Income Taxes (Tables)

9 Months Ended

Sep. 30, 2024

Income Taxes [Abstract]

Federal and State Income Tax Provision

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

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2024			2023			2024			2023
Current portion of income tax provision:
Federal	$	(1	)	$	(1	)	$	(1	)	$	(11	)
State		(9	)		(8	)		(31	)		(29	)
Total current portion		(10	)		(9	)		(32	)		(40	)
Deferred portion of income tax provision:
Federal		(4	)		(4	)		(12	)		–
State		(4	)		(9	)		(10	)		(5	)
Foreign		(1	)		–			(1	)		–
Total deferred portion		(9	)		(13	)		(23	)		(5	)
Total provision for income taxes	$	(19	)	$	(22	)	$	(55	)	$	(45	)

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 September 30,						For the Nine Months Ended September 30,
	2024			2023			2024			2023
Pre-Tax Net Book Income (“NBI”)	$	1,451		$	1,372		$	4,392		$	4,100
Texas Margin Tax (1)		(13	)		(17	)		(40	)		(33	)
State income tax provision, net of federal benefit		(1	)		–			(1	)		(1	)
Federal income tax provision computed by applying      the federal statutory rate to NBI of corporate entities		(4	)		(5	)		(12	)		(11	)
Other		(1	)		–			(2	)		–
Provision for income taxes	$	(19	)	$	(22	)	$	(55	)	$	(45	)
Effective income tax rate		(1.3	)%		(1.6	)%		(1.3	)%		(1.1	)%

(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.

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:

	September 30,		December 31,
	2024		2023
Deferred tax liabilities:
Attributable to investment in OTA (1)	$	456	$	436
Attributable to property, plant and equipment		148		138
Attributable to investments in other entities		5		4
Other		83		83
Total deferred tax liabilities		692		661
Deferred tax assets:
Net operating loss carryovers (2)		55		46
Temporary differences related to Texas Margin Tax		3		4
Total deferred tax assets		58		50
Total net deferred tax liabilities	$	634	$	611

(1)	Represents the deferred tax liability balance held by our wholly owned subsidiary, OTA Holdings, Inc. ("OTA"), which we acquired in March 2020.
(2)	The loss amount presented as of September 30, 2024 has an indefinite carryover period.  All losses are subject to limitations on their utilization.