Income Taxes (Tables)

6 Months Ended

Jun. 30, 2020

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

	For the Three Months Ended June 30,					For the Six Months Ended June 30,
	2020		2019			2020			2019
Current portion of income tax provision (benefit):
Federal	$	2.2	$	(0.4	)	$	2.3		$	0.5
State		4.1		7.5			8.7			16.5
Foreign		–		0.2			0.2			0.8
Total current portion		6.3		7.3			11.2			17.8
Deferred portion of income tax provision (benefit):
Federal		46.4		–			(126.4	)		(0.1	)
State		7.0		2.6			(4.3	)		4.5
Foreign		–		(0.2	)		–			(0.2	)
Total deferred portion		53.4		2.4			(130.7	)		4.2
Total provision for (benefit from) income taxes	$	59.7	$	9.7		$	(119.5	)	$	22.0

Reconciliation of Provision for Income Taxes

A reconciliation of the provision for 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 Three Months Ended June 30,						For the Six Months Ended June 30,
	2020			2019			2020			2019
Pre-Tax Net Book Income (“NBI”)	$	1,120.5		$	1,246.2		$	2,316.3		$	2,538.9

Texas Margin Tax (1)		7.0			10.1			14.7			21.0
State income tax provision (benefit), net of federal benefit (2)		3.2			0.1			(8.1	)		0.3
Federal income tax provision (benefit) computed by applying the federal statutory rate to NBI of corporate entities		49.5			(0.5	)		(58.3	)		0.7
Federal benefit attributable to settlement of Liquidity Option (2)		–			–			(67.8	)		–
Provision for (benefit from) income taxes	$	59.7		$	9.7		$	(119.5	)	$	22.0

Effective income tax rate		5.3	%		0.8	%		(5.2	)%		0.9	%

(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.
(2)	The total benefit recognized in income tax expense on March 5, 2020 from settlement of the Liquidity Option was $72.2 million, which is comprised of $4.4 million of state income tax benefit and $67.8 million of federal income tax benefit.

Components of Deferred Tax Assets and Liabilities

Deferred tax liability at March 5, 2020				$	439.7
Impact of change in fair value of units on deferred tax liability:
Change in fair value of 54,807,352 EPD common units held by OTA (1)	$	(301.4	)
Multiplied by estimated blended federal and state tax rate		22.4	%		(67.4	)
Other, including interim allocations of taxable income					2.9
Deferred tax liability at June 30, 2020				$	375.2

(1)	The market price of EPD common units declined from $23.67 per unit at March 5, 2020 (settlement date of the Liquidity Option) to $18.17 per unit on June 30, 2020.

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

	June 30,		December 31,
	2020		2019
Deferred tax liabilities:
Attributable to investment in OTA	$	375.2
Attributable to property, plant and equipment		105.6	$	100.2
Attributable to investments in other entities		3.4		3.3
Total deferred tax liabilities		484.2		103.5
Less deferred tax assets:
Net operating loss carryovers (1)		0.1		0.1
Temporary differences related to Texas Margin Tax		2.5		3.0
Total deferred tax assets		2.6		3.1
Total net deferred tax liabilities	$	481.6	$	100.4

(1)	These losses expire in various years between 2020 and 2037 and are subject to limitations on their utilization.