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Taxes - HECO (Hawaiian Electric Company, Inc. and Subsidiaries) | 9 Months Ended
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Sep. 30, 2013
Hawaiian Electric Company, Inc. and Subsidiaries |
Revenue taxes | Taxes Revenue taxes. Hawaiian Electric and its subsidiaries’ operating revenues include amounts for various Hawaii state revenue taxes. Revenue taxes are generally recorded as an expense in the period the related revenues are recognized. However, Hawaiian Electric and its subsidiaries’ revenue tax payments to the taxing authorities in the period are based on the prior year’s billed revenues (in the case of public service company taxes and PUC fees) or on the current year’s cash collections from electric sales (in the case of franchise taxes). For the nine months ended September 30, 2013 and 2012, Hawaiian Electric and its subsidiaries included approximately $198 million and $212 million, respectively, of revenue taxes in “operating revenues” and in “taxes, other than income taxes” expense. Out-of-period income tax benefit. In the third quarter of 2013, the Utilities recorded a $2.7 million out-of-period income tax benefit, resulting from the reversal of deferred tax liabilities due to errors in the amount of book over tax basis differences in plant and equipment. Management concluded that this out-of-period adjustment was not material to either the current or any prior period financial statements. Recent tax developments. In September 2013, the Internal Revenue Service (IRS) issued final regulations addressing the acquisition, production and improvement of tangible property, which are effective January 1, 2014. Management is currently evaluating the impact of these new regulations, but does not expect a material impact on the Utilities since specific guidance on network (i.e., transmission and distribution) assets and generation property has already been received. The IRS also proposed regulations addressing the disposition of property. The Utilities adopted the safe harbor guidelines with respect to network assets in 2011 and the IRS recently released a revenue procedure relating to deductions for repairs of generation property, which provides some guidance (that is elective) for taxpayers that own steam or electric generation property. This guidance defines the relevant components of generation property to be used in determining whether such component expenditures should be deducted as repairs or capitalized and depreciated by taxpayers. The revenue procedure also provides an extrapolation methodology that could be used by taxpayers in determining deductions for prior years’ repairs without going back to the specific documentation of those years. The guidance does not provide specific methods for determining the repairs amount. Management is evaluating the costs and benefits of adopting this guidance, in order to determine whether and when an election should be made.

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- Definition This element encapsulates disclosures pertaining to revenue taxes, recorded as an expense in the period the related revenues are recognized. + References No definition available. + Details
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