DTE Energy 2014 Annual Report Download - page 74

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
Deferred tax assets (liabilities) were comprised of the following at December 31:



Property, plant and equipment  
$ (3,372)
Securitized regulatory assets 
(127)
Tax credit carry-forwards 
266
Pension and benefits 
(30)
State net operating loss and credit carry-forwards 
43
Other 
(92)

(3,312)
Less valuation allowance 
(37)
 
$ (3,349)
Current deferred income tax assets (liabilities)  
$ (28)
Long-term deferred income tax liabilities 
(3,321)
 
$ (3,349)
Deferred income tax assets  
$ 934
Deferred income tax liabilities 
(4,283)
 
$ (3,349)
Tax credit carry forwards include $29 million of general business credits that expire through 2034 and $267 million of alternative minimum tax credits
that may be carried forward indefinitely. The alternative minimum tax credits are production tax credits earned prior to 2006 but not utilized. The majority of
these alternative minimum tax credits were generated from projects that had received a private letter ruling (PLR) from the IRS. These PLRs provide assurance
as to the appropriateness of using these credits to offset taxable income, however, these tax credits are subject to IRS audit and adjustment.
The above table excludes unamortized investment tax credits that are shown separately on the Consolidated Statements of Financial Position.
Investment tax credits are deferred and amortized to income over the average life of the related property.
The Company has state deferred tax assets related to net operating loss and credit carry-forwards of $39 million and $43 million at December 31, 2014
and 2013, respectively. The state net operating loss and credit carry-forwards expire from 2015 through 2034. The Company has recorded valuation
allowances at December 31, 2014 and 2013 of approximately $31 million and $37 million, respectively, with respect to these deferred tax assets. In assessing
the realizability of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be
realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those
temporary differences become deductible.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
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


Balance at January 1  
$ 11
$ 48
Reductions for tax positions of prior years 
—
(2)
Additions for tax positions of current year 
—
1
Settlements 
—
(30)
Lapse of statute of limitations 
(1)
(6)
Balance at December 31  
$ 10
$ 11
The Company had $2 million of unrecognized tax benefits at December 31, 2014 and 2013, that, if recognized, would favorably impact its effective tax
rate. During the next twelve months, it is reasonably possible that the statute of limitation will expire on various state tax returns. As a result, the Company
believes that it is possible that there will be a decrease in unrecognized tax benefits of up to $6 million within the next twelve months.
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