Xcel Energy 2015 Annual Report Download - page 114
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• ITCs at 30 percent for commercial solar projects that begin construction by the end of 2019; 26 percent for projects that begin
construction in 2020; 22 percent for projects that begin construction in 2021; and 10 percent for projects thereafter;
• R&E credit was permanently extended; and
• Delay of two years (until 2020) of the excise tax on certain employer-provided health insurance plans.
The accounting related to the Act was recorded beginning in the fourth quarter of 2015 because a change in tax law is accounted for
beginning in the period of enactment. The fourth quarter 2015 accounting impacts included:
• Recognition of additional tax deductions for bonus depreciation of $1.2 billion, and as a result, recognition of $4.9 million
benefit related to a carryback claim (see additional discussion below) and $3.5 million expense related to valuation
allowances and expirations of charitable contribution carryforwards; and
• Recognition of $6.8 million benefit for federal R&E credits.
Tax Increase Prevention Act of 2014 — In 2014, the Tax Increase Prevention Act (TIPA) was signed into law. The TIPA provides for
the following:
• The R&E credit was extended for 2014;
• PTCs were extended for projects that began construction before the end of 2014 with certain projects qualifying into future
years; and
• 50 percent bonus depreciation was extended one year through 2014. Additionally, some longer production period property
placed in service in 2015 is also eligible for 50 percent bonus depreciation.
The accounting related to the TIPA was recorded beginning in the fourth quarter of 2014 because a change in tax law is accounted for
in the period of enactment.
American Taxpayer Relief Act of 2012 — In 2013, the American Taxpayer Relief Act (ATRA) was signed into law. The ATRA
provided for the following:
• The top tax rate for dividends increased from 15 percent to 20 percent. The 20 percent dividend rate is now consistent with
the tax rates for capital gains;
• The R&E credit was extended for 2012 and 2013;
• PTCs were extended for projects that began construction before the end of 2013 with certain projects qualifying into future
years; and
• 50 percent bonus depreciation was extended one year through 2013. Additionally, some longer production period property
placed in service in 2014 is also eligible for 50 percent bonus depreciation.
The accounting related to the ATRA, including the provisions related to 2012, was recorded beginning in the first quarter of 2013
because a change in tax law is accounted for in the period of enactment.
Federal Tax Loss Carryback Claims — In 2012, 2013, 2014 and 2015, Xcel Energy identified certain expenses related to 2009, 2010,
2011, 2013, 2014 and 2015 that qualify for an extended carryback beyond the typical two-year carryback period. As a result of a
higher tax rate in prior years, Xcel Energy recognized a tax benefit of approximately $5 million in 2015, $17 million in 2014 and $12
million in 2013 and $15 million in 2012.
Federal Audit — Xcel Energy files a consolidated federal income tax return. In the third quarter of 2012, the IRS commenced an
examination of tax years 2010 and 2011, including the 2009 carryback claim. As of Dec. 31, 2015, the IRS had proposed an
adjustment to the federal tax loss carryback claims that would result in $14 million of income tax expense for the 2009 through 2011
and 2013 claims, the recently filed 2014 claim, and the anticipated claim for 2015. In the fourth quarter of 2015, the IRS forwarded
the issue to the Office of Appeals (Appeals); however the outcome and timing of a resolution is uncertain. The statute of limitations
applicable to Xcel Energy’s 2009 through 2011 federal income tax returns expires in December 2016 following an extension to allow
additional time for the Appeals process. In the third quarter of 2015, the IRS commenced an examination of tax years 2012 and 2013.
As of Dec. 31, 2015, the IRS had not proposed any material adjustments to tax years 2012 and 2013.