XML 34 R24.htm IDEA: XBRL DOCUMENT v3.22.2.2
Income Taxes
 9 Months Ended
Sep. 30, 2022
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Provision for income taxes$1,891 $954 $5,469 $2,111 

The operations of a partnership are generally not subject to income taxes, except for Texas margin tax, because its income is taxed directly to its partners. Current state income taxes attributable to the Texas margin tax relating to the operation of the Partnership of $120 and $59 were recorded in income tax expense for the three months ended September 30, 2022 and 2021, respectively. Current state income taxes attributable to the Texas margin tax relating to the operation of the Partnership of $376 and $240 were recorded in income tax expense for the nine months ended September 30, 2022 and 2021, respectively. Deferred taxes applicable to the Texas margin tax relating to the operation of the Partnership are immaterial.

MTI, a wholly owned subsidiary of the Partnership, is subject to income taxes due to its corporate structure (the "Taxable Subsidiary"). Total income tax expense of $1,771 and $895, related to the operation of the Taxable Subsidiary, for the three months ended September 30, 2022 and 2021, resulted in an effective income tax rate ("ETR") of 19.94% and 23.42%, respectively. Total income tax expense of $5,093 and $1,871, related to the operation of the Taxable Subsidiary, for the nine months ended September 30, 2022 and 2021, resulted in an effective income tax rate ETR of 21.09% and 29.51%, respectively.

The decrease in the ETR for the income taxes during the three and nine months ended September 30, 2022 was primarily due to significantly larger pretax income recorded for both the three and nine months ended September 30, 2022, compared to the same periods in 2021. The increase in the provision for income taxes for both the three and nine months ended September 30, 2022, compared to the same periods in 2021, was primarily due to an increase in income before income taxes in the current period.

    A current federal income tax expense of $348 and $153, related to the operation of the Taxable Subsidiary, was recorded for the three months ended September 30, 2022 and 2021, respectively. A current federal income tax expense of $1,071 and $276, related to the operation of the Taxable Subsidiary, was recorded for the nine months ended September 30, 2022 and 2021, respectively. A current state income tax expense of $116 and $81, related to the operation of the Taxable Subsidiary, was recorded for the three months ended September 30, 2022 and 2021, respectively. A current state income tax expense of $411 and $177, related to the operation of the Taxable Subsidiary, was recorded for the nine months ended September 30, 2022 and 2021, respectively.

With respect to MTI, income taxes are accounted for under the asset and liability method pursuant to the provisions of ASC 740 related to income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities 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.

    A deferred tax expense related to the MTI temporary differences of $1,307 and $661 was recorded for the three months ended September 30, 2022 and 2021, respectively. A deferred tax expense related to the MTI temporary differences of $3,611 and $1,419 was recorded for the nine months ended September 30, 2022 and 2021, respectively. A net deferred tax asset of $16,210 and $19,821, related to the cumulative book and tax temporary differences, existed at September 30, 2022 and December 31, 2021, respectively.
    All income tax positions taken for all open years are more likely than not to be sustained based upon their technical merit under applicable tax laws.