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Income Taxes | 9 Months Ended
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Sep. 30, 2018
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES FirstEnergy’s interim effective tax rates reflect the estimated annual effective tax rates for 2018 and 2017. These tax rates are affected by estimated annual permanent items, such as AFUDC equity and other flow-through items, as well as discrete items that may occur in any given period, but are not consistent from period to period. FirstEnergy’s effective tax rate on continuing operations for the three months ended September 30, 2018 and 2017, was 25.6% and 40.2%, respectively. The decrease in effective tax rate is primarily due to the Tax Act that decreased the corporate federal income tax rate from 35% to 21%, which became effective January 1, 2018. FirstEnergy's effective tax rate for the nine months ended September 30, 2018 and 2017 was 37.5% and 38.5%, respectively. The decrease in effective tax rate is primarily due to the Tax Act, discussed above, offset by the impact of the legal and financial separation of FES and FENOC from FirstEnergy in the first quarter of 2018. This separation officially eroded the ties between FES, FENOC and other FirstEnergy subsidiaries doing business in West Virginia. As such, FES and FENOC were removed from the West Virginia unitary group when calculating West Virginia state income taxes, resulting in a $126 million charge to income tax expense in continuing operations associated with the re-measurement in state deferred taxes. See Note 3, "Discontinued Operations" for other tax matters relating to the FES Bankruptcy that were recognized in discontinued operations. At December 31, 2017, FirstEnergy recorded provisional income tax amounts in its accounting for certain effects of the provisions of the Tax Act as allowed under SAB 118. In addition, SAB 118 allowed for a measurement period for companies to finalize the provisional amounts recorded as of December 31, 2017, not to exceed one year. During the third quarter of 2018, the IRS provided additional guidance regarding the Tax Act, however, the adjustments to the provisional amounts recorded as of December 31, 2017, were immaterial. FirstEnergy expects to complete its assessment and record any final adjustments to the provisional amounts in the fourth quarter of 2018. FirstEnergy's assessment of accounting for the Tax Act is based upon management's current understanding of the Tax Act. However, it is also expected that further guidance will be issued during the fourth quarter of 2018, which may result in adjustments that could have a material impact to FirstEnergy's future results of operations, cash flows, or financial position. On July 1, 2018, the Governor of New Jersey signed budget legislation that, among other things, enacted unitary combined reporting, imposed a temporary surtax on top of the 9% corporate tax rate, imposed a one-time surtax on certain dividends, required market-based sourcing for sales of services, and selectively adopted certain aspects of the Tax Act. FirstEnergy expects the impact of this legislation to be immaterial to the financial statements. As of September 30, 2018, it was reasonably possible that approximately $2 million of unrecognized tax benefits, unrelated to FES and FENOC, may be resolved within the next twelve months as a result of the statute of limitations expiring, none of which would affect FirstEnergy's effective tax rate. On October 18, 2017, the Supreme Court of Pennsylvania affirmed the Commonwealth Court’s holding that the state’s net loss carryover provision violated the Pennsylvania Uniformity Clause and was unconstitutional. However, the court also opined that the unconstitutional portion of the net loss carryover provision that created the violation may be severed from the statute, enabling the statute to operate as the legislature intended, and on October 30, 2017, the Pennsylvania Governor signed House Bill 542 into law, which, among other things, amended Pennsylvania’s limitation on net loss deductions to remove the flat-dollar limitation. On January 4, 2018, the court declined to further hear any arguments related to the matter and, as a result, FirstEnergy withdrew its protective refund claims from the Commonwealth of Pennsylvania on January 30, 2018. Upon doing so, FirstEnergy reversed a previously recorded unrecognized tax benefit of approximately $45 million in the first quarter of 2018, none of which impacted FirstEnergy’s effective tax rate. In January 2018, the IRS completed its examination of FirstEnergy’s 2016 federal income tax return and issued a Full Acceptance Letter with no changes or adjustments to FirstEnergy’s taxable income.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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