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Income Taxes
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES:
Income tax benefit provided on earnings consisted of:
For the Years Ended December 31,
202220212020
Current:
U.S. Federal
$— $— $(55,799)
U.S. State
6,188 17 12 
6,188 17 (55,787)
Deferred:
U.S. Federal
(40,649)(157,626)(83,080)
U.S. State
(35,409)19,739 (35,220)
(76,058)(137,887)(118,300)
Total Income Tax Benefit$(69,870)$(137,870)$(174,087)
The components of the net deferred taxes are as follows:
December 31,
20222021
Deferred Tax Assets:
   Gas Derivatives$461,952 $262,658 
Net Operating Loss- Federal
187,154 209,731 
Net Operating Loss - State
82,189 128,592 
Operating Lease Liabilities45,427 14,322 
Federal Tax Credits34,317 33,034 
Section 174 Expenses26,397 — 
Gas Well Closing25,045 25,682 
Interest Limitation14,618 — 
Salary Retirement8,167 11,504 
Foreign Tax Credit7,738 39,404 
Convertible Note Amortization5,080 — 
Equity Compensation4,474 5,838 
Other
8,396 8,613 
Total Deferred Tax Assets
910,954 739,378 
Valuation Allowance
(84,609)(151,798)
Net Deferred Tax Assets
826,345 587,580 
Deferred Tax Liabilities:
Property, Plant and Equipment
(850,095)(749,811)
Investment in Partnership
(163,483)(133,287)
   Operating Lease Right-of-Use Assets(44,238)(14,985)
   Advance Gas Royalties(286)(1,842)
   Discount on Convertible Notes— (15,864)
Other
(523)(392)
Total Deferred Tax Liabilities
(1,058,625)(916,181)
Net Deferred Tax Liability
$(232,280)$(328,601)

Deferred taxes are recorded for certain tax benefits, including net operating losses and tax credit carry-forwards, if management assesses the utilization of those assets to be more likely than not. A valuation allowance is required when it is not more likely than not that all or a portion of a deferred tax asset will be realized. All available evidence, both positive and negative, must be considered in determining the need for a valuation allowance. Positive evidence considered included financial earnings generated over the past three years for certain subsidiaries, reversals of financial to tax temporary differences and the implementation of and/or ability to employ various tax planning strategies. Negative evidence includes financial and tax losses generated in prior periods and the inability to achieve forecasted results for those periods.

As of December 31, 2022, the Company has a deferred tax asset related to federal net operating losses of $187,154. The pre-2018 federal net operating losses will expire at various times between 2034 and 2037. Because of the Tax Cuts and Jobs Act (TCJA) enacted on December 22, 2017 and the Coronavirus Aid, Relief, and Economic Security (CARES) Act enacted on March 27, 2020, the federal net operating losses (NOLs) generated in 2018 - 2021 do not expire but may only offset 80% of taxable income in any tax years beginning after 2020.

As of December 31, 2022 and 2021, the Company has $34,317 and $33,034, respectively, of federal tax credits available to offset future federal tax. These credits expire between 2032 and 2042.

A valuation allowance on foreign tax credits of $7,738 and $39,404 has also been recorded at December 31, 2022 and 2021, respectively. These credits are fully valued because the Company does not expect income of the correct character to use
the credits before they expire. The valuation allowance was decreased by $31,666 in 2022 due to the expiration of a portion of the credits. The remaining foreign tax credits expire in 2023.

CNX has, on an after federal tax basis, a deferred tax asset related to state operating losses of $82,189 with a related valuation allowance of $76,871 at December 31, 2022. The deferred tax asset related to state operating losses, on an after-tax adjusted basis, was $128,592 with a related valuation allowance of $112,298 at December 31, 2021. A review of positive and negative evidence regarding these state tax attributes concluded that the valuation allowances for various CNX subsidiaries was warranted.

Pennsylvania enacted legislation in July 2022 that, among other things, gradually reduced the corporate net income tax rate over the next several years beginning in 2023 to 8.99% to ultimately 4.99% in 2031. The Company revised the deferred state income tax rates and apportionment factors for several states to reflect, among other things, the recent Pennsylvania rate reduction resulting in a benefit to income tax expense in the Consolidated Statements of Income. The deferred tax benefit is also offset by an increase in deferred taxes relating to valuation allowance assertions against various state net operating losses due to the tax accounting treatment of unrealized losses on commodity derivative instruments.

