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Income Taxes (Tables) | 3 Months Ended
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Mar. 31, 2022
Income Taxes [Abstract] |
Federal and State Income Tax Provision | The following table presents the components of our consolidated provision for income taxes for the periods indicated (dollars in millions):
|  | For the Three Months Ended March 31, |
|  | 2022 |  |  | 2021 |
Deferred tax expense attributable to OTA Holdings, Inc. (“OTA”) |  | $ | (7 | ) |  | $ | (6 | )
Revised Texas Franchise Tax (“Texas Margin Tax”) |  |  | (12 | ) |  |  | (3 | )
Other |  |  | – |  |  |  | (1 | )
Provision for income taxes |  | $ | (19 | ) |  | $ | (10 | )
Our federal, state and foreign income tax benefit (provision) is summarized below:
|  | For the Three Months Ended March 31, |
|  | 2022 |  |  | 2021 |
Current portion of income tax benefit (provision): |  |  |  |  |  |
Federal |  | $ | – |  |  | $ | 1 |
State |  |  | (10 | ) |  |  | (5 | )
Foreign |  |  | – |  |  |  | (1 | )
Total current portion |  |  | (10 | ) |  |  | (5 | )
Deferred portion of income tax benefit (provision): |  |  |  |  |  |  |  |
Federal |  |  | (7 | ) |  |  | (6 | )
State |  |  | (2 | ) |  |  | 1 |
Total deferred portion |  |  | (9 | ) |  |  | (5 | )
Total provision for income taxes |  | $ | (19 | ) |  | $ | (10 | )
Reconciliation of Provision for Income Taxes | A reconciliation of the 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 March 31, |
|  | 2022 |  |  | 2021 |
Pre-Tax Net Book Income (“NBI”) |  | $ | 1,350 |  |  | $ | 1,373 |
Texas Margin Tax (1) |  |  | (12 | ) |  |  | (3 | )
State income tax provision, net of federal benefit |  |  | – |  |  |  | (1 | )
Federal income tax provision computed by applying the federal statutory rate to NBI of corporate entities |  |  | (3 | ) |  |  | (3 | )
Valuation allowance (2) |  |  | (4 | ) |  |  | (3 | )
Provision for income taxes |  | $ | (19 | ) |  | $ | (10 | )
Effective income tax rate |  |  | (1.4 | )% |  |  | (0.7 | )%
(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) | Management believes that it is more likely than not that the net deferred tax assets attributable to OTA will not be fully realizable. Accordingly, we provided for a valuation allowance against OTA’s net deferred tax assets.
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:
|  | March 31, |  |  | December 31, |
|  | 2022 |  |  | 2021 |
Deferred tax liabilities: |  |  |  |  |  |
Attributable to investment in OTA |  | $ | 391 |  |  | $ | 384 |
Attributable to property, plant and equipment |  |  | 120 |  |  |  | 118 |
Attributable to investments in other entities |  |  | 5 |  |  |  | 5 |
Other |  |  | 36 |  |  |  | 14 |
Total deferred tax liabilities |  |  | 552 |  |  |  | 521 |
Deferred tax assets: |  |  |  |  |  |  |  |
Net operating loss carryovers (1) |  |  | 4 |  |  |  | 14 |
Temporary differences related to Texas Margin Tax |  |  | 3 |  |  |  | 3 |
Total deferred tax assets |  |  | 7 |  |  |  | 17 |
Valuation allowance |  |  | 4 |  |  |  | 14 |
Total deferred tax assets, net of valuation allowance |  |  | 3 |  |  |  | 3 |
Total net deferred tax liabilities |  | $ | 549 |  |  | $ | 518 |
(1) | The loss amount presented as of March 31, 2022 has an indefinite carryover period. All losses are subject to limitations on their utilization.

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