Income Taxes

6 Months Ended

Jun. 30, 2012

6. Income Taxes

GenOn Americas Generation

GenOn Americas Generation and most of its subsidiaries are limited liability companies that are treated as branches of GenOn Americas for income tax purposes. As a result, GenOn Americas and GenOn have direct liability for the majority of the United States federal and state income taxes relating to GenOn Americas Generation’s operations. Two of GenOn Americas Generation’s subsidiaries, Hudson Valley Gas Corporation and GenOn Special Procurement, Inc., exist as regarded corporate entities for income tax purposes. GenOn Kendall, which had previously existed as a regarded entity, was converted to a disregarded entity effective January 1, 2011. For these subsidiaries that continue to exist as corporate regarded entities, GenOn Americas Generation allocates current and deferred income taxes to each corporate regarded entity as if such entity were a single taxpayer utilizing the asset and liability method to account for income taxes. To the extent GenOn Americas Generation provides tax expense or benefit, any related tax payable or receivable to GenOn is reclassified to equity in the same period because GenOn Americas Generation does not have a tax sharing agreement with GenOn.

If GenOn Americas Generation were to be allocated income taxes attributable to its operations, the pro forma income tax provision (benefit) attributable to income before taxes would be $0 million and $(8) million during the three months ended June 30, 2012 and 2011, respectively, and $0 million and $10 million during the six months ended June 30, 2012 and 2011, respectively. The pro forma balance of GenOn Americas Generation’s net deferred income taxes is $0 at June 30, 2012.

On July 20, 2012, GenOn entered into the NRG Merger Agreement. GenOn and its subsidiaries will experience an ownership change under the applicable tax rules as a result of the NRG Merger. Immediately following the NRG Merger, GenOn and NRG will be members of the same consolidated federal income tax group. The ability of this consolidated tax group to deduct the pre-NRG Merger NOL carry forwards of GenOn against the post-NRG Merger taxable income of the group will be substantially limited as a result of the ownership change. Therefore if GenOn Americas Generation were to be allocated income taxes attributable to its operations, its pro forma NOLs would be substantially limited. See note 9.

GenOn Mid-Atlantic

GenOn Mid-Atlantic and its subsidiaries are limited liability companies and are not subject to United States federal or state income taxes. As such, GenOn Mid-Atlantic is treated as though it were a branch of GenOn Americas Generation’s parent, GenOn Americas, for income tax purposes, and not as a separate taxpayer. GenOn Americas and GenOn are directly responsible for income taxes related to GenOn Mid-Atlantic’s operations. If GenOn Mid-Atlantic were to be allocated income taxes attributable to its operations, the pro forma income tax provision (benefit) attributable to income before taxes would be $(22) million and $(2) million during the three months ended June 30, 2012 and 2011, respectively, and $6 million and $10 million during the six months ended June 30, 2012 and 2011, respectively. The balance of GenOn Mid-Atlantic’s pro forma deferred income taxes would be a net deferred tax liability of $247 million at June 30, 2012.

- 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

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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 6: http://www.xbrl.org/2003/role/presentationRef

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+ Details

GENON MID-ATLANTIC, LLC 10-Q