Income Taxes (Tables)

12 Months Ended

Dec. 31, 2022

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 years indicated:

	For the Year Ended December 31,
	2022			2021			2020
Deferred tax benefit (provision) attributable to OTA	$	(22	)	$	(28	)	$	155
Texas Margin Tax		(56	)		(42	)		(32	)
Other		(4	)		–			1
Benefit from (provision for) income taxes	$	(82	)	$	(70	)	$	124

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

	For the Year Ended December 31,
	2022			2021			2020
Current portion of income tax benefit (provision):
Federal	$	(2	)	$	2		$	3
State		(18	)		(31	)		(26	)
Foreign		(2	)		(1	)		(1	)
Total current portion		(22	)		(30	)		(24	)
Deferred portion of income tax benefit (provision):
Federal		(20	)		(27	)		142
State		(40	)		(13	)		6
Foreign		–			–			–
Total deferred portion		(60	)		(40	)		148
Total benefit from (provision for) income taxes	$	(82	)	$	(70	)	$	124

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 Year Ended December 31,
	2022			2021			2020
Pre-Tax Net Book Income (“NBI”)	$	5,697		$	4,825		$	3,762
Texas Margin Tax (1)		(56	)		(42	)		(32	)
State income tax benefit (provision), net of federal benefit (2)		(1	)		(1	)		9
Federal income tax benefit (provision) computed by applying the       federal statutory rate to NBI of corporate entities		(15	)		(13	)		80
Federal benefit attributable to settlement of Liquidity Option Agreement (2)		–			–			68
Valuation allowance (3)		(8	)		(14	)		–
Other		(2	)		–			(1	)
Benefit from (provision for) income taxes	$	(82	)	$	(70	)	$	124
Effective income tax rate		(1.4	)%		(1.5	)%		3.3	%

(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 million, which is comprised of $4 million of state income tax benefit and $68 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.  Accordingly, we provided for a valuation allowance against OTA’s net deferred tax assets.

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:

	December 31,
	2022		2021
Deferred tax liabilities:
Attributable to investment in OTA	$	406	$	384
Attributable to property, plant and equipment		133		118
Attributable to investments in other entities		5		5
Other		60		14
Total deferred tax liabilities		604		521
Deferred tax assets:
Net operating loss carryovers (1)		22		14
Temporary differences related to Texas Margin Tax		4		3
Total deferred tax assets		26		17
Valuation allowance		22		14
Total deferred tax assets, net of valuation allowance		4		3
Total net deferred tax liabilities	$	600	$	518

(1) The loss amount presented as of December 31, 2022 has an indefinite carryover period.  All losses are subject to limitations on their utilization.