Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Total income tax expense (benefit) provided on income (loss) before income taxes was allocated as follows:

	Year Ended December 31,
	2021		2020
Continuing operations	$	3,609	$	(2,164)
Discontinued operations	(201)		—
Total	$	3,408	$	(2,164)

Significant components of income tax expense (benefit) from continuing operations were as follows:

	Year Ended December 31,
	2021		2020
Current tax expense (benefit):
Federal	$	2,586	$	(35,187)
State	1,186		(99)
Total current	$	3,772	$	(35,286)
Deferred tax (benefit) expense:
Federal	$	(3)	$	33,348
State	(160)		(226)
Total deferred	$	(163)	$	33,122
Total income tax expense (benefit):
Federal	$	2,583	$	(1,839)
State	1,026		(325)
Total	$	3,609	$	(2,164)

A reconciliation of statutory federal income tax expense (benefit) on income (loss) from continuing operations to the actual income tax expense (benefit) is as follows:

	Year Ended December 31,
	2021		2020
Federal statutory income tax expense (benefit)	$	61,013	$	(51,163)
Increase (reductions) in taxes due to:
Percentage depletion allowance	(11,864)		(2,039)
AMT sequestration refund	—		(2,123)
State taxes, net of federal tax impact	12,998		(9,640)
State apportioned tax rate change, net of federal tax impact	8,751		(1,235)
Change in valuation allowances	(78,056)		59,929
Capital loss expiration	10,552		—
Stock-based compensation	405		1,739
Other, net	(190)		2,368
Income tax expense (benefit)	$	3,609	$	(2,164)

Deferred income taxes result from temporary differences between the reporting of amounts for financial statement purposes and income tax purposes. The net deferred tax assets and liabilities included in the Consolidated Balance Sheets include the following amounts:

	Year Ended December 31,
	2021		2020
Deferred tax assets:
Asset retirement obligations	$	36,252	$	41,268
Reserves and accruals not currently deductible	9,610		12,131
Workers’ compensation benefit obligations	47,105		59,478
Pension obligations	34,956		52,598
Equity method investments	1,846		2,050
Loss carryforwards, net of Section 382 limitation	187,341		255,772
Acquisition-related obligations	9,156		10,002
Other	7,100		10,976
Gross deferred tax assets	333,366		444,275
Less valuation allowance	(172,883)		(263,387)
Deferred tax assets	$	160,483	$	180,888
Deferred tax liabilities:
Property, plant and mineral reserves	$	(134,075)	$	(141,549)
Acquired intangibles, net	(16,408)		(22,037)
Prepaid expenses	(4,955)		(6,211)
Restricted cash	(5,362)		(11,516)
Other	—		(55)
Total deferred tax liabilities	(160,800)		(181,368)
Net deferred tax liabilities	$	(317)	$	(480)

Changes in the valuation allowance were as follows:

	Year Ended December 31,
	2021		2020
Valuation allowance beginning of period	$	263,387	$	133,020
(Decrease) increase in valuation allowance recorded to income tax expense (benefit)	(78,043)		117,829
(Decrease) increase in valuation allowance not affecting income tax expense (benefit)	(12,461)		12,538
Valuation allowance end of period	$	172,883	$	263,387

On December 22, 2017, President Trump signed into law legislation commonly referred to as the “Tax Cuts and Jobs Act” (“TCJA”). Among other provisions, the TCJA repealed the corporate alternative minimum tax (“AMT”) and provided a mechanism for corporations to monetize their alternative minimum tax credits (“AMT Credits”) as a refundable credit during the 2018 through 2021 tax years. On March 27, 2020, President Trump signed into law legislation referred to as the CARES Act. The CARES Act modified the AMT Credits provision such that a corporate taxpayer’s remaining AMT Credits would be refunded in the 2019 tax year rather than the 2019 through 2021 tax years. As of December 31, 2019, the Company recorded a current federal income tax receivable of $33,065 and a deferred tax asset of $33,065 in relation to its refundable AMT Credits. During the first quarter of 2020 and following enactment of the CARES Act, the Company reclassified the $33,065 deferred tax asset to a current federal income tax receivable. The Company received the $66,130 AMT Credit refund in the fourth quarter of 2020. In addition, the Company received $2,123 related to AMT Credits claimed in prior tax years under a different Internal Revenue Code section, which were previously and erroneously subjected to the budgetary sequestration provisions. The Company does not expect to receive any further benefits related to AMT Credits.

