Vectren 2010 Annual Report Download - page 85

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The components of income tax expense and utilization of investment tax credits follow:
(In millions) 2010 2009 2008
Current:
Federal (0.8)$ (21.4)$ (14.8)$
State 6.2 0.6 11.3
Total current taxes 5.4 (20.8) (3.5)
Deferred:
Federal 65.6 78.7 78.2
State 4.5 7.3 2.7
Total deferred taxes 70.1 86.0 80.9
Amortization of investment tax credits (0.8) (1.1) (1.3)
Total income tax expense 74.7$ 64.1$ 76.1$
Year Ended December 31,
Uncertain Tax Positions
Following is a roll forward of unrecognized tax benefits for the three years ended December 31, 2010:
(In millions) 2010 2009 2008
Unrecognized tax benefits at January 1 11.5$ 2.2$ 6.2$
Gross increases - tax positions in prior periods 1.6 1.1 1.7
Gross decreases - tax positions in prior periods (0.3) (1.8) (6.0)
Gross increases - current period tax positions 1.0 9.0 0.3
Settlements - (0.1) -
Lapse of statute of limitations (0.5) 1.1 -
Unrecognized tax benefits at December 31 13.3$ 11.5$ 2.2$
Of the change in unrecognized tax benefits during 2010, 2009, and 2008, almost none impacted the effective rate. The amount
of unrecognized tax benefits, which if recognized, that would impact the effective tax rate was $0.7 million at December 31,
2010 and $0.5 million at both December 31, 2009 and 2008. As of December 31, 2010, the unrecognized tax benefit relates to
tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such
deductibility. Because of the impact of deferred tax accounting, other than interest and penalties, the disallowance of the
shorter deductibility period would not affect the annual effective tax rate but would accelerate the payment of cash to the taxing
authority. Thus, it is not expected that any changes to these tax positions would have a significant impact on earnings.
The Company recognized expense related to interest and penalties totaling approximately $0.3 million in 2010, $0.2 million in
2009, and less than $0.1 million in 2008. The Company had approximately $0.9 million and $0.6 million for the payment of
interest and penalties accrued as of December 31, 2010 and 2009, respectively.
The net liability on the Consolidated Balance Sheet for unrecognized tax benefits inclusive of interest, penalties and net of
secondary impacts which are a component of the Deferred income taxes and are benefits, totaled $9.8 million and $7.9 million,
respectively, at December 31, 2010 and 2009.
The Company and/or certain of its subsidiaries file income tax returns in the U.S. federal jurisdiction and various states. The
Internal Revenue Service (IRS) has conducted examinations of the Company’s U.S. federal income tax returns for tax years
through December 31, 2005. Tax years 2006 and 2008 are currently under IRS exam. The State of Indiana, the Company’s
primary state tax jurisdiction, has conducted examinations of state income tax returns for tax years through December 31, 2007.
The statutes of limitations for assessment of federal income tax have expired with respect to tax years through 2005 and
through 2006 for Indiana income tax.