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INCOME TAXES | 12 Months Ended
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Dec. 31, 2022
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES Income tax benefit (expense) consisted of the following:
| For the year ended December 31,
(in thousands) | 2022 |  | 2021 |  | 2020
Current: |  |  |  |  |
Federal | $ | (24,382) |  |  | $ | (4,818) |  |  | $ | — |
State | (9,977) |  |  | (2,915) |  |  | (156) |
Total current | (34,359) |  |  | (7,733) |  |  | (156) |
Deferred: |  |  |  |  |
Federal | (19,236) |  |  | (15,851) |  |  | 14,088 |
State | 1,447 |  |  | (1,574) |  |  | 3,704 |
Total deferred | (17,789) |  |  | (17,425) |  |  | 17,792 |
Total tax benefit (expense) | $ | (52,148) |  |  | $ | (25,158) |  |  | $ | 17,636 |
During the years ended December 31, 2021 and 2020, the Company recorded $0.4 million and $4.7 million, respectively, related to certain deductible expenditures incurred in connection with the Business Combination to “Additional paid-in capital.” Income (loss) before income taxes, by tax jurisdiction, was as follows:
| For the year ended December 31,
(in thousands) | 2022 |  | 2021 |  | 2020
United States | $ | 341,152 |  |  | $ | 160,195 |  |  | $ | (39,461) |
Income taxes differed from the amounts computed by applying the U.S. federal income tax rate of 21% to pretax income (loss) as a result of the following:
| For the year ended December 31,
| 2022 |  | 2021 |  | 2020
(in thousands, except tax rates) | Percent |  | Amount |  | Percent |  | Amount |  | Percent |  | Amount
Computed income tax benefit (expense) at the statutory rate | 21.0 | % |  | $ | (71,642) |  |  | 21.0 | % |  | $ | (33,641) |  |  | 21.0 | % |  | $ | 8,287 |
Changes resulting from: |  |  |  |  |  |  |  |  |  |  |
State and local income taxes, net of federal benefits | 3.3 | % |  | (11,395) |  |  | 2.7 | % |  | (4,288) |  |  | 4.3 | % |  | 1,729 |
Limitation on officer’s compensation | 2.3 | % |  | (8,067) |  |  | 1.7 | % |  | (2,638) |  |  | (1.2) | % |  | (478) |
Depletion in excess of basis | (4.5) | % |  | 15,248 |  |  | (6.1) | % |  | 9,663 |  |  | 1.1 | % |  | 425 |
Paycheck Protection Loan forgiveness | — | % |  | — |  |  | (0.5) | % |  | 714 |  |  | — | % |  | — |
Foreign-derived intangible income | (4.0) | % |  | 13,676 |  |  | (1.8) | % |  | 2,886 |  |  | — | % |  | — |
California Competes Tax Credit, net of federal detriment | (0.9) | % |  | 3,160 |  |  | (1.2) | % |  | 1,975 |  |  | — | % |  | — |
Excess tax benefits on stock-based compensation | (1.0) | % |  | 3,575 |  |  | (0.6) | % |  | 974 |  |  | — | % |  | — |
Valuation allowance | (0.8) | % |  | 2,845 |  |  | 0.5 | % |  | (821) |  |  | 23.7 | % |  | 9,333 |
Other, net | (0.1) | % |  | 452 |  |  | — | % |  | 18 |  |  | (4.2) | % |  | (1,660) |
Total effective tax rate and income tax benefit (expense) | 15.3 | % |  | $ | (52,148) |  |  | 15.7 | % |  | $ | (25,158) |  |  | 44.7 | % |  | $ | 17,636 |
The tax effects of temporary differences that gave rise to significant portions of the deferred income tax assets and deferred income tax liabilities were as follows:
| December 31,
(in thousands) | 2022 |  | 2021
Deferred tax assets: |  |  |
Asset retirement and environmental obligations | $ | 5,643 |  |  | $ | 8,744 |
Net operating losses | — |  |  | 2,174 |
Inventories | 12,448 |  |  | 6,695 |
Offtake Advances, net of debt discount | — |  |  | 4,034 |
Shenghe Warrant | — |  |  | 2,329 |
Research and experimental costs | 691 |  |  | — |
Stock-based compensation | 3,785 |  |  | 2,688 |
Organization costs | 776 |  |  | 860 |
Credits | 346 |  |  | 764 |
Other | 351 |  |  | 636 |
Gross deferred tax assets | 24,040 |  |  | 28,924 |
Less: Valuation allowance | (346) |  |  | (3,192) |
Net deferred tax assets | 23,694 |  |  | 25,732 |
