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Income Taxes (Tables) | 9 Months Ended
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Sep. 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 September 30, |  |  | For the Nine Months Ended September 30, |
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Deferred tax benefit (expense) attributable to OTA Holdings, Inc. (“OTA”) |  | $ | (6.8 | ) |  | $ | 21.3 |  |  | $ | (20.1 | ) |  | $ | 158.0 |
Revised Texas Franchise Tax (“Texas Margin Tax”) |  |  | (9.6 | ) |  |  | (7.2 | ) |  |  | (37.0 | ) |  |  | (21.9 | )
Other |  |  | 0.3 |  |  |  | 5.0 |  |  |  | (0.2 | ) |  |  | 2.5 |
Benefit from (provision for) income taxes |  | $ | (16.1 | ) |  | $ | 19.1 |  |  | $ | (57.3 | ) |  | $ | 138.6 |
Our federal, state and foreign income tax benefit (provision) is summarized below:
|  | For the Three Months Ended September 30, |  |  | For the Nine Months Ended September 30, |
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Current portion of income tax benefit (provision): |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 1.0 |  |  | $ | 5.3 |  |  | $ | 1.6 |  |  | $ | 3.0 |
State |  |  | (8.2 | ) |  |  | (4.7 | ) |  |  | (24.8 | ) |  |  | (13.4 | )
Foreign |  |  | 0.1 |  |  |  | 0.2 |  |  |  | (1.0 | ) |  |  | – |
Total current portion |  |  | (7.1 | ) |  |  | 0.8 |  |  |  | (24.2 | ) |  |  | (10.4 | )
Deferred portion of income tax benefit (provision): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (7.1 | ) |  |  | 18.7 |  |  |  | (19.3 | ) |  |  | 145.1 |
State |  |  | (1.9 | ) |  |  | (0.4 | ) |  |  | (13.8 | ) |  |  | 3.9 |
Foreign |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |
Total deferred portion |  |  | (9.0 | ) |  |  | 18.3 |  |  |  | (33.1 | ) |  |  | 149.0 |
Total benefit from (provision for) income taxes |  | $ | (16.1 | ) |  | $ | 19.1 |  |  | $ | (57.3 | ) |  | $ | 138.6 |
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 September 30, |  |  | For the Nine Months Ended September 30, |
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Pre-Tax Net Book Income (“NBI”) |  | $ | 1,198.2 |  |  | $ | 1,064.9 |  |  | $ | 3,748.0 |  |  | $ | 3,381.2 |
Texas Margin Tax (1) |  |  | (9.6 | ) |  |  | (7.2 | ) |  |  | (37.0 | ) |  |  | (21.9 | )
State income tax benefit (provision), net of federal benefit (2) |  |  | (0.1 | ) |  |  | 1.6 |  |  |  | (1.0 | ) |  |  | 9.7 |
Federal income tax benefit (provision) computed by applying the federal statutory rate to NBI of corporate entities |  |  | (3.3 | ) |  |  | 25.1 |  |  |  | (9.8 | ) |  |  | 83.4 |
Federal benefit attributable to settlement of Liquidity Option Agreement (2) |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 67.8 |
Valuation allowance (3) |  |  | (3.1 | ) |  |  | – |  |  |  | (9.3 | ) |  |  | – |
Other |  |  | – |  |  |  | (0.4 | ) |  |  | (0.2 | ) |  |  | (0.4 | )
Benefit from (provision for) income taxes |  | $ | (16.1 | ) |  | $ | 19.1 |  |  | $ | (57.3 | ) |  | $ | 138.6 |
Effective income tax rate |  |  | (1.3 | )% |  |  | 1.8 | % |  |  | (1.5 | )% |  |  | 4.1 | %
(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:
|  | September 30, |  |  | December 31, |
|  | 2021 |  |  | 2020 |
Deferred tax liabilities: |  |  |  |  |  |
Attributable to investment in OTA |  | $ | 376.7 |  |  | $ | 356.6 |
Attributable to property, plant and equipment |  |  | 119.8 |  |  |  | 106.4 |
Attributable to investments in other entities |  |  | 4.4 |  |  |  | 4.1 |
Other |  |  | 13.5 |  |  |  | – |
Total deferred tax liabilities |  |  | 514.4 |  |  |  | 467.1 |
Deferred tax assets: |  |  |  |  |  |  |  |
Net operating loss carryovers (1) |  |  | 9.4 |  |  |  | 0.1 |
Temporary differences related to Texas Margin Tax |  |  | 3.0 |  |  |  | 2.3 |
Total deferred tax assets |  |  | 12.4 |  |  |  | 2.4 |
Valuation allowance |  |  | 9.3 |  |  |  | – |
Total deferred tax assets, net of valuation allowance |  |  | 3.1 |  |  |  | 2.4 |
Total net deferred tax liabilities |  | $ | 511.3 |  |  | $ | 464.7 |
(1) | Of the loss amount presented for September 30, 2021, $0.1 million expires in various years between 2021 and 2037. The remaining $9.3 million has an indefinite carryover period. All losses are subject to limitations on their utilization.

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