The Company acquired the core assets of Alpha Natural Resources, Inc. as part of the Alpha Natural Resources, Inc. bankruptcy reorganization in transactions intended to be treated as a tax-free reorganization for U.S. federal income tax purposes. As a result of these transactions, the Company inherited the tax basis of the core assets and the net operating loss and

other carryforwards of Alpha Natural Resources, Inc. On December 31, 2016, the net operating loss carryforwards and other carryforwards were reduced under Internal Revenue Code Section 108 due to the cancellation of indebtedness resulting from the Alpha Natural Resources, Inc. bankruptcy reorganization. Due to the change in ownership, the net operating loss and other carryforwards inherited in the Alpha Natural Resources, Inc. bankruptcy reorganization are subjected to significant limitations on their use in future years.

Due to the Company’s formation through acquisition of certain core coal assets as part of the Alpha Natural Resources, Inc. bankruptcy reorganization, the Company does not have a long history of operating results. Additionally, significant ownership change limitations limit the ability of the Company to utilize its net operating loss and other carryforwards in future years. The Company currently is relying primarily on the reversal of taxable temporary differences, along with consideration of taxable income via carryback to prior years and tax planning strategies, to support the realization of deferred tax assets. The Company assesses the realizability of its deferred tax assets, including scheduling the reversal of its deferred tax liabilities, to determine the amount of valuation allowance needed. Scheduling the reversal of deferred tax asset and liability balances requires judgment and estimation. The Company believes the deferred tax liabilities relied upon as future taxable income in its assessment will reverse in the same period and jurisdiction and are of the same character as temporary differences giving rise to the deferred tax assets that will be realized. The valuation allowance recorded represents the portion of deferred tax assets for which the Company is unable to support realization through the methods described above. The Company has concluded that it is more likely than not that the remaining deferred tax assets, net of valuation allowances, are realizable.

At December 31, 2021, the Company has regular tax net operating loss carryforwards for federal income tax purposes of approximately $1,543,000. This includes $1,008,000 that are available to offset regular federal taxable income subject to an annual Internal Revenue Code Section 382 limitation of approximately $1,000 and $270,000 that are subject to an annual Section 382 limitation of approximately $17,500. These federal net operating loss carryforwards were generated before 2018 and will expire between years 2030 and 2037. The Company also has $265,000 of federal net operating loss carryforwards with an indefinite carryforward period that can be used to offset up to 80% of taxable income. The Company has capital loss carryforwards of approximately $223,000. The capital loss carryforwards will expire between years 2022 and 2025. A full valuation allowance is recorded against the capital loss carryforwards.

During the third quarter of the year ended December 31, 2020, the Company recorded a decrease in unrecognized tax benefits of approximately $20,788 as a result of the issuance of final regulatory guidance from the Internal Revenue Service (“IRS”). The decrease in unrecognized tax benefits did not impact the Company’s effective tax rate for the year ended December 31, 2020.

The Company’s policy is to classify interest and penalties related to uncertain tax positions as part of income tax expense. As of December 31, 2021 and 2020, the Company had no accrued interest and penalties.

The following reconciliation illustrates the Company’s liability for uncertain tax positions:

	Year Ended December 31,
	2021		2020
Unrecognized tax benefits - beginning of period	$	—	$	20,788
Reductions for tax positions of prior years	—		(20,788)
Unrecognized tax benefits - end of period	$	—	$	—

As of December 31, 2021, tax years 2018 – 2021 remain open to federal and state examination. During the third quarter of 2021, the IRS concluded its audit of the Company’s 2016 federal income tax return and associated net operating loss (“NOL”) carryback claim. The audit conclusion did not result in any material impact to the financial statements or related disclosures. Following the conclusion of the audit, the Company received the $64,160 carryback claim tax refund and $5,425 of accrued interest.