Deferred tax liabilities: |  |  |
Property, plant and equipment | (36,481) |  |  | (14,077) |
Prepaid expenses | (1,567) |  |  | (1,192) |
Deferred revenue | (6,604) |  |  | (9,938) |
Mineral rights | (101,195) |  |  | (104,735) |
Other | (200) |  |  | (290) |
Total deferred tax liabilities | (146,047) |  |  | (130,232) |
Non-current deferred tax liabilities, net | $ | (122,353) |  |  | $ | (104,500) |
For income tax purposes, the Business Combination was treated as a tax-free reorganization whereby the taxable years of MPMO and Secure Natural Resources LLC (“SNR”) ended on November 17, 2020, and the Company became the new parent and sole filer of a tax return for the remainder of 2020 as MPMO and SNR became disregarded entities. Although the SNR Mineral Rights Acquisition was treated as an asset acquisition, the assets, liabilities and other attributes took carryover basis for income tax purposes because of the tax-free reorganization nature of the transaction. As of December 31, 2022 and 2021, the Company did not have any net operating loss carryforwards for federal income tax purposes, and had zero and $7.4 million, respectively, for state income tax purposes. As of December 31, 2022, the Company considered the positive and negative evidence to determine the need for a valuation allowance to offset its deferred tax assets and has concluded that it is more likely than not that, with the exception of certain deferred tax assets related to California Alternative Minimum Tax credits, its deferred tax assets will be realized through future taxable temporary differences, principally resulting from the deferred tax liability recorded as a result of the SNR Mineral Rights Acquisition which occurred during the 2020 tax year. During the fourth quarter of 2021, the Company received notice from the State of California that it had been awarded a California Competes Tax Credit (“CCTC”) of $14.8 million that is available to be offset against the Company’s California state income tax liability over the next several years. The credit is allocated in varying amounts over a five-year period based on the Company’s ability to meet certain milestones related to California employees hired, the annual wage of these employees, and the capital investments made by the Company in California. Once the annual milestones are met, a credit amount is awarded. However, a portion of the credit could be “clawed back” if the milestones are not continually met for each of the three following years. For the years ended December 31, 2022 and 2021, it was determined that the Company had met the relevant annual milestones for the CCTC and as a result, the Company recorded a credit of $4.0 million and $2.5 million, respectively, which resulted in an income tax benefit and a reduction to the Company’s California state income tax payable for the 2022 and 2021 tax years. On August 16, 2022, the U.S. government enacted the Inflation Reduction Act of 2022 which, among other things, implements a 15% minimum tax on book income of certain large corporations, a 1% excise tax on net stock repurchases, and provides several tax incentives to promote clean energy for tax years beginning after December 31, 2022. At this time, we do not expect the minimum tax or excise tax to have a material impact on the Company’s Consolidated Financial Statements. We are continuing to evaluate the impact of the clean energy incentives. The Company has evaluated its tax positions for the years ended December 31, 2022, 2021 and 2020 and determined that there were no uncertain tax positions requiring recognition in the Consolidated Financial Statements. The tax years from 2019 onward remain open to examination by the taxing jurisdictions to which the Company is subject.

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