or points in the
range are more likely, in which case the most likely amount in this range is accrued.
Income Taxes
The Partnership is not a taxable entity for U.S. federal income tax purposes, or for the majority of states that
impose income taxes. Rather, income taxes are generally assessed at the partner level. There are some states in
which the Partnership operates where it is subject to state and local income taxes. Substantially all of the income
tax reflected in the Partnership’s consolidated financial statements is derived from the operations of Inland, Mid-
Valley and West Texas Gulf, all of which are entities subject to income taxes for federal and state purposes at the
corporate level. The effective tax rates for these entities approximate the federal statutory rate of 35 percent.
The Partnership recognizes a tax benefit from uncertain positions only if it is more likely than not that the
position is sustainable, based solely on its technical merits and consideration of the relevant taxing authorities’
widely understood administrative practices and precedents. The tax benefits recognized from such positions are
measured based on the largest benefit that has a greater than 50 percent likelihood of being realized upon
settlement.
The following table presents the components of income tax expense for the periods presented:
Successor Predecessor
Period from
Acquisition
(October 5, 2012) to
December 31, 2012
Period from
January 1, 2012 to
October 4, 2012
Year Ended
December 31,
2011 2010
(in millions) (in millions)
Federal
Current ............................ $ 8 $ 22 $ 25 $ 6
Deferred ........................... (2) — (2) —
State
Current ............................ 2 2 2 2
Deferred ........................... — — — —
Total income tax expense .............. $ 8 $ 24 $ 25 $ 8
The income taxes paid by Inland, Mid-Valley and West Texas Gulf approximated current income tax
expense for each year presented.
In taxable jurisdictions, the Partnership records deferred income taxes on all significant temporary
differences between the book basis and the tax basis of assets and liabilities. At December 31, 2012 and 2011, the
Partnership had $243 and $222 million, respectively, of net deferred tax liability derived principally from the
difference in the book and tax bases of properties, plants and equipment associated with the Inland, Mid-Valley
and West Texas Gulf acquisitions.
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