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Income Taxes | 12 Months Ended
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Dec. 31, 2017
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES Income Tax Expense The following table is a summary of income tax expense for the years ended December 31:
(in millions) |  | 2017 |  | 2016 |  | 2015
Current tax expense |  | $ | 111.8 |  |  | $ | 72.7 |  |  | $ | 15.1 |
Deferred income taxes, net |  | 274.4 |  |  | 498.7 |  |  | 420.4 |
Investment tax credit, net |  | (2.7 | ) |  | (4.9 | ) |  | (1.7 | )
Total income tax expense |  | $ | 383.5 |  |  | $ | 566.5 |  |  | $ | 433.8 |
Statutory Rate Reconciliation The provision for income taxes for each of the years ended December 31 differs from the amount of income tax determined by applying the applicable United States statutory federal income tax rate to income before income taxes as a result of the following:
|  | 2017 |  | 2016 |  | 2015
|  |  |  | Effective |  |  |  | Effective |  |  |  | Effective
(in millions) |  | Amount |  | Tax Rate |  | Amount |  | Tax Rate |  | Amount |  | Tax Rate
Expected tax at statutory federal tax rates |  | $ | 555.5 |  |  | 35.0 | % |  | $ | 526.4 |  |  | 35.0 | % |  | $ | 375.5 |  |  | 35.0 | %
State income taxes net of federal tax benefit |  | 100.8 |  |  | 6.4 | % |  | 72.8 |  |  | 4.8 | % |  | 73.1 |  |  | 6.8 | %
Federal tax reform |  | (226.9 | ) |  | (14.3 | )% |  | — |  |  | — | % |  | — |  |  | — | %
Production tax credits |  | (16.8 | ) |  | (1.1 | )% |  | (15.7 | ) |  | (1.1 | )% |  | (17.4 | ) |  | (1.6 | )%
AFUDC – Equity |  | (4.0 | ) |  | (0.3 | )% |  | (8.8 | ) |  | (0.6 | )% |  | (7.1 | ) |  | (0.7 | )%
Investment tax credit restored |  | (2.7 | ) |  | (0.2 | )% |  | (4.9 | ) |  | (0.3 | )% |  | (1.7 | ) |  | (0.2 | )%
Other, net |  | (22.4 | ) |  | (1.4 | )% |  | (3.3 | ) |  | (0.2 | )% |  | 11.4 |  |  | 1.1 | %
Total income tax expense |  | $ | 383.5 |  |  | 24.1 | % |  | $ | 566.5 |  |  | 37.6 | % |  | $ | 433.8 |  |  | 40.4 | %
The net impact of tax reform in the amount of $206.7 million is represented in both the Federal tax reform and State income taxes net of federal tax benefit lines above. Deferred Income Tax Assets and Liabilities On December 22, 2017, the Tax Legislation was signed into law. For businesses, the Tax Legislation reduces the corporate federal tax rate from a maximum of 35% to a 21% rate effective January 1, 2018. We estimated a preliminary tax benefit related to the re-measurement of our deferred taxes in the amount of approximately $2,657 million. Accordingly, the tax benefit related to our regulated utilities was recorded as both an increase to regulatory liabilities as well as a decrease to certain existing regulatory assets as of December 31, 2017. The effects of federal Tax Legislation primarily at our non-utility energy infrastructure and corporate and other segments resulted in the recording of an income tax benefit of approximately $206.7 million for the year ended December 31, 2017. This tax benefit is primarily due to a re-measurement of deferred tax assets and liabilities. Our revaluation of our deferred tax assets and liabilities is subject to further clarification of the new law that cannot be estimated at this time. The impact of the Tax Legislation could materially differ from this estimate due to, among other things, changes in interpretations and assumptions we have made. On December 22, 2017, the SEC staff issued guidance in Staff Accounting Bulletin 118 (SAB 118), Income Tax Accounting Implications of the Tax Cuts and Jobs Act, which provides for a measurement period of up to one year from the enactment date to complete accounting under GAAP for the tax effects of the legislation. Due to the complex and comprehensive nature of the enacted tax law changes, and their application under GAAP, certain amounts related to bonus depreciation and future tax benefit utilization recorded in the financial statements as a result of the Tax Legislation are to be considered "provisional" as discussed in SAB 118 and subject to revision. We are awaiting additional guidance from industry and income tax authorities in order to finalize our accounting. The components of deferred income taxes as of December 31 are as follows:
(in millions) |  | 2017 |  | 2016
Deferred tax assets |  |  |  |
Tax gross up – regulatory items |  | $ | 585.8 |  |  | $ | — |
Future tax benefits |  | 303.9 |  |  | 430.4 |
Employee benefits and compensation |  | 164.2 |  |  | 222.0 |
Deferred revenues |  | 128.8 |  |  | 207.2 |
Property-related |  | 24.4 |  |  | 54.5 |
Other |  | 185.0 |  |  | 230.6 |
Total deferred tax assets |  | 1,392.1 |  |  | 1,144.7 |
Valuation allowance |  | (15.7 | ) |  | (15.0 | )
Net deferred tax assets |  | $ | 1,376.4 |  |  | $ | 1,129.7 |
Deferred tax liabilities |  |  |  |
Property-related |  | $ | 3,464.6 |  |  | $ | 4,979.3 |
Investment in transmission affiliate |  | 321.2 |  |  | 476.9 |
