Company: EAI
Filing Date: 2025-02-18
Form Type: 10-K
Source: 0000065984-25-000012
Chunk: 366

Company: ENTERGY ARKANSAS, LLC
Filing Date: 2025-02-18
Form: 10-K
Item: Item 7
Chunk 366
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 Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 23, 2024, for discussion of results of operations for 2023 compared to 2022.

7

Table of ContentsEntergy Corporation and SubsidiariesManagement’s Financial Discussion and Analysis

Income Tax Legislation and Regulation

The Inflation Reduction Act of 2022 (IRA), signed into law on August 16, 2022, significantly expanded federal tax incentives for clean energy production, including the extension of production tax credits to solar projects and certain qualified nuclear power facilities.  Additionally, the IRA enacted a 1% excise tax on the buyback of public company stock and a new corporate alternative minimum tax (CAMT).  Effective for tax years beginning after December 31, 2022, the CAMT imposes a 15% tax on the Adjusted Financial Statement Income (AFSI) on each corporation in a group of corporations that averages greater than $1 billion in AFSI over a three-year period.  Taxpayers subject to the CAMT regime must pay the greater of 15% of AFSI or their regular federal tax liability.  In September 2024 the IRS issued proposed regulations regarding the application of the CAMT.  Entergy and the Registrant Subsidiaries are closely monitoring any potential impact associated with the expansion of federal tax incentives, the 1% excise tax, and CAMT.  Based on current IRS guidance and internal forecasts, Entergy and the Registrant Subsidiaries may be subject to the CAMT beginning in the next two to four years.  The U.S. Treasury is expected to issue further guidance that will clarify how the tax credit provisions and CAMT provisions will be interpreted and applied.  This guidance will determine the amount of tax credits and incremental cash tax payments Entergy expects in the future as a result of the legislation.  Prior to receiving this guidance, Entergy cannot adequately assess the expected future effects on its results of operations, financial position, and cash flows.

In March and April of 2024 the IRS issued final regulations related to applicable tax credit transferability and direct pay provisions of the IRA.  In June 2024 the IRS issued final regulations related to the prevailing wage and apprenticeship requirements under the IRA.  In December 2024 the IRS issued final regulations related to technology neutral production tax credits and investment tax credits.  Entergy and the Registrant Subsidi