Income Taxes

9 Months Ended

Sep. 30, 2022

Income Taxes

Income Taxes

8. Income Taxes

Effective Income Tax Rate

Our provision for income taxes may not have the customary relationship of taxes to income. A reconciliation between the U.S. corporate income tax rate and the effective income tax rate was as follows:

	For the three months ended					For the nine months ended
	September 30,					September 30,
	2022		2021			2022			2021
U.S. corporate income tax rate	21	%		21	%		21	%		21	%
Dividends received deduction	(1)			(4)			(1)			(4)
Tax credits	(1)			(3)			(1)			(2)
Interest exclusion from taxable income	—			(1)			—			(1)
Foreign country statutory rate differential	—			(1)			—			—
Impact of equity method presentation	—			—			—			(1)
State income taxes	1			1			—			1
Low income housing tax credit amortization	—			1			—			1
Other	—			1			1			—
Effective income tax rate	20	%		15	%		20	%		15	%

Inflation Reduction Act of 2022

The Inflation Reduction Act of 2022 (“IRA 2022”) was enacted by the U.S. government on August 16, 2022. The IRA 2022 implements a new corporate alternative minimum tax (the Book Minimum Tax or “BMT”) effective January 1, 2023. We are expected to be an “Applicable Corporation,” which requires computation of our U.S. federal income tax liability under two systems, the U.S. regular corporate tax (“RCT”) and the BMT. Although the BMT may apply in any given year when tentative minimum tax (“TMT”) then exceeds the RCT liability, as a “prepayment” the BMT generates a corresponding alternative minimum tax credit (“AMTC”). The AMTC is accounted for as a deferred tax asset (“DTA”) with an indefinite carryover life recoverable in years when the RCT liability then exceeds TMT.

The tax accounting consequences of a change in tax law is required to be recognized in the period legislation is enacted. Generally, a company is also required to consider the impact of new tax law on realizability of its DTAs, including determination of whether a change to their valuation allowance amounts is necessary. We made an accounting policy election to disregard our BMT status when evaluating DTAs under the RCT system.