Employee benefits and compensation |  | 285.8 |  |  | 401.6 |
Deferred transmission costs |  | 60.1 |  |  | 93.1 |
Other |  | 244.5 |  |  | 325.4 |
Total deferred tax liabilities |  | 4,376.2 |  |  | 6,276.3 |
Deferred tax liability, net |  | $ | 2,999.8 |  |  | $ | 5,146.6 |
Consistent with rate-making treatment, deferred taxes related to our regulated utilities in the table above are offset for temporary differences that have related regulatory assets and liabilities. The components of net deferred tax assets associated with federal and state tax benefit carryforwards as of December 31, 2017 and 2016 are summarized in the tables below:
2017 (in millions) |  | Gross Value |  | Deferred Tax Effect |  | Valuation Allowance |  | Earliest Year of Expiration
Future tax benefits as of December 31, 2017 |  |  |  |  |  |  |  |
Federal foreign tax credit |  | $ | — |  |  | $ | 13.5 |  |  | $ | (13.5 | ) |  | 2018
Other federal tax credit |  | — |  |  | 259.6 |  |  | (0.1 | ) |  | 2025
Charitable contribution and capital loss |  | 21.7 |  |  | 8.6 |  |  | (2.1 | ) |  | 2017
State net operating loss |  | 282.7 |  |  | 17.2 |  |  | — |  |  | 2025
State tax credit |  | — |  |  | 5.0 |  |  | — |  |  | 2017
Balance as of December 31, 2017 |  | $ | 304.4 |  |  | $ | 303.9 |  |  | $ | (15.7 | ) |  |
2016 (in millions) |  | Gross Value |  | Deferred Tax Effect |  | Valuation Allowance |  | Earliest Year of Expiration
Future tax benefits as of December 31, 2016 |  |  |  |  |  |  |  |
Federal net operating loss |  | $ | 407.6 |  |  | $ | 142.7 |  |  | $ | — |  |  | 2031
Federal foreign tax credit |  | — |  |  | 13.5 |  |  | (13.5 | ) |  | 2017
Other federal tax credit |  | — |  |  | 241.1 |  |  | — |  |  | 2025
Charitable contribution |  | 9.4 |  |  | 4.0 |  |  | (1.5 | ) |  | 2016
State net operating loss |  | 482.6 |  |  | 24.3 |  |  | — |  |  | 2024
State tax credit |  | — |  |  | 4.8 |  |  | — |  |  | 2016
Balance as of December 31, 2016 |  | $ | 899.6 |  |  | $ | 430.4 |  |  | $ | (15.0 | ) |  |
Valuation allowances of $15.7 million have been established for certain tax benefit carryforwards obtained in the Integrys acquisition based on our projected ability to realize such benefits by offsetting future tax liabilities. This is primarily the result of bonus depreciation. Realization is dependent on generating sufficient tax liabilities prior to expiration of the tax benefit carryforwards. Unrecognized Tax Benefits We previously adopted accounting guidance related to uncertainty in income taxes. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
(in millions) |  | 2017 |  | 2016
Balance as of January 1 |  | $ | 14.5 |  |  | $ | 9.5 |
Additions for tax positions of prior years |  | 7.9 |  |  | 6.7 |
Additions based on tax positions related to the current year |  | 0.5 |  |  | 1.1 |
Reductions for tax positions of prior years |  | (5.6 | ) |  | (1.0 | )
Reductions due to statute of limitations |  | — |  |  | (1.8 | )
Balance as of December 31 |  | $ | 17.3 |  |  | $ | 14.5 |
The amount of unrecognized tax benefits as of December 31, 2017 and 2016, excludes deferred tax assets related to uncertainty in income taxes of $2.1 million and $6.6 million, respectively. As of December 31, 2017 and 2016, the net amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate for continuing operations was $15.2 million and $7.9 million, respectively. We recognize interest and penalties accrued related to unrecognized tax benefits as a component of income tax expense. For the years ended December 31, 2017, 2016, and 2015, we recognized $0.6 million of interest income, $0.2 million of interest expense, and zero interest, respectively, in our income statements. For the years ended December 31, 2017, 2016, and 2015, we recognized no penalties in our income statements. For the year ended December 31, 2017, we had $0.2 million of interest accrued and no penalties accrued on our balance sheets. For the year ended December 31, 2016, we had $0.8 million of interest accrued and no penalties accrued on our balance sheets. We do not anticipate any significant increases or decreases in the total amounts of unrecognized tax benefits within the next 12 months. We file income tax returns in the United States federal jurisdiction and state tax returns based on income in our major state operating jurisdictions of Wisconsin, Illinois, Michigan, and Minnesota. We also file tax returns in other state and local jurisdictions with varying statutes of limitations. As of December 31, 2017, we were subject to examination by state or local tax authorities for the 2013 through 2017 tax years in our major state operating jurisdictions as follows:
Jurisdiction |  | Years
Federal |  | 2014–2017
Illinois |  | 2013–2017
Michigan |  | 2013–2017
Minnesota |  | 2014–2017
Wisconsin |  | 2013–2017

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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