Company: EAI
Filing Date: 2025-02-18
Form Type: 10-K
Source: 0000065984-25-000012
Chunk: 555

Company: ENTERGY ARKANSAS, LLC
Filing Date: 2025-02-18
Form: 10-K
Item: Item 7
Chunk 555
---
 the audit, Entergy agreed with the IRS adjustments concerning the nuclear decommissioning tax position allowing Entergy Arkansas to include $102 million of its decommissioning liability in cost of goods sold.

126

Table of ContentsEntergy Corporation and SubsidiariesNotes to Financial Statements

Mark-to-Market Method of AccountingIn 2016, Entergy Louisiana elected mark-to-market income tax treatment for various wholesale electric power purchase and sale agreements, including Entergy Louisiana’s contract to purchase electricity from the Vidalia hydroelectric facility and from System Energy under the Unit Power Sales Agreement as well as other intercompany power purchase agreements.  The election resulted in a $2 billion deductible temporary difference.  The IRS allowed the mark-to-market tax method of accounting associated with the Vidalia contract and various other third-party and intercompany wholesale electric power purchase and sale agreements.  The IRS disallowed the net deductions associated with the Unit Power Sales Agreement, which did not have an effect on net tax expense.  The net allowance resulted in a reversal of a provision for uncertain tax positions of $132 million and a corresponding reduction of income tax expense.In 2017, Entergy New Orleans also elected mark-to-market income tax treatment for the Unit Power Sales Agreement and various intercompany wholesale electric contracts which resulted in a $1 billion deductible temporary difference.  The IRS allowed the mark-to-market tax method of accounting associated with various intercompany and third-party wholesale electric contracts.  The IRS disallowed the net deductions associated with the Unit Power Sales Agreement, which did not have an effect on net tax expense.  The net allowance resulted in a reversal of a provision for uncertain tax positions of $139 million and a corresponding reduction of income tax expense.In 2018, Entergy Arkansas and Entergy Mississippi each accrued approximately $2 billion in deductible temporary differences related to mark-to-market tax accounting for the Unit Power Sales Agreement and various wholesale electric contracts.  The IRS allowed the mark-to-market tax method of accounting associated with various intercompany and third-party wholesale electric contracts.  The IRS disallowed the net deductions associated with the Unit Power Sales Agreement, which did not have an effect on net tax expense.  The effective settlement of the mark-to-market tax position for Entergy Arkansas resulted in the accrual of an increase to tax expense of $40 million, which was offset by approximately $5 million of miscellaneous excess ADIT recognized as a result of the 2016-2018 IRS audit resolution.  The net increase