Management will continue to assess the potential for realized deferred tax assets based upon income forecast data and the feasibility of future tax planning strategies and may record adjustments to valuation allowances against deferred tax assets in future periods, as appropriate, that could materially impact net income.

The following is a reconciliation, stated as a percentage of pretax income, of the United States statutory federal income tax rate to CNX's effective tax rate:
 For the Years Ended December 31,
 202220212020
 AmountPercentAmountPercentAmountPercent
Statutory U.S. Federal Income Tax Rate$(44,509)21.0 %$(133,668)21.0 %$(126,595)21.0 %
Net Effect of State Income Taxes(5,817)2.8 (36,300)5.7 (32,336)5.5 
Non-Controlling Interest— — — — (11,556)1.9 
Uncertain Tax Positions14,440 (6.8)35,914 (5.6)375 (0.1)
Effect of Equity Compensation2,254 (1.1)2,465 (0.4)4,311 (0.7)
Effect of Change in Valuation Allowance(35,427)16.7 28,704 (4.5)(2,004)0.3 
Deferred Adjustments2,481 (1.2)(4,408)0.7 1,227 (0.2)
Effect of State Rate Changes10,025 (4.7)22,458 (3.5)(1,450)0.2 
Effect of Federal Tax Credits(15,723)7.4 (53,269)8.3 (6,284)1.0 
Other2,406 (1.1)234 — 225 — 
Income Tax Benefit / Effective Rate$(69,870)33.0 %$(137,870)21.7 %$(174,087)28.9 %

The effective tax rate for the year ended December 31, 2022 differs from the U.S. federal statutory rate primarily due to federal income tax credits offset by uncertain tax positions, state taxes, equity compensation, and the decrease in certain state valuation allowance assertions as a result of a reduction in the Pennsylvania corporate income tax rate applied to deferred taxes and a higher-than-expected unrealized loss on commodity derivative instruments generated during 2022.

The effective tax rate for the year ended December 31, 2021 differs from the U.S. federal statutory rate primarily due to federal income tax credits, offset by uncertain tax positions, state taxes, equity compensation, and the increase in certain state valuation allowance assertions as a result of a higher-than-expected unrealized loss on commodity derivative instruments generated during 2021.

The effective tax rate for the year ended December 31, 2020 differs from the U.S. federal statutory rate primarily due to state taxes, equity compensation, and the decrease in certain state valuation allowances as a result of the Merger transaction with CNXM (See Note 4 – Acquisitions and Dispositions) partially offset by the benefit from non-controlling interest.

As a result of the Midstream Acquisition on January 3, 2018, the Company obtained a controlling interest in CNX Gathering LLC and, through CNX Gathering's ownership of the general partner, control over CNXM. The financial results for 2020 reflect full consolidation of CNXM’s assets and liabilities. The effective tax rate for the year ended December 31, 2020 reflects a $11,556 reduction in income tax expense due to the non-controlling interest in CNXM’s earnings.
A reconciliation of the beginning and ending gross amounts of unrecognized tax benefits is as follows:
For the Years Ended
December 31,
20222021
Balance at Beginning of Period$67,805 $31,891 
Increase in Unrecognized Tax Benefits Resulting from Tax Positions Taken During Prior Periods
14,440 38,735 
Reduction in Unrecognized Tax Benefits Because of the Lapse of the Applicable Statute of Limitations— (2,821)
Balance at End of Period$82,245 $67,805 

If these unrecognized tax benefits were recognized, $82,245 and $67,805 would affect CNX's effective income tax rate for 2022 and 2021, respectively.

In 2022 and 2021, CNX recognized an increase in unrecognized tax benefits of $14,440 and $38,735, respectively, for tax benefits resulting from tax positions taken on our 2021 and 2020 federal tax returns for additional federal tax credits. CNX also recognized a reduction to unrecognized tax benefits in 2021of $2,821 due to the expiration of the statute of limitations from a position taken on a previously filed federal income tax return.

CNX recognizes accrued interest related to unrecognized tax benefits in its interest expense. As of December 31, 2022 and 2021, the Company reported no accrued liability relating to interest in Other Liabilities in the Consolidated Balance Sheets. During the years ended December 31, 2022 and 2021, CNX paid no interest related to income tax deficiencies.

CNX recognizes penalties accrued related to uncertain tax positions in its income tax expense. CNX had no accrued liabilities for tax penalties as of December 31, 2022 and 2021.
CNX and its subsidiaries file federal income tax returns with the United States and income tax returns within various states. With few exceptions, the Company is no longer subject to United States federal, state, local or non-U.S. income tax examinations by tax authorities for the years before 2019.