Income Taxes (Notes)

12 Months Ended

Dec. 31, 2016

For tax purposes, each partner of the Partnership is required to take into account its share of income, gain, loss and deduction in computing its federal and state income tax liabilities, regardless of whether cash distributions are made to such partner by the Partnership. The taxable income reportable to each partner takes into account differences between the tax basis and fair market value of our assets, the acquisition price of such partner's units and the taxable income allocation requirements under our Partnership Agreement.

The Partnership is not a taxable entity for federal income tax purposes. While most states do not impose an entity level tax on partnership income, the Partnership is subject to entity level tax in both Tennessee and Texas. The Partnership does not file a separate Texas tax return. Our results of operations are included in Delek’s consolidated return. However, the provisions of ASC 740 have been followed as if we were a stand-alone entity. As a result, the Partnership must record deferred income taxes for the differences between book and tax bases of its assets and liabilities based on those states' enacted tax rates and laws that will be in effect when the differences are expected to reverse.

The total non-current deferred tax assets were $0.3 million and $0.1 million as of December 31, 2016 and 2015, respectively, and are included in other non-current assets in our accompanying consolidated balance sheets. The majority component of our non-current deferred tax assets as of December 31, 2016 and 2015 was depreciation and amortization.

The difference between the actual income tax expense and the tax expense computed by applying the statutory federal income tax rate to income before income taxes is attributable to the following (in thousands):



	Year Ended December 31,
	2016			2015			2014
State income taxes	121			171			492
Other items	(40		)	(366		)	(360		)
Income tax expense (benefit)	$	81		$	(195	)	$	132

Income tax expense (benefit) is as follows (in thousands):



	Year Ended December 31,
	2016			2015			2014
Current	$	254		$	(209	)	$	241
Deferred	(173		)	14			(109		)
Total	$	81		$	(195	)	$	132

Delek files a consolidated Texas gross margin tax return, and tax payments for the Partnership are paid by Delek. Therefore, a portion of the current tax payable is included in accounts receivable/payable from related parties. As of December 31, 2016 and 2015, income taxes payable (receivable) of $0.1 million and $(0.2) million, respectively, were included in accounts receivable/payable from related parties in the accompanying consolidated balance sheets. Taxes that are determined on a consolidated basis apply the “benefits for loss” allocation method; thus, tax attributes are realized when used in the combined tax return to the extent that they have been subject to a valuation allowance.

We recognize accrued interest and penalties related to unrecognized tax benefits as an adjustment to the current provision for income taxes. There were no uncertain tax positions recorded as of December 31, 2016 or 2015, and there were no interest or penalties recognized related to uncertain tax positions for the years ended December 31, 2016, 2015 or 2014. We have examined uncertain tax positions for any material changes in the next 12 months and none are expected.