Income Taxes

12 Months Ended

Dec. 31, 2019

We are not a taxable entity for federal income tax purposes. As such, we do not directly pay federal income taxes. Other than with respect to our corporate subsidiaries and the Texas Margin Tax, our taxable income or loss is includible in the federal income tax returns of each of our partners.

A few of our operations are owned by wholly-owned corporate subsidiaries that are taxable as corporations. We pay federal and state income taxes on these operations.

As a result of the Tax Cuts and Jobs Act enacted on December 22, 2017, The Partnership remeasured its U.S. deferred tax assets and liabilities during the year ended December 31, 2017 and recorded a $5.3 million benefit relating to the U.S. federal corporate tax rate change.

Our income tax (benefit) expense is as follows:



	Year Ended December 31,
	2019			2018		2017
Current:
Federal	$	—		$	—	$	—
State	591			810		100
Total current income tax expense	$	591		$	810	$	100
Deferred:
Federal	$	930		$	114	$	(5,530	)
State	(866		)	574		1,471
Total deferred income tax expense (benefit)	$	64		$	688	$	(4,059	)
Total income tax expense (benefit)	$	655		$	1,498	$	(3,959	)

Deferred income taxes relate to temporary differences based on tax laws and statutory rates that were enacted at the balance sheet date. Deferred tax assets and liabilities consist of the following:



	December 31,
	2019			2018
Deferred tax assets:
Net operating loss carryforwards	$	12,557		$	11,057
Other	927			434
Total long-term deferred tax asset	13,484			11,491
Valuation allowances	(2,172		)	(1,758		)
Total deferred tax assets	$	11,312		$	9,733
Deferred tax liabilities:
Long-term:
Fixed assets	$	(1,958	)	$	(2,893	)
Intangible assets	(20,730		)	(18,209		)
Other	(1,264		)	(1,207		)
Total long-term liability	(23,952		)	(22,309		)
Total deferred tax liabilities	$	(23,952	)	$	(22,309	)
Total net deferred tax liability	$	(12,640	)	$	(12,576	)

We record a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of the deferred tax assets depends on the ability to generate sufficient taxable income of the appropriate character in the future and in the appropriate taxing jurisdictions.

The reconciliation between the Partnership's effective tax rate on income (loss) from operations and the statutory tax rate is as follows:



	Year Ended December 31,
	2019			2018			2017
Income (loss) from operations before income taxes	$	100,721		$	(10,294	)	$	78,120
Partnership income not subject to federal income tax	(99,832		)	10,824			(77,704		)
Income subject to federal income taxes	$	889		$	530		$	416
Tax expense at federal statutory rate	$	187		$	111		$	146
State income taxes, net of federal tax	729			1,285			1,396
Return to provision, federal and state	(219		)	(128		)	(163		)
Other	(42		)	230			(68		)
Re-measurement of deferred taxes due to enacted tax rate change	—			—			(5,270		)
Income tax expense (benefit)	$	655		$	1,498		$	(3,959	)
Effective tax rate on income from operations before income taxes	1		%	(15		)%	(5		)%

At December 31, 2019, 2018 and 2017, we had no uncertain tax positions.