Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

(13) Income Taxes

As of December 31, 2023 and 2022, the Company’s Consolidated Balance Sheets reflected a payable of $25 million and receivable of $22 million, respectively, from the IRS and certain state jurisdictions.

Income Tax Expense (Benefit)

Income tax expense (benefit) is comprised of the following:

	Year Ended December 31,
(in millions)	2023		2022		2021
Current:
Federal	$	118	$	156	$	84
State	9		14		7
Total current	127		170		91
Deferred:
Federal	73		(26)		(76)
State	7		13		(23)
Total deferred	80		(13)		(99)
Total income tax expense (benefit)	$	207	$	157	$	(8)

The following is a reconciliation of total income tax expense (benefit) to income tax expense (benefit) computed by applying the statutory federal income tax rate to pretax income:

	Year Ended December 31,
(in millions)	2023		2022		2021
Tax computed at federal statutory rate	$	228	$	168	$	14
State income taxes, net of federal tax benefit	28		28		3
Changes in enacted state tax rates, net of federal tax expense	(5)		—		(10)
State tax incentives, net of federal tax expense	(11)		(6)		(6)
Noncontrolling interest	(23)		(38)		(10)
Renewable fuel incentives	(15)		(7)		—
Other, net	5		12		1
Total income tax expense (benefit)	$	207	$	157	$	(8)

Deferred Tax Assets and Liabilities

The income tax effect of temporary differences that give rise to the Deferred income tax assets and Deferred income tax liabilities at December 31, 2023 and 2022 are as follows:

	December 31,
(in millions)	2023		2022
Deferred income tax assets:
Personnel accruals	$	11	$	14
Inventories	3		—
Right of use lease liability	9		—
Contingent liabilities	61		—
State tax credit carryforward, net	12		8
Total gross deferred income tax assets	96		22
Unrealized gains/losses	(6)		—
Prepaid expenses	(6)		—
Right of use lease asset	(10)		—
Investment in CVR Partners	(60)		(68)
Investment in CVR Refining	—		(202)
Investment in Joint Ventures	(15)		—
Property, plant and equipment	(295)		—
Turnaround costs	(30)		—
Other	(1)		(1)
Total gross deferred income tax liabilities	(423)		(271)
Net deferred income tax liabilities	$	(327)	$	(249)

Effective February 1, 2023, we completed a restructuring of our business to segregate the renewables business. The restructuring took place in several phases, and included the formation of new, wholly-owned subsidiaries of CVR Energy to which certain assets were transferred. See Part II, Item 7, Renewables Business, for further discussion of the restructuring. The Deferred income tax assets and Deferred income tax liabilities as of December 31, 2023 reflect such restructuring.

Although realization is not assured, management believes that it is more likely than not that all of the deferred income tax assets will be realized, and therefore, no valuation allowance was recognized as of December 31, 2023 and 2022.

As of December 31, 2023, CVR Energy has state tax credits of approximately $14 million, which are available to reduce future state income taxes. These credits have an indefinite carryover period.

Uncertain Tax Positions

A reconciliation of unrecognized tax benefits is as follows:

	Year Ended December 31,
(in millions)	2023		2022		2021
Balance, beginning of year	$	11	$	17	$	17
Reductions related to expirations from statute of limitations	(10)		(6)		—
Balance, end of year	$	1	$	11	$	17

Included in the balance of unrecognized tax benefits as of December 31, 2023, 2022, and 2021 are $1 million, $9 million, and $13 million, respectively, of tax benefits that, if recognized, would affect the effective tax rate. Additionally, the Company reasonably believes that no unrecognized tax positions related to state income tax credits will be recognized by the end of 2024 as a result of the expiration of statute of limitations. No unrecognized tax benefits were netted with Deferred income tax asset

carryforwards as of December 31, 2023. Approximately $2 million of unrecognized tax benefits were netted with Deferred income tax asset carryforwards as of December 31, 2022. The remaining unrecognized tax benefits are included in Other long-term liabilities in the Consolidated Balance Sheets.

CVR Energy recognized $3 million interest benefit and no liability for interest as of December 31, 2023, $1 million interest expense and $3 million liability for interest as of December 31, 2022, and $1 million interest expense and $2 million liability for interest as of December 31, 2021. No penalties were recognized during 2023, 2022, or 2021.

At December 31, 2023, the Company’s tax filings are open to examination in the United States for the tax years ended December 31, 2020 through December 31, 2022 and in various individual states for the tax years ended December 31, 2019 through December 31, 2022.