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Income Taxes | 12 Months Ended
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Dec. 31, 2022
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The provision for income taxes is comprised of the following:
|  | Years Ended December 31,
|  | 2022 |  | 2021 |  | 2020
|  | (In thousands)
Current |  |  |  |  |  |
Federal |  | $ | 674,977 |  |  | $ | (33,206) |  |  | $ | (59,452) |
State |  | 108,993 |  |  | (1,802) |  |  | (5,391) |
Foreign |  | 57,734 |  |  | 30,336 |  |  | 9,423 |
Deferred |  |  |  |  |  |
Federal |  | 38,535 |  |  | 94,353 |  |  | (64,836) |
State |  | 21,121 |  |  | 1,386 |  |  | (52,872) |
Foreign |  | (6,488) |  |  | 32,831 |  |  | (59,019) |
|  | $ | 894,872 |  |  | $ | 123,898 |  |  | $ | (232,147) |
The statutory federal income tax rate applied to pre-tax book income reconciles to income tax expense (benefit) as follows:
|  | Years Ended December 31,
|  | 2022 |  | 2021 |  | 2020
|  | (In thousands)
Tax computed at statutory rate |  | $ | 826,570 |  |  | $ | 165,302 |  |  | $ | (156,880) |
State income taxes, net of federal tax benefit |  | 123,442 |  |  | 13,588 |  |  | (41,566) |
Noncontrolling interest in net income |  | (28,726) |  |  | (25,931) |  |  | (21,799) |
Effect of change in state rate |  | (15,800) |  |  | (13,342) |  |  | — |
CARES Act benefits |  | — |  |  | (10,384) |  |  | (19,837) |
Foreign rate differential |  | 6,608 |  |  | 331 |  |  | (14,294) |
Federal tax credits |  | (23,853) |  |  | (29,777) |  |  | — |
US tax on non-US operations |  | 12,920 |  |  | 18,547 |  |  | — |
Effect of nondeductible goodwill impairment charge |  | — |  |  | — |  |  | 16,573 |
Other |  | (6,289) |  |  | 5,564 |  |  | 5,656 |
|  | $ | 894,872 |  |  | $ | 123,898 |  |  | $ | (232,147) |
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Our deferred income tax assets and liabilities as of December 31, 2022 and 2021 are as follows:
|  | December 31, 2022
|  | Assets |  | Liabilities |  | Total
|  | (In thousands)
Deferred income taxes |  |  |  |  |  |
Properties, plants, equipment and intangibles (due primarily to tax in excess of book depreciation) |  | $ | — |  |  | $ | (1,032,048) |  |  | $ | (1,032,048) |
Lease obligation |  | 129,727 |  |  | — |  |  | 129,727 |
Accrued employee benefits |  | 17,665 |  |  | — |  |  | 17,665 |
Accrued post-retirement benefits |  | 9,951 |  |  | — |  |  | 9,951 |
Accrued environmental costs |  | 37,868 |  |  | — |  |  | 37,868 |
Hedging instruments |  | 3,260 |  |  | — |  |  | 3,260 |
Inventory differences |  | — |  |  | (230,112) |  |  | (230,112) |
Deferred turnaround costs |  | — |  |  | (88,574) |  |  | (88,574) |
Net operating loss and tax credit carryforwards |  | 27,963 |  |  | — |  |  | 27,963 |
Investment in HEP |  | — |  |  | (134,160) |  |  | (134,160) |
Valuation allowance |  | — |  |  | (3,691) |  |  | (3,691) |
Other |  | — |  |  | (14) |  |  | (14) |
Total |  | $ | 226,434 |  |  | $ | (1,488,599) |  |  | $ | (1,262,165) |
|  | December 31, 2021
|  | Assets |  | Liabilities |  | Total
|  | (In thousands)
Deferred income taxes |  |  |  |  |  |
Properties, plants, equipment and intangibles (due primarily to tax in excess of book depreciation) |  | $ | — |  |  | $ | (741,970) |  |  | $ | (741,970) |
Lease obligation |  | 131,567 |  |  | — |  |  | 131,567 |
Accrued employee benefits |  | 17,322 |  |  | — |  |  | 17,322 |
Accrued post-retirement benefits |  | 10,897 |  |  | — |  |  | 10,897 |
Accrued environmental costs |  | 26,999 |  |  | — |  |  | 26,999 |
Hedging instruments |  | — |  |  | (652) |  |  | (652) |
Inventory differences |  | — |  |  | (148,539) |  |  | (148,539) |
