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Income Taxes Income Taxes (Notes)
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Tax Disclosure [Text Block] INCOME TAXES:
As a partnership, we are not subject to United States federal income tax and most state income taxes. However, the Partnership conducts certain activities through corporate subsidiaries which are subject to federal and state income taxes.
The Partnership’s income (loss) before income tax expense by geographic area is shown in the table below:
 Years Ended December 31,
 202420232022
United States$7,101 $5,602 $6,073 
Foreign5 (5)(1)
Total$7,106 $5,597 $6,072 
The components of the federal and state income tax expense (benefit) of our taxable subsidiaries are summarized as follows:
 Years Ended December 31,
 202420232022
Current expense:
Federal$198 $56 $— 
State66 44 17 
Foreign1 — — 
Total265 100 17 
Deferred expense (benefit):
Federal175 227 239 
State101 (24)(58)
Foreign— — 6 
Total276 203 187 
Total income tax expense$541 $303 $204 
Historically, our effective tax rate has differed from the statutory rate primarily due to partnership earnings that are not subject to United States federal and most state income taxes at the partnership level. A reconciliation of income tax expense at the United States statutory rate to the Partnership’s income tax benefit for the years ended December 31, 2024, 2023 and 2022 is as follows:
Years Ended December 31,
202420232022
Income tax expense at United States statutory rate
$1,492 $1,175 $1,275 
Increase (reduction) in income taxes resulting from:
Partnership earnings not subject to tax(1,084)(884)(1,086)
Noncontrolling interests— — 26 
State tax, net of federal tax benefit113 47 19 
Statutory rate change— (10)(42)
Valuation allowance— (3)(4)
Uncertain tax positions21 (14)(3)
Non-deductible goodwill9 — — 
Dividend received deduction(3)(3)(3)
Foreign taxes— — 6 
Other(7)(5)16 
Income tax expense$541 $303 $204 
Deferred taxes result from the temporary differences between financial reporting carrying amounts and the tax basis of existing assets and liabilities. The following table summarizes the principal components of the deferred tax assets (liabilities) as follows:
 December 31,
 20242023
Deferred income tax assets:
Net operating losses and other carryforwards$197 $371 
Other42 46 
Total deferred income tax assets239 417 
Deferred income tax liabilities:
Property, plant and equipment(224)(232)
Investments in affiliates(4,098)(4,003)
Trademarks(82)(91)
Other(18)(22)
Total deferred income tax liabilities(4,422)(4,348)
Net deferred income taxes$(4,183)$(3,931)
As of December 31, 2024, ETP Holdco had a federal net operating loss carryforward of $537 million, that can be carried forward indefinitely. A total of $341 million of the federal net operating loss carryforward is limited under IRC §382. Although we expect to fully utilize the IRC §382 limited federal net operating loss, the amount utilized in a particular year may be limited. As of December 31, 2024, Sunoco Retail LLC, a corporate subsidiary of Sunoco LP, had a state net operating loss carryforward of $20 million, which we expect to fully utilize. Sunoco Retail LLC has no federal net operating loss carryforward. A foreign subsidiary of Sunoco Retail LLC had a net operating loss carryforward of $56 million, which we expect to fully utilize.
Our corporate subsidiaries have state net operating loss carryforward benefits of $64 million, net of federal tax, some of which expire between 2025 and 2043, while others are carried forward indefinitely. Our corporate subsidiaries have cumulative excess business interest expense of $118 million available for carryforward indefinitely, of which $4 million is limited under IRC §382.
The following table sets forth the changes in unrecognized tax benefits:
 Years Ended December 31,
 202420232022
Balance at beginning of year$40 $52 $56 
Additions attributable to tax positions taken in prior years34 — — 
Reduction attributable to tax positions taken in prior years— (9)(4)
Settlements— (3)— 
Balance at end of year$74 $40 $52 
As of December 31, 2024, we had $74 million ($65 million after federal income tax benefits) related to tax positions which, if recognized, would impact our effective tax rate.
Our policy is to accrue interest expense and penalties on income tax underpayments (overpayments) as a component of income tax expense. During 2024, we recognized an interest and penalty benefit of $6 million. At December 31, 2024, we have interest and penalties accrued of $5 million, net of tax.
In November 2015, the Pennsylvania Commonwealth Court determined in Nextel Communications v. Commonwealth (“Nextel”) that the Pennsylvania limitation on NOL carryforward deductions violated the uniformity clause of the Pennsylvania Constitution and struck the NOL limitation in its entirety. In October 2017, the Pennsylvania Supreme Court affirmed the decision with respect to the uniformity clause violation; however, the Court reversed with respect to the remedy and instead severed the flat-dollar limitation, leaving the percentage-based limitation intact. ETC Sunoco previously recognized approximately $67 million ($53 million after federal income tax benefits) in tax benefit based on previously filed tax returns and certain previously filed protective claims held pending the Nextel matter. Based upon the
Pennsylvania Supreme Court’s October 2017 decision, and because of uncertainty in the breadth of the application of the decision, ETC Sunoco reserved $34 million ($27 million after federal income tax benefits) against the receivable. On December 22, 2021, the Pennsylvania Supreme Court found in General Motors Corporation v. Commonwealth (“GM”) that the taxpayer was entitled to meaningful backwards looking relief under the Due Process Clause, meaning the Commonwealth must equalize the taxpayer’s position with taxpayers who were not affected by the NOL cap in place for the year at issue. The Court therefore held the taxpayer was entitled to a refund by calculating its tax for that year with an uncapped NOL deduction. We believed the Pennsylvania Supreme Court’s ruling in GM would more likely than not be upheld if challenged by the Commonwealth, and we reversed the reserve thereby recognizing the entire tax benefit of $34 million ($27 million after federal income tax effects). On November 20, 2024, the Pennsylvania Supreme Court reversed its earlier holding in GM and determined taxpayers are not entitled to refunds for excess taxes paid in earlier years. A motion for rehearing of this decision was filed with the court on December 4, 2024. Following the reversal of the GM decision, we reinstated the reserve.
IRS Audits
The Partnership’s 2020 U.S. Federal income tax return is currently under examination by the IRS. In general, Energy Transfer and its subsidiaries are no longer subject to examination by the IRS, and most state jurisdictions, for the 2019 and prior tax years. Energy Transfer and its other subsidiaries also have various state and local income tax returns in the process of examination or administrative appeal in various jurisdictions. We believe the appropriate accruals or unrecognized tax benefits have been recorded for any potential assessment with respect to these examinations.
USAC is currently under examination by the IRS for years 2019 and 2020. The IRS has issued preliminary partnership examination changes, along with imputed underpayment computations. Based on discussions with the IRS, USAC has estimated a potential range of loss up to $28 million, including interest. Once a final partnership imputed underpayment, if any, is determined, USAC’s general partner may either elect to pay the imputed underpayment (including any applicable penalties and interest) directly to the IRS or, if eligible, issue a revised information statement to each USAC unitholder, and former USAC unitholder, as applicable, with respect to an audited and adjusted return.