Taxes

12 Months Ended

Dec. 31, 2021

Income Taxes

Taxes

15. Taxes

Significant components of the provision for (benefit from) income taxes are as follows:

		Year Ended		Year Ended	Year Ended
		December 31,		December 31,	December 31,
		2021		2020	2019
(In thousands)
Current:
Federal	$	1,525	$	518	$	(36)
State		342		(569)		124
Total current	$	1,867	$	(51)	$	88
Deferred:
Federal	$	7	$	44	$	667
State		—		—		(507)
Total deferred	$	7	$	44	$	160
	$	1,874	$	(7)	$	248

A reconciliation of the statutory federal income tax provision (benefit) at the statutory rate to the actual provision for (benefit from) income taxes follows:

	Year Ended		Year Ended		Year Ended
	December 31,		December 31,		December 31,
	2021		2020		2019
Income tax provision (benefit) at statutory rate	$	71,284	$	(72,371)	$	49,150
Percentage depletion and other perm items		(29,392)		(7,763)		(17,743)
State taxes, net of effect of federal taxes		16,490		(3,298)		(12,769)
Change in valuation allowance		(69,603)		76,524		(24,206)
Other, net		13,095		6,901		5,816
Provision for (benefit from) income taxes	$	1,874	$	(7)	$	248

Significant components of the Company’s deferred tax assets and liabilities that result from carryforwards and temporary differences between the financial statement basis and tax basis of assets and liabilities are summarized as follows:

	December 31,		December 31,
	2021		2020
(In thousands)
Deferred tax assets:
Tax loss carryforwards	$	326,763	$	352,342
Tax credit carryforwards		2,565		3,117
Investment in partnerships		170,610		213,478
Other		17,263		19,377
Gross deferred tax assets	$	517,201	$	588,314
Valuation allowance		(504,392)		(573,995)
Total deferred tax assets	$	12,809	$	14,319
Deferred tax liabilities:
Plant and equipment		467		1,219
Convertible Notes		7,008		8,845
Other		5,304		4,218
Total deferred tax liabilities	$	12,779	$	14,282
Net deferred tax asset	$	30	$	37

The Company provides for deferred income taxes for temporary differences arising from differences between the financial statement and tax basis of assets and liabilities existing at each balance sheet date using enacted tax rates expected to be in effect when the related taxes are expected to be paid or recovered. The Company assesses the need for a valuation allowance against its deferred tax assets through a review of future taxable income, available tax planning strategies, the reversals of temporary differences and considering all available positive and negative evidence.

On the basis of this evaluation, a full valuation allowance has been held against the Company's net deferred tax asset since 2015. Through December 31, 2018, the Company was in a three-year cumulative loss position. Since 2019, the Company has been in a cumulative income position; however, has fluctuated between income and loss for individual years and quarters within each cumulative three-year period.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law. CARES Act provided for an acceleration of the refund timing related to remaining AMT credits as initially established under the Tax Cut and Jobs Act of 2017. During 2020, the Company received all outstanding refunds for AMT credits.

For the year ended December 31, 2020, a $76.5 million tax provision was recorded from the addition of valuation allowance offsetting the federal and state net operating losses generated during the year. This was partially offset by an $8.8 million release of valuation allowance through additional paid-in capital (APIC), as a result of the deferred tax liability recorded through APIC related to Convertible Notes. A $574.0 million valuation allowance fully offsets all net deferred tax assets.

For the year ended December 31, 2021, a $69.6 million income tax benefit was recorded from the release of valuation allowance as a result of the federal and state net operating losses utilized during the year.

The Company has gross federal NOL carryforwards for income tax purposes of $1.3 billion at December 31, 2021. Of these carryforwards, approximately $1.1 billion will expire, if not utilized, in various years through 2038. The remaining carryforwards have no expiration; however, they can only be used to offset 80% of the Company’s U.S. federal taxable income in any taxable year beginning after December 31, 2021.

The ability to use net operating losses (“NOLs”) in existence immediately prior to the Company’s emergence from bankruptcy in 2016 has been limited by the “ownership change” under Section 382 of the Internal Revenue Code (the “Code”) that occurred as a result of such emergence (the “Emergence Ownership Change”). NOLs generated after the Emergence Ownership Change are generally not subject to the limitations resulting from the Emergence Ownership Change.

A reconciliation of the beginning and ending amounts of gross unrecognized tax benefits follows:

	(In thousands)
Balance at December 31, 2018	$	39,093
Additions based on tax positions to the current year		2,980
Reductions for tax positions of prior years		(1,970)
Reductions as a result of lapses in the statute of limitations		(374)
Balance at December 31, 2019		39,729
Additions for tax positions related to the current year		1,583
Additions for tax positions related to the prior year		7,918
Reductions for tax positions of prior years		(732)
Reductions as a result of lapses in the statute of limitations		(382)
Balance at December 31, 2020		48,116
Additions based on tax positions to the current year		3,467
Additions for tax positions related to the prior year		3,931
Reductions for tax positions of prior years		(2,868)
Reductions as a result of lapses in the statute of limitations		(3,683)
Balance at December 31, 2021	$	48,963

If recognized, the entire amount of the gross unrecognized tax benefits at December 31, 2021 would affect the effective tax rate. The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense. The Company had accrued interest and penalties of $3.8 million and $2.3 million at December 31, 2021 and 2020, respectively. In the next 12 months, $37.5 million gross unrecognized tax benefits are expected to be reduced due to the expiration of the statute of limitations.

The Company is subject to U.S. federal income tax as well as income tax in multiple state jurisdictions. The tax years 2011 through 2021 remain open to examination for U.S. federal income tax matters and 2001 through 2021 remain open to examination for various state income tax matters.