Deferred turnaround costs |  | — |  |  | (100,585) |  |  | (100,585) |
Net operating loss and tax credit carryforwards |  | 63,967 |  |  | — |  |  | 63,967 |
Investment in HEP |  | — |  |  | (94,486) |  |  | (94,486) |
Valuation allowance |  | — |  |  | (3,165) |  |  | (3,165) |
Other |  | 1,244 |  |  | — |  |  | 1,244 |
Total |  | $ | 251,996 |  |  | $ | (1,089,397) |  |  | $ | (837,401) |
We have tax benefits attributable to net operating losses of $16.9 million in Luxembourg that can be carried forward 16 years which will begin expiring in 2034. We also have tax benefits attributable to net operating losses of $6.9 million in the Netherlands that can be carried forward indefinitely. We have reflected a valuation allowance of $3.7 million in 2022 and $3.2 million in 2021 with respect to net operating carryforwards that primarily relate to losses in Luxembourg and China. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
|  | Years Ended December 31,
|  | 2022 |  | 2021 |  | 2020
|  |  |  | (In thousands) |  |
Balance at January 1 |  | $ | 54,605 |  |  | $ | 54,899 |  |  | $ | 56,621 |
Additions for tax positions of prior years |  | — |  |  | — |  |  | 6 |
Reductions for tax positions of prior years |  | (53,023) |  |  | (49) |  |  | (1,500) |
Settlements |  | — |  |  | (125) |  |  | — |
Lapse of statute of limitations |  | (228) |  |  | (120) |  |  | (228) |
Balance at December 31 |  | $ | 1,354 |  |  | $ | 54,605 |  |  | $ | 54,899 |
At December 31, 2022, 2021 and 2020, there were $1.4 million, $54.6 million, and $54.9 million, respectively, of unrecognized tax benefits that, if recognized, would affect our effective tax rate. Unrecognized tax benefits are adjusted in the period in which new information about a tax position becomes available or the final outcome differs from the amount recorded. Approximately $0.7 million of the unrecognized tax benefits relates to claims filed with the IRS on the federal income tax treatment of refundable biodiesel/ethanol blending tax credits for prior years. We filed suit related to these claims in the Federal District Court of Dallas in March of 2022; the suit was stayed pending the outcome of controlling cases in the U.S. Court of Appeals for the Fifth Circuit, which were decided in favor of the IRS and were not appealed. As such precedence is controlling for us, we intend to file a motion to dismiss the suit in the Federal District Court of Dallas in early 2023 and have reduced our unrecognized tax benefits by the expected unrecoverable amount. We recognize interest and penalties relating to liabilities for unrecognized tax benefits as an element of tax expense. We have not recorded any penalties related to our uncertain tax positions as we believe that it is more likely than not that there will not be any assessment of penalties. We are subject to U.S. and Canadian federal income tax, Oklahoma, Kansas, New Mexico, Iowa, Arizona, Utah, Colorado and Nebraska income tax and to income tax of multiple other state jurisdictions. We have substantially concluded all state and local income tax matters for tax years through 2018. Other than the federal claim noted above and to the extent of the federal net operating loss carried back to 2015 from 2020, we have materially concluded all U.S. federal income tax matters for tax years through December 31, 2018. We are currently under audit with the Canada Revenue Agency for the 2018 tax year, and during the fourth quarter of 2022, an IRS audit was initiated for the federal income tax returns for the 2020 and 2021 tax years.

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