Provision for Income Taxes

12 Months Ended

Dec. 31, 2016

Provision for Income Taxes [Abstract]

Note 16. Provision for Income Taxes

Publicly traded partnerships like ours are treated as corporations unless they have 90% or more in “qualifying income” (as that term is defined in the Internal Revenue Code). We satisfied this requirement in each of the years ended December 31, 2016, 2015 and 2014 and, as a result, are not subject to federal income tax. However, our partners are individually responsible for paying federal income tax on their share of our taxable income. Net earnings for financial reporting purposes may differ significantly from taxable income reportable to our unitholders as a result of differences between the tax basis and financial reporting basis of certain assets and liabilities and other factors. We do not have access to information regarding each partner’s individual tax basis in our limited partner interests.

Provision for income taxes primarily reflects our state tax obligations under the Revised Texas Franchise Tax (the “Texas Margin Tax”). Deferred income tax assets and liabilities are recognized for temporary differences between the assets and liabilities of our tax paying entities for financial reporting and tax purposes.

Our federal, state and foreign income tax provision (benefit) is summarized below:

	For the Year Ended December 31,
	2016			2015			2014
Current:
Federal	$	(0.5	)	$	0.9		$	2.2
State		16.7			15.5			13.4
Foreign		0.6			1.7			1.4
Total current		16.8			18.1			17.0
Deferred:
Federal		1.1			(1.4	)		2.2
State		5.2			(19.2	)		3.5
Foreign		0.3			--			0.4
Total deferred		6.6			(20.6	)		6.1
Total provision for (benefit from) income taxes	$	23.4		$	(2.5	)	$	23.1

A reconciliation of the provision for (benefit from) income taxes with amounts determined by applying the statutory U.S. federal income tax rate to income before income taxes is as follows:

	For the Year Ended December 31,
	2016		2015			2014
Pre-Tax Net Book Income (“NBI”)	$	2,576.4	$	2,555.9		$	2,856.6

Texas Margin Tax (1)	$	22.1	$	(3.7	)	$	17.5
State income taxes (net of federal benefit)		0.2		0.7			0.2
Federal income taxes computed by applying the federal statutory rate to NBI of corporate entities		0.8		1.1			1.5
Other permanent differences		0.3		(0.6	)		3.9
Provision for (benefit from) income taxes	$	23.4	$	(2.5	)	$	23.1

Effective income tax rate		0.9%		(0.1)%			0.8%

(1) Although the Texas Margin Tax is not considered a state income tax, it has the characteristics of an income tax since it is determined by applying a tax rate to a base that considers our Texas-sourced revenues and expenses. During 2015, certain legislative changes were enacted to the Texas Margin Tax, which reduced the tax rate for business entities that operate within the state.

The following table presents the significant components of deferred tax assets and deferred tax liabilities at the dates indicated:

	December 31,
	2016		2015
Deferred tax assets:
Net operating loss carryovers (1)	$	0.2	$	0.2
Accruals		1.6		1.6
Total deferred tax assets		1.8		1.8
Less: Deferred tax liabilities:
Property, plant and equipment		50.5		44.9
Equity investment in partnerships		3.7		2.7
Total deferred tax liabilities		54.2		47.6
Total net deferred tax liabilities	$	52.4	$	45.8

Current portion of total net deferred tax assets	$	0.3	$	0.3
Long-term portion of total net deferred tax liabilities	$	52.7	$	46.1

(1) These losses expire in various years between 2017 and 2033 and are subject to limitations on their utilization.

Accounting guidance provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. We did not rely on any uncertain tax positions in recording our income tax-related amounts during the years ended December 31, 2016, 2015 or 2014.