Page 73 - SWGas Annual Report 2015

A reconciliation of the U.S. federal statutory rate to the consolidated effective tax rate for 2013, 2014, and 2015 (and
the sources of these differences and the effect of each) are summarized as follows:

Year Ended December 31, 2015 2014 2013

U.S. federal statutory income tax rate 35.0% 35.0% 35.0%
Net state taxes 1.8 1.9 2.4
Property-related items 0.1 0.1 0.1
Tax credits (0.4) (0.5) (0.4)
Company owned life insurance 0.1 (1.0) (2.1)
All other differences (0.2) 0.2 —

Consolidated effective income tax rate 36.4 % 35.7 % 35.0 %

Deferred tax assets and liabilities consist of the following (thousands of dollars): 2015 2014

December 31, $ 1,614 $ 2,146
Deferred tax assets:
36,923 31,557
Deferred income taxes for future amortization of ITC
Employee benefits 4,809 20,172
Alternative minimum tax credit
Net operating losses and credits 868 9,719
Interest rate swap
Other 7,351 8,622
Valuation allowance
24,636 25,872
Deferred tax liabilities:
Property-related items, including accelerated depreciation (499) (253)
Regulatory balancing accounts
Unamortized ITC 75,702 97,835
Debt-related costs
Intangibles 794,850 736,810
Other 743 33,736
3,410
Net deferred tax liabilities 2,549 5,066
5,497 12,792
Current 9,547 27,600
Noncurrent 31,533
Net deferred tax liabilities 819,414
844,719
721,579
769,017

— (2,109)
769,017 723,688

$769,017 $721,579

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, various states, and in
Canada. With few exceptions, the Company is no longer subject to United States federal, state and local, or
Canadian income tax examinations for years before 2011.

Southwest Gas Corporation