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Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes

Note 20. INCOME TAXES

As a limited partnership, we are not subject to federal and state income taxes. However, our corporate subsidiaries are subject to income taxes. Income tax attributable to our taxable income (including any dividend income from our corporate subsidiaries), which may differ significantly from income for financial statement purposes, is assessed at the individual limited partner unitholder level. Individual unitholders have different investment basis depending upon the timing and price at which they acquired their common units. Further, each unitholder’s tax accounting, which is partially dependent upon the unitholder’s tax position, differs from the accounting followed in the Partnership’s financial statements. Accordingly, the aggregate difference in the basis of the Partnership’s net assets for financial and tax reporting purposes cannot be readily determined because information regarding each unitholder’s tax attributes in the Partnership is not available to the Partnership.

We are subject to a statutory requirement that non-qualifying income, as defined by the Internal Revenue Code, cannot exceed 10% of total gross income for the calendar year. If non-qualifying income exceeds this statutory limit, we would be taxed as a corporation. The non-qualifying income did not exceed the statutory limit in any annual period presented.

Certain activities that generate non-qualifying income are conducted through our wholly owned taxable corporate subsidiaries, LGWS and Joe’s Kwik Marts. Current and deferred income taxes are recognized on the earnings of these subsidiaries. Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Partnership calculates its current and deferred tax provision based on estimates and assumptions that could differ from actual results reflected in income tax returns filed in subsequent years. Adjustments based on filed returns are recorded when identified.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was passed on March 27, 2020, which established a five-year carryback of net operating losses (NOLs) generated in 2018, 2019 and 2020 and temporarily suspended the 80% limitation on the use of NOLs in 2018, 2019 and 2020. The CARES Act also increased the adjusted taxable income limitation from 30% to 50% for business interest deductions under IRC Section 163(j) for 2020 and the adjusted taxable income limitation reverts back to 30% for 2021. As a result of the CARES Act, we carried back $16.9 million in NOLs generated in 2020 to tax years 2015 through 2018, which resulted in the recording of an incremental current benefit of $1.0 million in 2020, representing the difference between the tax at the 21% statutory rate in 2020 as compared the 34% statutory rate at the time for 2015 through 2018.

Components of income tax expense related to net income were as follows (in thousands):

 

 

 

For the Year Ended December 31,

 

 

 

2021

 

 

2020

 

 

2019

 

Current

 

 

 

 

 

 

 

 

 

 

 

 

U.S. federal

 

$

329

 

 

$

(3,973

)

 

$

(4,865

)

U.S. state

 

 

207

 

 

 

461

 

 

 

66

 

Total current

 

 

536

 

 

 

(3,512

)

 

 

(4,799

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred

 

 

 

 

 

 

 

 

 

 

 

 

U.S. federal

 

 

(3,927

)

 

 

(491

)

 

 

4,895

 

U.S. state

 

 

166

 

 

 

(3,945

)

 

 

(1,326

)

Total deferred

 

 

(3,761

)

 

 

(4,436

)

 

 

3,569

 

Income tax benefit

 

$

(3,225

)

 

$

(7,948

)

 

$

(1,230

)

The difference between the actual income tax provision and income taxes computed by applying the U.S. federal statutory rate to earnings (losses) before income taxes is attributable to the following (in thousands):

 

 

 

For the Year Ended December 31,

 

 

 

2021

 

 

2020

 

 

2019

 

Consolidated income from continuing operations before income

   taxes - all domestic

 

$

18,429

 

 

$

99,508

 

 

$

16,846

 

Income from continuing operations before income taxes of

   non-taxable entities

 

 

(37,072

)

 

 

(119,457

)

 

 

(16,902

)

Loss from continuing operations before income taxes of

   corporate entities

 

 

(18,643

)

 

 

(19,949

)

 

 

(56

)

Federal income tax benefit at statutory rate

 

 

(3,915

)

 

 

(4,189

)

 

 

(11

)

Increase (decrease) due to:

 

 

 

 

 

 

 

 

 

 

 

 

Rate difference on NOL carryback (a)

 

 

329

 

 

 

(1,003

)

 

 

—

 

Nondeductible expenses

 

 

—

 

 

 

1

 

 

 

54

 

State income taxes, net of federal income tax benefit (b)

 

 

372

 

 

 

(2,712

)

 

 

(995

)

Non-taxable refund

 

 

(11

)

 

 

(45

)

 

 

(278

)

Total income tax benefit

 

$

(3,225

)

 

$

(7,948

)

 

$

(1,230

)

 

(a)

The CARES Act allowed a 5-year carryback of net operating losses generated in 2020, which resulted in the recognition of an incremental benefit at the 34% statutory federal rate in effect for 2015 through 2017 relative to the current statutory federal rate of 21%.

 

(b)

The state tax expense in 2021 was primarily driven by gross receipts-based or net assets-based tax in certain states. The state tax benefit in 2020 was primarily driven by changes in apportionment due to a reduction in gross receipts in certain combined filing states where we were generally in a net deferred tax liability position and an increase in gross receipts in separate company filing states that do not conform to federal bonus depreciation rules where we are generally in a net deferred tax asset position. The conversion of company operated sites to dealer operated sites in 2019 resulted in a reduction in gross receipts primarily in combined filing states. See Note 4 for information regarding the acquisition of retail and wholesale assets, which resulted in an increase in gross receipts primarily in separate filing states.

The tax effects of significant temporary differences representing deferred income tax assets and liabilities were as follows (in thousands):

 

 

 

December 31,

 

 

 

2021

 

 

2020

 

Deferred income tax assets:

 

 

 

 

 

 

 

 

Deferred rent expense

 

$

121

 

 

$

175

 

Operating and finance lease obligations

 

 

34,605

 

 

 

40,274

 

Asset retirement obligations

 

 

10,899

 

 

 

9,847

 

Intangible assets

 

 

9,724

 

 

 

9,994

 

Other assets (a)

 

 

13,798

 

 

 

7,361

 

Total deferred income tax assets

 

 

69,147

 

 

 

67,651

 

 

 

 

 

 

 

 

 

 

Deferred income tax liabilities:

 

 

 

 

 

 

 

 

Deferred rent income

 

 

948

 

 

 

1,036

 

Property and equipment

 

 

50,274

 

 

 

46,174

 

Right-of-use assets

 

 

30,266

 

 

 

35,463

 

Total deferred income tax liabilities

 

 

81,488

 

 

 

82,673

 

Net deferred income tax liabilities

 

$

12,341

 

 

$

15,022

 

 

 

(a)

Includes a $2.7 million deferred tax asset related to a $12.7 million federal net operating loss that has no expiration

We record an accrual for federal, state and local and uncertain tax positions. The development of these tax positions requires subjective, critical estimates and judgments about tax matters, potential outcomes and timing. Although the outcome of potential tax examinations is uncertain, in management’s opinion, adequate provisions for income taxes have been made for potential liabilities resulting from these reviews. If actual outcomes differ materially from these estimates, they could have a material impact on our financial condition and results of operations. Differences between actual results and assumptions, or changes in assumptions in future periods, are recorded in the period they become known. To the extent additional information becomes available prior to resolution, such accruals are adjusted to reflect probable outcomes.

We did not have unrecognized tax benefits at December 31, 2021 or 2020. Our practice is to recognize interest and penalties related to income tax matters in income tax expense. We had no material interest and penalties for 2021, 2020 and 2019.

We file income tax returns with the U.S. federal government as well as the many state jurisdictions in which we operate. The statute remains open for tax years 2018 through 2021; therefore, these years remain subject to examination by federal, state and local jurisdiction authorities.