Sunoco 2013 Annual Report Download - page 71

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of the Partnership's reporting units. Management establishes fair value by comparing the reporting unit to other companies that
are similar, from an operational or industry perspective, and by considering risk characteristics in order to determine the risk
profile relative to the comparable companies as a group. The most significant assumptions are the market multiples.
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 amounts reflected in the
Partnership's consolidated financial statements are related to the operations of Inland, Mid-Valley and West Texas Gulf, all of
which are 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
Year Ended
December 31, 2013
Period from Acquisition
(October 5, 2012) to
December 31, 2012
Period from
January 1, 2012
to October 4, 2012 Year Ended December 31, 2011
(in millions) (in millions)
Federal
Current $ 21 $ 8 $ 22 $ 25
Deferred 6 (2) — (2)
State
Current 3 2 2 2
Deferred — — — —
Total income tax expense $ 30 $ 8 $ 24 $ 25
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, 2013 and 2012, the Partnership had $253 and $243
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 Inland, Mid-Valley and West Texas Gulf.