DTE Energy 2008 Annual Report Download - page 20

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NOTE 5 — INCOME TAXES
I
ncome Tax Summary
We are part of the consolidated federal income tax return of DTE Energy. Our federal income tax expense is determined on an individual
company basis with no allocation of tax benefits or expenses from other affiliates of DTE Energy. We have an income tax payable of
$2 million at December 31, 2008, and $10 million at December 31, 2007 due to DTE Energy.
Total income tax expense (benefit) varied from the statutory federal income tax rate for the following reasons:
Components of income tax expense (benefit) were as follows:
Investment tax credits are deferred and amortized to income over the average life of the related property.
Deferred tax assets and liabilities are recognized for the estimated future tax effect of temporary differences between the tax basis of assets or
liabilities and the reported amounts in the financial statements. Deferred tax assets and liabilities are classified as current or noncurrent
according to the classification of the related assets or liabilities. Deferred tax assets and liabilities not related to assets or liabilities are classified
according to the expected reversal date of the temporary differences. Consistent with rate making treatment, deferred taxes are offset in the
table below for temporary differences which have related regulatory assets and liabilities.
Deferred income tax assets (liabilities) were comprised of the following at December 31:
18
(Dollars in Millions) 2008 2007 2006
Income tax expense at 35% statutory rate $41 $ 33 $ 22
Investment tax credi
t
(1) (1) (1)
Depreciation (7) (7)(7)
Employee Stock Ownership Plan dividends (1) (1) (1)
Medicare Part D subsidy (1) (1)(1)
State and local income taxes — net of federal benefit 3 —
—
Life insurance trus
t
3 (1)
—
Other 1 1 —
Total $38 $ 23 $12
32.2% 24.5% 18.8%
(in Millions) 2008 2007 2006
Current income taxes
Federal $(30)
$16 $47
State and other income tax expense 4 —
—
Total current income taxes (26) 16 47
Deferred federal and other income tax expense
Federal 63 7(35)
State and other income tax expense 1 —
—
Total deferred income taxes 64 7(35)
Total $38 $ 23 $12
(in Millions) 2008 2007
Property, plant and equipment $(150)$(114)
Pension and benefits
(91) (86)
Other comprehensive income 11
Other, ne
t
(10) 20
$(250)$(179)
Current deferred income tax assets (included in Current Assets
—
Other) $40 $16
Long term deferred income tax liabilities (290)(195)
$ (250) $ (179)
Deferred income tax liabilities $(704)$(595)
Deferred income tax assets
454 416
$(250)$(179)