Income Taxes

9 Months Ended

Sep. 30, 2021

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

We recorded an income tax benefit of $1,860 million and $1,864 million during the three and nine months ended September 30, 2021, respectively, and an income tax benefit of $75 million and income tax provision of $119 million during the three and nine months ended September 30, 2020, respectively.

The effective tax rates for the three and nine months ended September 30, 2021 were 67.0% and 79.7%, respectively. Our effective tax rate is based on income (loss) before income taxes and non-controlling interest and is significantly impacted by non-controlling interest that is not taxable to Cheniere. Our effective tax rate experienced volatility during the three and nine months ended September 30, 2021 due to variability in our earnings and the proportion of such earnings attributable to non-controlling interest. The variability in earnings in the three and nine months ended September 30, 2021 were mainly the result of approximately $3.5 billion and $4.2 billion, respectively, of pre-tax derivative losses, primarily on our commodity derivatives as a result of unfavorable shifts in international forward commodity curves.

The effective tax rates for the three and nine months ended September 30, 2020 were 12.9% and 19.3%, respectively, which were lower than the 21% federal statutory tax rate primarily due to income allocated to non-controlling interest that is not taxable to Cheniere, and in the nine months ended September 30, 2020, it was partially offset by a $38 million discrete tax expense related to an internal restructuring.