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Income Taxes (Tables) | 6 Months Ended
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Jun. 30, 2021
Income Taxes [Abstract] |
Federal and State Income Tax Provision | The following table presents the components of our consolidated benefit from (provision for) income taxes for the periods indicated (dollars in millions):
|  | For the Three Months Ended June 30, |  |  | For the Six Months Ended June 30, |
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Deferred tax benefit (expense) attributable to OTA Holdings, Inc. (“OTA”) |  | $ | (7.0 | ) |  | $ | (50.5 | ) |  | $ | (13.3 | ) |  | $ | 136.7 |
Revised Texas Franchise Tax (“Texas Margin Tax”) |  |  | (24.1 | ) |  |  | (7.0 | ) |  |  | (27.4 | ) |  |  | (14.7 | )
Other |  |  | (0.1 | ) |  |  | (2.2 | ) |  |  | (0.5 | ) |  |  | (2.5 | )
Benefit from (provision for) income taxes |  | $ | (31.2 | ) |  | $ | (59.7 | ) |  | $ | (41.2 | ) |  | $ | 119.5 |
Our federal, state and foreign income tax benefit (provision) is summarized below:
|  | For the Three Months Ended June 30, |  |  | For the Six Months Ended June 30, |
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Current portion of income tax benefit (provision): |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | (0.2 | ) |  | $ | (2.2 | ) |  | $ | 0.6 |  |  | $ | (2.3 | )
State |  |  | (11.5 | ) |  |  | (4.1 | ) |  |  | (16.6 | ) |  |  | (8.7 | )
Foreign |  |  | – |  |  |  | – |  |  |  | (1.1 | ) |  |  | (0.2 | )
Total current portion |  |  | (11.7 | ) |  |  | (6.3 | ) |  |  | (17.1 | ) |  |  | (11.2 | )
Deferred portion of income tax benefit (provision): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (6.3 | ) |  |  | (46.4 | ) |  |  | (12.2 | ) |  |  | 126.4 |
State |  |  | (13.2 | ) |  |  | (7.0 | ) |  |  | (11.9 | ) |  |  | 4.3 |
Foreign |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |
Total deferred portion |  |  | (19.5 | ) |  |  | (53.4 | ) |  |  | (24.1 | ) |  |  | 130.7 |
Total benefit from (provision for) income taxes |  | $ | (31.2 | ) |  | $ | (59.7 | ) |  | $ | (41.2 | ) |  | $ | 119.5 |
Reconciliation of Provision for Income Taxes | A reconciliation of the benefit from (provision for) income taxes with amounts determined by applying the statutory U.S. federal income tax rate to income before income taxes is as follows:
|  | For the Three Months Ended June 30, |  |  | For the Six Months Ended June 30, |
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Pre-Tax Net Book Income (“NBI”) |  | $ | 1,177.2 |  |  | $ | 1,120.5 |  |  | $ | 2,549.8 |  |  | $ | 2,316.3 |
Texas Margin Tax (1) |  |  | (24.1 | ) |  |  | (7.0 | ) |  |  | (27.4 | ) |  |  | (14.7 | )
State income tax benefit (provision), net of federal benefit (2) |  |  | (0.3 | ) |  |  | (3.2 | ) |  |  | (0.9 | ) |  |  | 8.1 |
Federal income tax benefit (provision) computed by applying the federal statutory rate to NBI of corporate entities |  |  | (3.4 | ) |  |  | (49.5 | ) |  |  | (6.5 | ) |  |  | 58.3 |
Federal benefit attributable to settlement of Liquidity Option Agreement (2) |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 67.8 |
Valuation allowance on deferred tax assets (3) |  |  | (3.4 | ) |  |  | – |  |  |  | (6.2 | ) |  |  | – |
Other |  |  | – |  |  |  | – |  |  |  | (0.2 | ) |  |  | – |
Benefit from (provision for) income taxes |  | $ | (31.2 | ) |  | $ | (59.7 | ) |  | $ | (41.2 | ) |  | $ | 119.5 |
Effective income tax rate |  |  | (2.7 | )% |  |  | (5.3 | )% |  |  | (1.6 | )% |  |  | 5.2 | %
(1) | Although the Texas Margin Tax is not considered a state income tax, it has the characteristics of an income tax since it is determined by applying a tax rate to a base that considers our Texas-sourced revenues and expenses.
(2) | The total benefit recognized in income tax expense on March 5, 2020 from settlement of the Liquidity Option was $72.2 million, which is comprised of $4.4 million of state income tax benefit and $67.8 million of federal income tax benefit.
(3) | Management believes that it is more likely than not that the net deferred tax assets attributable to OTA will not be fully realizable; therefore, we have provided for a valuation allowance.
Components of Deferred Tax Assets and Liabilities | The following table presents the significant components of deferred tax assets and deferred tax liabilities at the dates indicated:
|  | June 30, |  |  | December 31, |
|  | 2021 |  |  | 2020 |
Deferred tax liabilities: |  |  |  |  |  |
Attributable to investment in OTA |  | $ | 369.9 |  |  | $ | 356.6 |
Attributable to property, plant and equipment |  |  | 117.8 |  |  |  | 106.4 |
Attributable to investments in other entities |  |  | 4.2 |  |  |  | 4.1 |
Other |  |  | 13.5 |  |  |  | – |
Total deferred tax liabilities |  |  | 505.4 |  |  |  | 467.1 |
Less deferred tax assets: |  |  |  |  |  |  |  |
Net operating loss carryovers (1) |  |  | 6.3 |  |  |  | 0.1 |
Temporary differences related to Texas Margin Tax |  |  | 3.0 |  |  |  | 2.3 |
Total deferred tax assets |  |  | 9.3 |  |  |  | 2.4 |
Total net deferred tax liabilities before valuation allowance |  |  | 496.1 |  |  |  | 464.7 |
Less: Valuation allowance on deferred tax assets |  |  | 6.2 |  |  |  | – |
Total net deferred tax liabilities |  | $ | 502.3 |  |  | $ | 464.7 |
(1) | Of the loss amount presented for June 30, 2021, $0.1 million expires in various years between 2021 and 2037. The remaining $6.2 million has an indefinite carryover period. All losses are subject to limitations on their utilization.

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