Company: EAI
Filing Date: 2025-02-18
Form Type: 10-K
Source: 0000065984-25-000012
Chunk: 558

Company: ENTERGY ARKANSAS, LLC
Filing Date: 2025-02-18
Form: 10-K
Item: Item 7
Chunk 558
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 the IRS audit on the results of operations was the measurement of deferred tax assets and liabilities influenced by the 2017 enactment of the Tax Cuts and Jobs Act income tax rate change discussed below.  With the conclusion of the audit, there are no remaining federal unrecognized tax benefits affected by the rate differential which could impact income tax expense and the regulatory liability for income taxes in future periods.State Income Tax AuditsAs a result of income tax audit adjustments proposed by the Arkansas Department of Finance and Administration, an Entergy subsidiary in the non-utility operations business recorded a provision in third quarter 2022 for uncertain tax positions of approximately $21 million, which includes interest expense.  In the third quarter 2024, Entergy and the Arkansas Department of Finance and Administration resolved the terms of the Arkansas 

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Table of ContentsEntergy Corporation and SubsidiariesNotes to Financial Statements

Department of Finance and Administration’s outstanding tax assessments related to the examination of the 2014 through 2018 tax years.  The agreement resulted in a payment of tax of approximately $8 million by Entergy.  As a result of the income tax audit adjustments and the reversal of a provision for uncertain tax positions, including amounts previously recorded in the third quarter 2022, Entergy Arkansas recorded a net reduction in income tax expense of approximately $18 million, which was offset by approximately $9 million of income tax expense recorded by other Entergy subsidiaries, resulting in a net reduction in income tax expense for Entergy of $9 million.Other Tax MattersTax Cuts and Jobs Act (TCJA)The most significant effect of the TCJA for Entergy and the Registrant Subsidiaries was the change in the federal corporate income tax rate from 35% to 21%, effective January 1, 2018.  Entergy had regulatory liability balances of $1.2 billion and $1.0 billion as of December 31, 2024 and December 31, 2023, respectively. These liabilities were primarily associated with the re-measurement of deferred tax assets and liabilities due to the income tax rate change, subsequent amortization of excess ADIT, and payments to customers since the enactment of the TCJA.  In addition to the protected and unprotected excess ADIT amounts, the net regulatory liability for income taxes includes other regulatory assets and liabilities for income taxes mainly related to AFUDC, as described in Note 1 to the financial statements.Entergy’s regulatory liability for income taxes includes a gross-up at