Taxes

12 Months Ended

Dec. 31, 2022

Taxes

Taxes

14. Taxes

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

		Year Ended		Year Ended	Year Ended
		December 31,		December 31,	December 31,
		2022		2021	2020
(In thousands)
Current:
Federal	$	(30,107)	$	1,525	$	518
State		204		342		(569)
Total current	$	(29,903)	$	1,867	$	(51)
Deferred:
Federal	$	(209,130)	$	7	$	44
State		(12,893)		—		—
Total deferred	$	(222,023)	$	7	$	44
	$	(251,926)	$	1,874	$	(7)

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

	Year Ended		Year Ended		Year Ended
	December 31,		December 31,		December 31,
	2022		2021		2020
Income tax provision (benefit) at statutory rate	$	226,587	$	71,284	$	(72,371)
Percentage depletion and other permanent items		(52,647)		(29,392)		(7,763)
State taxes, net of effect of federal taxes		2,988		16,490		(3,298)
Change in valuation allowance		(420,688)		(69,603)		76,524
Other, net		(8,166)		13,095		6,901
(Benefit from) provision for income taxes	$	(251,926)	$	1,874	$	(7)

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,
	2022		2021
(In thousands)
Deferred tax assets:
Tax loss carryforwards	$	219,302	$	326,763
Tax credit carryforwards		1,656		2,565
Investment in partnerships		39,999		170,610
Other		38,362		17,263
Gross deferred tax assets	$	299,319	$	517,201
Valuation allowance		(83,704)		(504,392)
Total deferred tax assets	$	215,615	$	12,809
Deferred tax liabilities:
Plant and equipment		1,245		467
Convertible Notes		75		7,008
Other		4,825		5,304
Total deferred tax liabilities	$	6,145	$	12,779
Net deferred tax asset	$	209,470	$	30

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 (including temporary differences and tax attributes) through a review of all available positive and negative evidence. On the basis of this assessment, a full valuation allowance was recorded against the Company's net deferred tax assets in 2015 and maintained through 2021. As of December 31, 2021, a $504.4 million valuation allowance fully offset the Company's net deferred tax assets.

During 2022, the Company experienced record profitability, recording a pre-tax profit of $1.08 billion for the year. After considering the impact of this and the resulting significant 3-year cumulative income position, along with all other positive and negative evidence, the Company determined that it is more likely than not that the net deferred tax assets would be realized, except for certain state NOLs and capital losses. Based on this conclusion, the Company released valuation allowance totaling $420.7 million during the fourth quarter of 2022. A corresponding income tax benefit was also recorded through continuing operations.

At December 31, 2022, the Company has gross NOL carryforwards for federal income tax purposes of $607.1 million. Of these carryforwards, approximately $334.5 million will expire, if not utilized, in various years through 2037. The remaining carryforwards have no expiration; however, they can only be used to offset 80% of our U.S. federal taxable income in any taxable year beginning after December 31, 2022.

The ability to use our net NOLs in existence immediately prior to our 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 limitations resulting from the Emergence Ownership Change.

On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was signed into law. This legislation introduces a 15% corporate alternative minimum tax among its key tax provisions. The IRA is effective for years beginning after December 31, 2022, therefore, the Company did not experience material impact in the current year. The Company will continue to evaluate the effects of IRA on future periods, however, does not anticipate any material impact.

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

	(In thousands)
Balance at December 31, 2019	$	39,729
Additions based on tax positions 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 for tax positions related 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
Additions based on tax positions to the current year		5,446
Additions for tax positions related to the prior year		768
Reductions for tax positions of prior years		(125)
Reductions as a result of lapses in the statute of limitations		(36,988)
Balance at December 31, 2022	$	18,064

If recognized, the entire amount of the gross unrecognized tax benefits at December 31, 2022 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 $0.0 million and $3.8 million at December 31, 2022 and 2021, respectively. In the next 12 months, $3.1 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.