Company: EAI
Filing Date: 2025-02-18
Form Type: 10-K
Source: 0000065984-25-000012
Chunk: 556

Company: ENTERGY ARKANSAS, LLC
Filing Date: 2025-02-18
Form: 10-K
Item: Item 7
Chunk 556
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 to tax expense is deferred as a regulatory asset, as discussed within the “Regulatory and Other Matters” section below.Restructuring of Entergy’s Non-Utility Operations BusinessDuring the 2016 to 2018 audit period, the ownership of certain of Entergy’s non-utility operations business  nuclear power plants (previously reported as part of Entergy Wholesale Commodities) was restructured.  Such restructuring transactions required Entergy to recognize the plants’ nuclear decommissioning liabilities for income tax purposes.  The accrual of the nuclear decommissioning liabilities also required Entergy to recognize a gain for income tax purposes, a significant portion of which resulted in an increase in the tax basis of the assets.  Because certain aspects of the restructuring transactions involved uncertainty, Entergy recorded a provision for uncertain tax positions.  The IRS did not propose adjustments to the tax treatment of the restructuring transactions resulting in a net decrease to income tax expense of $288 million from the reversal of the provision for uncertain tax positions in fourth quarter 2023.Reduction of Net Operating Loss CarryoversThe IRS audit reduced Entergy’s net operating loss carryover by $8 billion.  A portion of Entergy’s audit adjustments were not offset by losses which resulted in a tax liability of $79 million, which was fully offset by prior deposits made by Entergy.  Entergy received an assessment of interest in excess of prior deposits of $13 million in December 2023, and such interest was paid in January 2024.Net operating loss carryovers were reduced by $4 billion for Entergy Arkansas, $1 billion for Entergy Louisiana, $2 billion for Entergy Mississippi, $1 billion for Entergy New Orleans, and $40 million for System 

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Table of ContentsEntergy Corporation and SubsidiariesNotes to Financial Statements

Energy.  The IRS audit adjustments were also factored into the settle-up required under Entergy’s intercompany income tax allocation agreement, and such amounts were settled in the fourth quarter of 2023.Regulatory and Other MattersIn accordance with prior regulatory agreements associated with the Entergy Louisiana and Entergy Gulf States Louisiana business combination and Entergy New Orleans restructuring and general rate-making principles, Entergy Louisiana and Entergy New Orleans, respectively, recorded a regulatory liability and an associated regulatory charge of $38 million and $60 million ($28 million and $44 million net-of-tax), in December 2023.Additionally,