Income Taxes

12 Months Ended

Dec. 31, 2024

Income Taxes

Income Taxes

Note 14 Income Taxes

GMG, a wholly owned subsidiary of the Partnership, is a taxable entity for federal and state income tax purposes. Current and deferred income taxes are recognized on the separate earnings of GMG, including its proportional earnings from its equity method investment in SPR as described in Note 17, and the after-tax earnings of GMG are included in the consolidated earnings of the Partnership.

The following table presents a reconciliation of the difference between the statutory federal income tax rate and the effective income tax rate for the years ended December 31:

	2024		2023		2022
Federal statutory income tax rate	21.0	%	21.0	%	21.0	%
State income tax rate, net of federal tax benefit	1.9	%	1.7	%	1.7	%
Derecognition of goodwill	0.7	%	—	%	—	%
Partnership income not subject to tax	(19.6)	%	(17.7)	%	(18.3)	%
Effective income tax rate	4.0	%	5.0	%	4.4	%

The following table presents the components of the provision for income taxes for the years ended December 31 (in thousands):

	2024		2023		2022
Current:
Federal	$	7,452	$	1,437	$	—
State		2,518		4,190		7,239
Total current		9,970		5,627		7,239
Deferred:
Federal		(5,347)		3,181		9,519
State		(14)		(672)		64
Total deferred		(5,361)		2,509		9,583
Total	$	4,609	$	8,136	$	16,822

Significant components of long-term deferred taxes were as follows at December 31 (in thousands):

	2024		2023
Deferred Income Tax Assets
Accounts receivable allowances	$	432	$	406
Environmental liability		11,087		12,041
Asset retirement obligation		2,813		2,769
Deferred financing obligation		9,924		10,247
Lease liability		50,152		38,400
Other		1,108		3,619
Federal net operating loss carryforwards		2,610		5,521
State net operating loss carryforwards		300		433
Tax credit carryforward		1,727		1,709
Interest expense carryforwards		18,570		16,493
Total deferred tax assets, gross		98,723		91,638
Valuation allowance		(5,781)		(5,323)
Total deferred tax assets, net	$	92,942	$	86,315
Deferred Income Tax Liabilities
Property and equipment	$	(84,961)	$	(95,823)
Land		(16,543)		(17,675)
Right of use assets		(48,718)		(36,797)
Basis difference in SPR joint venture		(5,168)		(4,929)
Intangible assets		(1,100)		—
Total deferred tax liabilities	$	(156,490)	$	(155,224)
Net deferred tax liabilities	$	(63,548)	$	(68,909)

At December 31, 2024, GMG has fully utilized all federal net operating loss carryforwards and had state net operating loss carryforwards of approximately $6.8 million, of which $5.0 million will begin to expire in 2026, and $1.8 million which can be carried forward indefinitely.

Utilization of the net operating loss and interest expense carryforwards may be subject to annual limitations due to the ownership percentage change limitations provided by the Internal Revenue Code Section 382 and similar state provisions. An “ownership change” is generally defined as a cumulative change in the ownership interest of significant stockholders over a rolling three-year period in excess of 50 percentage points. In the event of an ownership change, an annual limitation imposed on the utilization of net operating losses and other tax attributes may result in the expiration of a portion of the carryforwards and future cash flows could be affected due to an increase in tax liability.

At December 31, 2024, the Partnership had $47.0 million of net deferred tax liabilities (consisting of the $63.5 million total net deferred tax liability less the $16.5 million deferred tax liability relating to land discussed below) relating to property and equipment, net operating loss carryforwards, tax credit carryforwards and other temporary differences, certain of which are available to reduce income taxes in future years. The Partnership recognizes deferred tax assets to the extent that the recoverability of these assets satisfies the “more likely than not” criteria in accordance with the FASB’s guidance regarding income taxes. A valuation allowance must be established when it is “more likely than not” that all or a portion of deferred tax assets will not be realized. A review of all available positive and negative evidence needs to be considered, including a company’s performance, the market environment in which the company operates, length of carryback and carryforward periods and projections of future operating results. The Partnership concluded, based on an evaluation of future operating results and reversal of existing taxable temporary differences, that a portion of these assets will not be realized in a future period.

The following table presents changes in the valuation allowance for the years ended December 31 (in thousands):

	Balance at		Current		Balance
	Beginning		Period		at End
Description	of Period		Provision		of Period
Year ended December 31,  2024
Valuation allowance	$	5,323	$	458	$	5,781
Year ended December 31,  2023
Valuation allowance	$	4,728	$	595	$	5,323
Year ended December 31,  2022
Valuation allowance	$	4,231	$	497	$	4,728

At December 31, 2024, the Partnership also had a $16.5 million deferred tax liability relating to land. Land is an asset with an indefinite useful life and would not ordinarily serve as a source of income for the realization of deferred tax assets. This deferred tax liability will not reverse until some indefinite future period when the asset is either sold or written down due to impairment. Such taxable temporary differences generally cannot be used as a source of taxable income to support the realization of deferred tax assets relating to reversing deductible temporary differences, including loss carryforwards with expiration periods. It can be used as a source of income to benefit other indefinite lived assets.

The following presents a reconciliation of the differences between income before income tax expense and income subject to income tax expense for the years ended December 31 (in thousands):

	2024		2023		2022
Income before income tax expense	$	114,936	$	160,642	$	379,029
Less non—taxable income		108,366		136,182		330,902
Income subject to income tax expense	$	6,570	$	24,460	$	48,127

The Partnership made approximately $9.3 million, $2.9 million and $8.1 million in income tax payments in 2024, 2023 and 2022, respectively.

GMG files income tax returns in the United States and various state jurisdictions. With few exceptions, the Partnership is subject to income tax examinations by tax authorities for all years dated back to 2021.

Unrecognized tax benefits represent uncertain tax positions for which reserves have been established. The Partnership had no gross-tax effected unrecognized tax benefits for the years ended December 31, 2024, 2023 and 2022.

The FASB’s accounting guidance for income taxes clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements by prescribing a minimum recognition threshold and measurement of a

tax position taken or expected to be taken in a tax return. The Partnership performed an evaluation of all material tax positions for the tax years that remain subject to examination by major tax jurisdictions as of December 31, 2024 (tax years ended December 31, 2024, 2023, 2022 and 2021). Tax positions that do not meet the more-likely-than-not recognition threshold at the financial statement date may not be recognized or continue to be recognized under the accounting guidance for income taxes. The Partnership classifies interest and penalties related to income taxes as components of its provision for income taxes. There were no interest and penalties recorded in the accompanying consolidated balance sheets at December 31, 2024 and 2023 and the consolidated statements of operations for the years ended December 31, 2024 and 2023 and 2022.