Talen Energy Corp
For the period ended Sep 30, 2024. Filed Nov 14, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 14, 2024
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5. Income Taxes
- Income Taxes
Effective Tax Rate Reconciliations
The reconciliations of the effective tax rate for the periods were:
| Successor · Predecessor | |||||
|---|---|---|---|---|---|
| Three Months Ended September 30, 2024 | Three Months Ended September 30, 2023 | Nine Months Ended September 30, 2024 | May 18 through September 30, 2023 | January 1 through May 17, 2023 | |
| Income (loss) before income taxes | $179 | $(92) | $1,137 | $(42) | $677 |
| Income tax benefit (expense) | (11) | 16 | (192) | (3) | (212) |
| Effective tax rate | 6.1% | 17.4% | 16.9% | (7.1%) | 31.3% |
| Federal income tax statutory tax rate | 21% | 21% | 21% | 21% | 21% |
| Income tax benefit (expense) computed at the federal income tax statutory tax rate | (38) | 19 | (239) | 9 | (143) |
| Income tax increase (decrease) due to: | |||||
| State income taxes, net of federal benefit | (5) | 3 | (34) | 1 | (34) |
| Change in valuation allowance | 29 | (12) | 63 | (10) | 129 |
| Production tax credits | 16 | — | 34 | — | — |
| Other permanent differences | (3) | 3 | 10 | — | (16) |
| Nuclear decommissioning trust taxes | (10) | 3 | (26) | (3) | (9) |
| Reorganization adjustments | — | — | — | — | (138) |
| Other | — | — | — | — | (1) |
| Income tax benefit (expense) | $(11) | $16 | $(192) | $(3) | $(212) |
Valuation Allowance
Management assesses the available positive and negative evidence to estimate whether it is more likely than not that sufficient future taxable income will be generated to permit use of existing deferred tax assets. The assessment of future taxable income includes the scheduled reversal of taxable temporary differences, projected future taxable income, tax planning strategies, and results of recent operations. For the nine months ended September 30, 2024 (Successor), Talen recognized a $63 million tax benefit for the reduction in federal and state valuation allowances, primarily related to year-to-date divestitures and year-to-date income which increase the amount of tax attributes that can be utilized. See Note 17 for information on divestitures. At each period, management will continue to assess the available positive and negative evidence to determine the need for a valuation allowance. We believe that there is a reasonable possibility that within the next 12 months, sufficient positive evidence may become available to allow us to reach a conclusion that a significant portion of the valuation allowance may no longer be needed.
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