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Income Taxes
 12 Months Ended
Dec. 31, 2023
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 consolidated 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.

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

 

 

 

For the Year Ended December 31,

 

 

 

2023

 

 

2022

 

 

2021

 

Current

 

 

 

 

 

 

 

 

 

U.S. federal

 

$

502

 

 

$

1,976

 

 

$

329

 

U.S. state

 

 

451

 

 

 

491

 

 

 

207

 

Total current

 

 

953

 

 

 

2,467

 

 

 

536

 

 

 

 

 

 

 

 

 

 

 

Deferred

 

 

 

 

 

 

 

 

 

U.S. federal

 

 

946

 

 

 

(2,236

)

 

 

(3,927

)

U.S. state

 

 

626

 

 

 

483

 

 

 

166

 

Total deferred

 

 

1,572

 

 

 

(1,753

)

 

 

(3,761

)

Income tax expense (benefit)

 

$

2,525

 

 

$

714

 

 

$

(3,225

)

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,

 

 

 

2023

 

 

2022

 

 

2021

 

Consolidated income from continuing operations before income
   taxes - all domestic

 

$

45,117

 

 

$

64,410

 

 

$

18,429

 

Income from continuing operations before income taxes of
   non-taxable entities

 

 

(34,797

)

 

 

(65,466

)

 

 

(37,072

)

Income (loss) from continuing operations before income taxes of
   corporate entities

 

 

10,320

 

 

 

(1,056

)

 

 

(18,643

)

Federal income tax expense (benefit) at statutory rate

 

 

2,167

 

 

 

(222

)

 

 

(3,915

)

Increase (decrease) due to:

 

 

 

 

 

 

 

 

 

State income taxes, net of federal income tax benefit

 

 

421

 

 

 

974

 

 

 

372

 

Other

 

 

(63

)

 

 

(38

)

 

 

318

 

Total income tax expense (benefit)

 

$

2,525

 

 

$

714

 

 

$

(3,225

)

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

 

 

 

December 31,

 

 

 

2023

 

 

2022

 

Deferred income tax assets:

 

 

 

 

 

 

Operating and finance lease obligations

 

$

29,193

 

 

$

33,318

 

Asset retirement obligations

 

 

11,045

 

 

 

10,745

 

Intangible assets

 

 

7,887

 

 

 

8,505

 

Net operating losses (a)

 

 

5,331

 

 

 

5,913

 

Other assets and liabilities

 

 

7,394

 

 

 

6,678

 

Total deferred income tax assets

 

 

60,850

 

 

 

65,159

 

 

 

 

 

 

 

 

Deferred income tax liabilities:

 

 

 

 

 

 

Deferred rent income

 

 

841

 

 

 

855

 

Property and equipment

 

 

46,223

 

 

 

45,440

 

Right-of-use assets

 

 

25,946

 

 

 

29,452

 

Total deferred income tax liabilities

 

 

73,010

 

 

 

75,747

 

Net deferred income tax liabilities

 

$

12,160

 

 

$

10,588

 
(a)
Includes a federal deferred tax asset of $3.7 million related to a $16.7 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, 2023 or 2022. 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 2023, 2022 and 2021.

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 2020 through 2023; therefore, these years remain subject to examination by federal, state and local jurisdiction authorities.