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INCOME TAXES | 9 Months Ended
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Sep. 30, 2024
Income Tax Disclosure [Abstract] |
INCOME TAXES | 15. INCOME TAXES Effective August 1, 2024, pursuant to the Corporate Reorganization, Summit Midstream Corporation became subject to federal and state income taxes. Prior to consummation of the Corporate Reorganization, SMLP was treated as a partnership for federal and state income tax purposes, in which the Partnership’s taxable income or loss was passed through to its unitholders. SMLP was subject to Texas margin tax. Therefore, with the exception of the state of Texas, SMLP did not directly pay federal and state income taxes and no entity-level income tax provisions was recorded other than for the effects of the Texas margin tax. Upon consummation of the Corporate Reorganization, Summit Midstream Corporation recognized (i) a $148.6 million income tax expense in its unaudited condensed consolidated statements of operations for temporary differences that existed as of the date of the Corporate Reorganization, (ii) a $28.1 million tax benefit to equity due to changes in tax bases and liabilities and (iii) a net deferred tax liability of $120.5 million in its unaudited condensed consolidated balance sheets. The tax amounts recognized in the financial statements are based on management’s best estimates, are preliminary and subject to change, and such changes could be material. The Partnership has not yet completed its tax return process for tax year 2024, which will require the receipt of final brokerage trade data and the determination of the Partnership’s final outside tax basis. SMC’s effective income tax rate for the three and nine months ended September 30, 2024, was -259% and 264%, respectively. The effective tax rate differed from the statutory rate primarily due to the tax expense to establish a net deferred tax liability upon the Company’s change in tax status and SMLP’s pre-Corporate Reorganization income not being subject to U.S. federal or state income tax, other than the Texas margin tax. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized, and when necessary, valuation allowances are provided. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. SMC assesses the realizability of its deferred tax assets quarterly and considers carryback availability, the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. No valuation allowance has been recognized as of September 30, 2024. SMC continues to monitor income tax developments in the United States. SMC will incorporate into its future financial statements the impacts, if any, of future regulations and additional authoritative guidance when finalized.

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