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Income Taxes | 12 Months Ended
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Dec. 31, 2021
Income Taxes [Abstract] |
Provision for Income Taxes | Note 15. Income Taxes Publicly traded partnerships like ours are treated as corporations unless they have 90% or more in “qualifying income” (as that term is defined in the Internal Revenue Code). We satisfied this requirement in each of the years ended December 31, 2021, 2020 and 2019 and, as a result, are not subject to federal income tax. However, our partners are individually responsible for paying federal income tax on their share of our taxable income. Net earnings for financial reporting purposes may differ significantly from taxable income reportable to our unitholders as a result of differences between the tax basis and financial reporting basis of certain assets and liabilities and other factors. We do not have access to information regarding each partner’s individual tax basis in our limited partner interests. The following table presents the components of our consolidated benefit from (provision for) income taxes for the years indicated:
|  | For the Year Ended December 31, |
|  | 2021 |  |  | 2020 |  |  | 2019 |
Deferred tax benefit (provision) attributable to OTA |  | $ | (27.6 | ) |  | $ | 155.3 |  |  | $ | – |
Texas Margin Tax |  |  | (41.9 | ) |  |  | (32.1 | ) |  |  | (44.2 | )
Other |  |  | (0.5 | ) |  |  | 1.1 |  |  |  | (1.4 | )
Benefit from (provision for) income taxes |  | $ | (70.0 | ) |  | $ | 124.3 |  |  | $ | (45.6 | )
In addition to income tax amounts attributable to OTA (as described below), the provision for income taxes includes our state tax obligations under the Revised Texas Franchise Tax (the “Texas Margin Tax”). Income taxes are accounted for under the asset-and-liability method. Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. We recognize the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. Accounting guidance provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. We did not rely on any uncertain tax positions in recording our income tax-related amounts during the years ended December 31, 2021, 2020 and 2019. OTA Deferred Tax Liability On March 5, 2020, the Partnership settled its obligations under the Liquidity Option Agreement (see Note 8) and indirectly assumed OTA’s deferred tax liability, which reflects OTA’s outside basis difference in the limited partner interests it received from the Partnership in October 2014. Upon settlement of the Liquidity Option, the Liquidity Option liability was effectively replaced by the deferred tax liability of OTA calculated in accordance with ASC 740, Income Taxes. At March 5, 2020, the Liquidity Option liability amount was $511.9 million. Since the book value of the Liquidity Option liability exceeded OTA’s estimated deferred tax liability of $439.7 million on that date, we recognized a non-cash benefit in earnings of $72.2 million, which is reflected in the “Benefit from (provision for) income tax” line on our Statement of Consolidated Operations for the year ended December 31, 2020. OTA recognized an additional net, non-cash deferred income tax benefit of $83.1 million primarily due to a decrease in the outside basis difference of its investment in the Partnership attributable to a decline in the market price of the Partnership’s common units subsequent to March 5, 2020 through September 30, 2020. In total, earnings for the year ended December 31, 2020 reflect $155.3 million of net deferred income tax benefit attributable to OTA. On September 30, 2020, OTA exchanged the Partnership common units it owned for non-publicly traded preferred units having a stated value of $1,000 per unit (see Note 8). As a result and beginning September 30, 2020, OTA’s deferred tax liability no longer fluctuates due to market price changes in the Partnership’s common units. Our subsidiary OTA is a corporation for U.S. federal income tax purposes, and the exchange of common units for preferred units did not constitute a taxable transaction for OTA. Tabular Disclosures Regarding Income Taxes Our federal, state and foreign income tax benefit (provision) is summarized below:
|  | For the Year Ended December 31, |
|  | 2021 |  |  | 2020 |  |  | 2019 |
Current portion of income tax benefit (provision): |  |  |  |  |  |  |  |  |
Federal |  | $ | 2.0 |  |  | $ | 2.9 |  |  | $ | 1.3 |
State |  |  | (31.1 | ) |  |  | (25.6 | ) |  |  | (25.7 | )
Foreign |  |  | (1.1 | ) |  |  | (0.6 | ) |  |  | (1.2 | )
Total current portion |  |  | (30.2 | ) |  |  | (23.3 | ) |  |  | (25.6 | )
Deferred portion of income tax benefit (provision): |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (26.9 | ) |  |  | 142.0 |  |  |  | (1.6 | )
State |  |  | (12.9 | ) |  |  | 5.6 |  |  |  | (18.5 | )
Foreign |  |  | – |  |  |  | – |  |  |  | 0.1 |
Total deferred portion |  |  | (39.8 | ) |  |  | 147.6 |  |  |  | (20.0 | )
Total benefit from (provision for) income taxes |  | $ | (70.0 | ) |  | $ | 124.3 |  |  | $ | (45.6 | )
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 Year Ended December 31, |
|  | 2021 |  |  | 2020 |  |  | 2019 |
Pre-Tax Net Book Income (“NBI”) |  | $ | 4,825.3 |  |  | $ | 3,761.4 |  |  | $ | 4,732.7 |
Texas Margin Tax (1) |  |  | (41.9 | ) |  |  | (32.1 | ) |  |  | (44.2 | )
State income tax benefit (provision), net of federal benefit (2) |  |  | (1.3 | ) |  |  | 9.2 |  |  |  | (0.5 | )
Federal income tax benefit (provision) computed by applying the federal statutory rate to NBI of corporate entities |  |  | (13.1 | ) |  |  | 80.1 |  |  |  | (0.9 | )
Federal benefit attributable to settlement of Liquidity Option Agreement (2) |  |  | – |  |  |  | 67.8 |  |  |  | – |
Valuation allowance (3) |  |  | (14.2 | ) |  |  | – |  |  |  | – |
Other |  |  | 0.5 |  |  |  | (0.7 | ) |  |  | – |
Benefit from (provision for) income taxes |  | $ | (70.0 | ) |  | $ | 124.3 |  |  | $ | (45.6 | )
Effective income tax rate |  |  | (1.5 | )% |  |  | 3.3 | % |  |  | (1.0 | )%
(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.
Deferred income taxes are determined based on the temporary differences between the financial statement and income tax bases of assets and liabilities as measured by the enacted tax rates, which will be in effect when these differences reverse. The following table presents the significant components of deferred tax assets and deferred tax liabilities at the dates indicated:
|  | December 31, |
|  | 2021 |  |  | 2020 |
Deferred tax liabilities: |  |  |  |  |  |
Attributable to investment in OTA |  | $ | 384.2 |  |  | $ | 356.6 |
Attributable to property, plant and equipment |  |  | 118.0 |  |  |  | 106.4 |
Attributable to investments in other entities |  |  | 5.2 |  |  |  | 4.1 |
Other |  |  | 13.5 |  |  |  | – |
Total deferred tax liabilities |  |  | 520.9 |  |  |  | 467.1 |
Deferred tax assets: |  |  |  |  |  |  |  |
Net operating loss carryovers (1) |  |  | 14.3 |  |  |  | 0.1 |
Temporary differences related to Texas Margin Tax |  |  | 2.8 |  |  |  | 2.3 |
Total deferred tax assets |  |  | 17.1 |  |  |  | 2.4 |
Valuation allowance |  |  | 14.2 |  |  |  | – |
Total deferred tax assets, net of valuation allowance |  |  | 2.9 |  |  |  | 2.4 |
Total net deferred tax liabilities |  | $ | 518.0 |  |  | $ | 464.7 |
(1) | Of the loss amount presented as of December 31, 2021, $0.1 million expires in various years between 2022 and 2037. The remaining $14.2 million has an indefinite carryover period. All losses are subject to limitations on their utilization.

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- 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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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