INCOME TAXES

3 Months Ended

Mar. 31, 2022

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The Company is subject to U.S. federal income tax and the Texas margin tax. The Company’s income tax provision for the three months ended March 31, 2022 consists of following:

	Three Months Ended March 31,
	2022		2021
	(In thousands)
Current tax expense:
Federal	$	—	$	—
State and local	—		—
Total current tax expense	—		—
Deferred tax expense:
Federal	—		—
State and Local	676		—
Total deferred tax expense	676		—
Total income tax expense	$	676	$	—

The Company records income taxes using an estimated annual effective tax rate and recognizes specific events discretely as they occur. The following table presents reconciliation of the U.S. statutory income tax rate to the estimated annual effective tax rate:

	Three Months Ended
	March 31, 2022
U.S. statutory rate(1)	21.0	%
Tax attributable to Noncontrolling interest - Common Units limited partners	(11.6)	%
Tax attributable to Noncontrolling interest - Preferred Units limited partners	(5.1)	%
State tax rate	3.1	%
Other	0.2	%
Valuation allowance	(4.5)	%
Effective rate	3.1	%

(1) Prior to the Closing on February 22, 2022, the Company was organized as limited partnership and was not subject to the U.S. federal income tax for the three months ended March 31, 2021.

For state purposes, the Company records deferred tax assets and liabilities based on the differences between the carrying value and tax basis of assets and liabilities recorded on the consolidated balance sheets. The deferred tax liabilities recorded as of March 31, 2022 and December 31, 2021 relate to these differences.

For federal purposes, the Company has a deferred tax asset related to our investment in the Partnership and net operating losses. The Company recorded a full allowance valuation on its deferred tax assets, as it has determined that more-likely-than-not that the benefit of the deferred tax assets will not be realized.

Upon Closing, the Company assumed certain uncertain tax positions from ALTM. The Company accounts for income taxes in accordance with ASC 740—Income Taxes, which prescribes a minimum recognition threshold a tax position must meet before being recognized in the financial statements. Tax positions generally refer to a position taken in a previously filed income tax return or expected to be included in a tax return to be filed in the future that is reflected in the measurement of current and deferred income tax assets and liabilities. Reconciliation of the beginning and ending amount of unrecognized tax benefit is as follows:

(In thousands)	Amount
Balance as of January 1, 2022	$	—
Increase related to ALTM acquisition	5,238
Reduction related to current year activities	(228)
Balance as of March 31, 2022	$	5,010