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Income Taxes (Tables)
 6 Months Ended
Jun. 30, 2021
Income Taxes [Abstract]  
Federal and State Income Tax Provision
The following table presents the components of our consolidated benefit from (provision for) income taxes for the periods indicated (dollars in millions):

 
  
For the Three Months
Ended June 30,
    
For the Six Months
Ended June 30,
  
 
  
2021
    
2020
    
2021
    
2020
  
Deferred tax benefit (expense) attributable to
    OTA Holdings, Inc. (“OTA”)
  
$
(7.0
)
  
$
(50.5
)
  
$
(13.3
)
  
$
136.7
  
Revised Texas Franchise Tax (“Texas Margin Tax”)
    
(24.1
)
    
(7.0
)
    
(27.4
)
    
(14.7
)
Other
    
(0.1
)
    
(2.2
)
    
(0.5
)
    
(2.5
)
Benefit from (provision for) income taxes
  
$
(31.2
)
  
$
(59.7
)
  
$
(41.2
)
  
$
119.5
  

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

 
  
For the Three Months
Ended June 30,
    
For the Six Months
Ended June 30,
  
 
  
2021
    
2020
    
2021
    
2020
  
Current portion of income tax benefit (provision):
                        
Federal
  
$
(0.2
)
  
$
(2.2
)
  
$
0.6
    
$
(2.3
)
State
    
(11.5
)
    
(4.1
)
    
(16.6
)
    
(8.7
)
Foreign
    
–
      
–
      
(1.1
)
    
(0.2
)
Total current portion
    
(11.7
)
    
(6.3
)
    
(17.1
)
    
(11.2
)
Deferred portion of income tax benefit (provision):
                                
    Federal
    
(6.3
)
    
(46.4
)
    
(12.2
)
    
126.4
  
    State
    
(13.2
)
    
(7.0
)
    
(11.9
)
    
4.3
  
Foreign
    
–
      
–
      
–
      
–
  
Total deferred portion
    
(19.5
)
    
(53.4
)
    
(24.1
)
    
130.7
  
Total benefit from (provision for) income taxes
  
$
(31.2
)
  
$
(59.7
)
  
$
(41.2
)
  
$
119.5
  
Reconciliation of Provision for Income Taxes
A reconciliation of the benefit from (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,
  
 
  
2021
    
2020
    
2021
    
2020
  
Pre-Tax Net Book Income (“NBI”)
  
$
1,177.2
    
$
1,120.5
    
$
2,549.8
    
$
2,316.3
  
                                 
Texas Margin Tax (1)
    
(24.1
)
    
(7.0
)
    
(27.4
)
    
(14.7
)
State income tax benefit (provision), net of federal benefit (2)
    
(0.3
)
    
(3.2
)
    
(0.9
)
    
8.1
  
Federal income tax benefit (provision) computed by applying the federal statutory rate to NBI of corporate entities
    
(3.4
)
    
(49.5
)
    
(6.5
)
    
58.3
  
Federal benefit attributable to settlement of
Liquidity Option Agreement (2)
    
–
      
–
      
–
      
67.8
  
Valuation allowance on deferred tax assets (3)
    
(3.4
)
    
–
      
(6.2
)
    
–
  
Other
    
–
      
–
      
(0.2
)
    
–
  
Benefit from (provision for) income taxes
  
$
(31.2
)
  
$
(59.7
)
  
$
(41.2
)
  
$
119.5
  
 
                                
Effective income tax rate
    
(2.7
)%
    
(5.3
)%
    
(1.6
)%
    
5.2
%

(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.
(3)
Management believes that it is more likely than not that the net deferred tax assets attributable to OTA will not be fully realizable; therefore, we have provided for a valuation allowance.
Components of Deferred Tax Assets and Liabilities
The following table presents the significant components of deferred tax assets and deferred tax liabilities at the dates indicated:

   
June 30,
    
December 31,
  
 
  
2021
    
2020
  
Deferred tax liabilities:
            
Attributable to investment in OTA
  
$
369.9
    
$
356.6
  
Attributable to property, plant and equipment
    
117.8
      
106.4
  
Attributable to investments in other entities
    
4.2
      
4.1
  
Other
    
13.5
      
–
  
     Total deferred tax liabilities
    
505.4
      
467.1
  
Less deferred tax assets:
                
Net operating loss carryovers (1)
    
6.3
      
0.1
  
Temporary differences related to Texas Margin Tax
    
3.0
      
2.3
  
Total deferred tax assets
    
9.3
      
2.4
  
Total net deferred tax liabilities before valuation allowance
    
496.1
      
464.7
  
Less: Valuation allowance on deferred tax assets
    
6.2
      
–
  
Total net deferred tax liabilities
  
$
502.3
    
$
464.7
  

(1)
Of the loss amount presented for June 30, 2021, $0.1 million expires in various years between 2021 and 2037.  The remaining $6.2 million has an indefinite carryover period.  All losses are subject to limitations on their utilization.