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Income Taxes (Tables) | 12 Months Ended
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Dec. 31, 2022
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 years indicated:
|  | For the Year Ended December 31, |
|  | 2022 |  |  | 2021 |  |  | 2020 |
Deferred tax benefit (provision) attributable to OTA |  | $ | (22 | ) |  | $ | (28 | ) |  | $ | 155 |
Texas Margin Tax |  |  | (56 | ) |  |  | (42 | ) |  |  | (32 | )
Other |  |  | (4 | ) |  |  | – |  |  |  | 1 |
Benefit from (provision for) income taxes |  | $ | (82 | ) |  | $ | (70 | ) |  | $ | 124 |
Our federal, state and foreign income tax benefit (provision) is summarized below:
|  | For the Year Ended December 31, |
|  | 2022 |  |  | 2021 |  |  | 2020 |
Current portion of income tax benefit (provision): |  |  |  |  |  |  |  |  |
Federal |  | $ | (2 | ) |  | $ | 2 |  |  | $ | 3 |
State |  |  | (18 | ) |  |  | (31 | ) |  |  | (26 | )
Foreign |  |  | (2 | ) |  |  | (1 | ) |  |  | (1 | )
Total current portion |  |  | (22 | ) |  |  | (30 | ) |  |  | (24 | )
Deferred portion of income tax benefit (provision): |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (20 | ) |  |  | (27 | ) |  |  | 142 |
State |  |  | (40 | ) |  |  | (13 | ) |  |  | 6 |
Foreign |  |  | – |  |  |  | – |  |  |  | – |
Total deferred portion |  |  | (60 | ) |  |  | (40 | ) |  |  | 148 |
Total benefit from (provision for) income taxes |  | $ | (82 | ) |  | $ | (70 | ) |  | $ | 124 |
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 Year Ended December 31, |
|  | 2022 |  |  | 2021 |  |  | 2020 |
Pre-Tax Net Book Income (“NBI”) |  | $ | 5,697 |  |  | $ | 4,825 |  |  | $ | 3,762 |
Texas Margin Tax (1) |  |  | (56 | ) |  |  | (42 | ) |  |  | (32 | )
State income tax benefit (provision), net of federal benefit (2) |  |  | (1 | ) |  |  | (1 | ) |  |  | 9 |
Federal income tax benefit (provision) computed by applying the federal statutory rate to NBI of corporate entities |  |  | (15 | ) |  |  | (13 | ) |  |  | 80 |
Federal benefit attributable to settlement of Liquidity Option Agreement (2) |  |  | – |  |  |  | – |  |  |  | 68 |
Valuation allowance (3) |  |  | (8 | ) |  |  | (14 | ) |  |  | – |
Other |  |  | (2 | ) |  |  | – |  |  |  | (1 | )
Benefit from (provision for) income taxes |  | $ | (82 | ) |  | $ | (70 | ) |  | $ | 124 |
Effective income tax rate |  |  | (1.4 | )% |  |  | (1.5 | )% |  |  | 3.3 | %
(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 million, which is comprised of $4 million of state income tax benefit and $68 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. 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:
|  | December 31, |
|  | 2022 |  |  | 2021 |
Deferred tax liabilities: |  |  |  |  |  |
Attributable to investment in OTA |  | $ | 406 |  |  | $ | 384 |
Attributable to property, plant and equipment |  |  | 133 |  |  |  | 118 |
Attributable to investments in other entities |  |  | 5 |  |  |  | 5 |
Other |  |  | 60 |  |  |  | 14 |
Total deferred tax liabilities |  |  | 604 |  |  |  | 521 |
Deferred tax assets: |  |  |  |  |  |  |  |
Net operating loss carryovers (1) |  |  | 22 |  |  |  | 14 |
Temporary differences related to Texas Margin Tax |  |  | 4 |  |  |  | 3 |
Total deferred tax assets |  |  | 26 |  |  |  | 17 |
Valuation allowance |  |  | 22 |  |  |  | 14 |
Total deferred tax assets, net of valuation allowance |  |  | 4 |  |  |  | 3 |
Total net deferred tax liabilities |  | $ | 600 |  |  | $ | 518 |
(1) | The loss amount presented as of December 31, 2022 has an indefinite carryover period. All losses are subject to limitations on their utilization.

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