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INCOME TAXES

12 Months Ended

Dec. 31, 2023

INCOME TAXES

INCOME TAXES

7.INCOME TAXES

​

Components of income tax expense are as follows:

​

​	​	​	​	​	​	​	​	​	​	​
​	​	Year Ended December 31,
​		2023			2022			2021
​	​	(in thousands)								​
Current:	​	​	​	​	​	​	​	​	​	​
Federal	​	$	15,917	​	$	17,572	​	$	(1)	​
State	​		1,336	​		1,605	​		70	​
​	​		17,253	​		19,177	​		69	​
Deferred:	​	​	​	​	​	​	​	​	​	​
Federal	​		(7,235)	​		33,038	​		356	​
State	​		(1,738)	​		1,763	​		(8)	​
​	​		(8,973)	​		34,801	​		348	​
Income tax expense	​	$	8,280	​	$	53,978	​	$	417	​

​

Alliance Minerals' Tax Election resulted in the recognition of an initial deferred tax liability of $37.3 million with a corresponding increase to income tax expense and reduction of net income for the year ended December 31, 2022. This reduction of net income equates to approximately $0.29 per basic and diluted limited partner unit. Recognition of the initial deferred tax liability and expense is primarily the result of the $177.0 million non-cash acquisition gain recognized in 2019 related to the acquisition of the remaining interests in AllDale Minerals LP ("AllDale I") and AllDale Minerals II, LP ("AllDale II", and collectively with AllDale I, "AllDale I & II") (the "Acquisition Gain"). The Acquisition Gain was

recognized to step up to fair value the financial reporting basis of the interests we already owned at the time of acquisition. The tax basis of the underlying properties of AllDale I & II did not include the Acquisition Gain.

​

Reconciliations of income taxes at the U.S. federal statutory tax rate to income taxes at our effective tax rate are as follows:

​

​	​	​	​	​	​	​	​	​	​	​
​	​	​	Year Ended December 31,							​
​		2023			2022			2021		​
​	​	(in thousands)								​
Income taxes at statutory rate	​	$	135,335	​	$	134,849	​	$	38,595	​
​	​	​	​	​	​	​	​	​	​	​
Less: Income taxes at statutory rate on Partnership income not subject to income taxes	​		(119,556)	​		(113,925)	​		(37,546)	​
​	​	​	​	​	​	​	​	​	​	​
Increase (decrease) resulting from:	​	​	​	​	​	​	​	​	​	​
State taxes, net of federal income tax	​		864	​		1,492	​		275	​
Change in valuation allowance of deferred tax assets	​		—	​		(317)	​		(834)	​
Deferred taxes related to tax election	​	​	—	​	​	37,253	​	​	—	​
Tax effect of noncontrolling interest income not subject to income taxes	​	​	(1,361)	​	​	(5,399)	​	​	—	​
Return to accrual adjustments	​	​	(7,008)	​	​	69	​	​	(1)	​
Other	​		6	​		(44)	​		(72)	​
Income tax expense	​	$	8,280	​	$	53,978	​	$	417	​

​

The effective income tax rates for our income tax expense for the year ended December 31, 2023 and 2021 are less than the federal statutory rate, primarily due to the portion of income not subject to income taxes. The effective income tax rate for our income tax expense for the year ended December 31, 2022 is less than the federal statutory rate, primarily due to the portion of income not subject to income taxes, partially offset by the effect of the Tax Election previously discussed.

​

Significant components of deferred tax liabilities and deferred tax assets are as follows:

​

​	​	​	​	​	​	​	​
​	​	December 31,
​		2023			2022
​	​	(in thousands)					​
Deferred tax liabilities:	​	​	​	​	​	​	​
Property, plant and equipment	​	$	(36,453)	​	$	(38,349)	​
Total deferred tax liabilities	​	​	(36,453)	​	​	(38,349)	​
​	​	​	​	​	​	​	​
Deferred tax assets:	​	​	​	​	​	​	​
Federal loss carryovers and credits	​	​	4,508	​	​	2,139	​
State loss carryovers and credits	​	​	2,126	​	​	951	​
Capitalized research and development	​	​	2,567	​	​	—	​
Other	​		1,098	​		133	​
Total deferred tax assets	​	​	10,299	​	​	3,223	​
​	​	​	​	​	​	​	​
Overall net deferred tax liabilities	​	$	(26,154)	​	$	(35,126)	​

​

Deferred tax liabilities for property, plant and equipment are primarily the result of the Alliance Minerals' Tax Election and associated impact of the Acquisition Gain discussed above.

​

Federal and state loss carryovers and credits are primarily due to net operating losses and research and development credits associated with the operations of other subsidiaries that are taxable for federal income tax purposes.

​

Research and development expenses are required to be capitalized and amortized for U.S. tax purposes, resulting in a deferred tax asset. These expenses are primarily associated with the operations of other subsidiaries that are taxable for federal income tax purposes.

​

Our 2020 through 2022 tax years remain open to examination by tax authorities, and lower-tier partnership income tax returns for the tax years ended December 31, 2020 and 2021 are being audited by the Internal Revenue Service.

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- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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