9. PROVISION FOR INCOME TAXES

Publicly traded partnerships like ours are treated as corporations unless they have 90% or more in qualifying income (as that term is defined in the Internal Revenue Code). We satisfied this requirement in each of the years ended December 31, 2019 and 2018 and, as a result, are not subject to federal income tax. However, our partners are individually responsible for paying federal income taxes on their share of our taxable income. Net earnings for financial reporting purposes may differ significantly from taxable income reportable to our unitholders as a result of differences between the tax basis and financial reporting basis of certain assets and liabilities and other factors. We do not have access to information regarding each partner's individual tax basis in our limited partner interests.

Provision for income taxes reflects franchise tax obligations in the state of Texas (the “Texas Margin Tax”). Deferred income tax assets and liabilities are recognized for temporary differences between the assets and liabilities of our tax paying entities for financial reporting and tax purposes.

Our federal and state income tax provision (benefit) is summarized below:


	Years Ended December 31,
	2019		2018
Current:
Federal	$	—	$	—
State		328		64
Total current		328		64

Deferred:
Federal		—		—
State		(126)		126
Total deferred		(126)		126
Total provision for income taxes	$	202	$	190

A reconciliation of the provision for (benefit from) income taxes with amounts determined by applying the statutory U.S. federal income tax rate to income (loss) before income taxes is as follows (in thousands):


	Years Ended December 31,
	2019		2018
Pre-tax net book income (loss)	$	(50,940)	$	15,881

Texas Margin Tax (a)		126		267
Return to accrual		76		9
Valuation allowance		—		(86)
Provision for income taxes	$	202	$	190

Effective income tax rate		(0.40%)		1.20%

(a)

Although the Texas Margin Tax is not considered a state income tax, it has the characteristics of an income tax since it is determined by applying a tax rate to a base that considers our Texas-sourced revenues and expenses.

The following table presents the significant components of deferred tax assets and deferred tax liabilities at the dates indicated (in thousands):


	December 31,
	2019		2018
Deferred tax assets (liabilities):
Derivative assets	$	(23)	$	(15)
Depreciable, depletable property, plant and equipment		21		(112)
Other		2		1
Deferred tax assets (liabilities):		—		(126)
Valuation allowance		—		—
Total deferred tax assets (liabilities)	$	—	$	(126)

Deferred tax assets which required valuation allowances were related to assets sold in 2018. Therefore, the valuation allowance is no longer necessary and was removed as of December 31, 2018.

As of December 31, 2019 and 2018, the Partnership had no material uncertain tax positions.

The Partnership files income tax returns in the U.S. and various state jurisdictions. The Partnership is no longer subject to examination by federal income tax authorities prior to 2016. State statutes vary by jurisdiction.